Asia-Pacific Employee Relations Review November 2009

New language requirements applicable to workplace communications by employers in Indonesia
Strong opposition from Korean unions to proposed implementation of laws
Update on award modernisation in Australia
Singapore court orders individual to pay damages to former employer for defamation
Hong Kong’s new race law comes into effect
Changes to childcare leave laws in Japan
New regulation boosts funding for unions in Vietnam
Changes to paid parental leave in Australia and Taiwan

New language requirements applicable to workplace communications by employers in Indonesia

On 9 July 2009 a new law came into effect in Indonesia which will have a significant impact upon the way in which foreign companies with operations in Indonesia communicate in the workplace and document their employment arrangements.

New requirements

Law no. 24 of 2009 on National Flag, Language, State Symbol and Anthem relevantly requires that:

1. All agreements involving an Indonesian private institution or individual must be in the Indonesian language. If a foreign party is involved, the agreement must also be prepared in the national language of that party or in English (or both)
2. The Indonesian language must be used in all formal communications in the workplace, and
3. If an employee working in Indonesia is unable to communicate in the Indonesian language, they must enrol, or be enrolled in an Indonesian language course.

Implications for employers

Prior to the new law, applicable regulations required fixed-term employment contracts in Indonesia to be in the Indonesian language. However, it is clear that the new provisions significantly extend the language requirements generally applicable to employment-related documentation.

At this stage, it is unclear how strictly the new law will be enforced by the authorities. A Presidential Regulation is expected to be issued to clarify the law’s requirements. In the interests of compliance with the law, multinational employers with operations in Indonesia may wish to take appropriate steps, including:

1. Checking that all contracts of employment with existing employees, both local and foreign, signed after 9 July 2009 are in the Indonesian language and, where appropriate, in bilingual versions. Where this is not the case, new versions of contracts in the appropriate language(s) should be prepared as soon as possible.
2. Ensuring that contract templates to be used for local and foreign employees moving forward are in the Indonesian language and, where appropriate, in bilingual versions.
3. Ensuring that a process is in place for all formal communications in the workplace (eg letters of promotion, warning letters, mutual agreements to terminate employment) to be in the Indonesian language or, where appropriate, in bilingual versions.
4. Ensuring that all existing employees working in Indonesia are able to communicate in the Indonesian language and, if not, to enrol those employees in a language course.
5. Implementing a process as part of new employee transfers/assignments into Indonesia to ensure that employees who cannot communicate in Indonesian are enrolled in a language course.

This article was written by George Cooper, Practice Leader, Celia Yuen, Senior Associate and Gillian McKenzie, Solicitor, Freehills Workplace Law & Advisory–Asia.

Strong opposition from Korean unions to proposed implementation of laws

Korean Labour Minister Yim Tae-hee recently announced that the government intends to give effect in early 2010 to legal provisions with a significant effect on labour unions and employers with unionised workforces.

The provisions

The provisions set to take effect in 2010 deal with:

1. prohibiting employers from paying remuneration to full-time union officials, and
2. giving legal permission for multiple unions to be established at a single worksite (currently each enterprise may legally only have one trade union).

These provisions were in fact enacted in 1996, but have not yet been put into effect, due to strong union opposition. It remains to be seen what form the final provisions to be implemented will take, and in particular whether they will include allowing a single negotiation channel for multiple unions at a particular enterprise.

Implications for employers

The lead up to the implementation of the provisions is likely to be a difficult time for employers in Korea with unionised workforces. The Federation of Korean Trade Unions and the Confederation of Trade Unions have indicated their intention to collaborate in calling a general strike in protest against implementation of the provisions.

Employers will also need to prepare themselves for the provisions coming into effect, including:

1. ensuring that any current practice of remunerating full-time union officials ceases upon the law coming into effect, and
2. putting in place a strategy to deal with the possibility that multiple unions may seek to represent employees on site, and adapting bargaining strategies to take account of this change.

This article was written by George Cooper, Practice Leader and Celia Yuen, Senior Associate, Freehills Workplace Law & Advisory–Asia.

Update on award modernisation in Australia

The foreshadowed commencement of the new modern awards in Australia—to operate in conjunction with the statutory safety net, the National Employment Standards, is set to occur on 1 January 2010, though much activity is yet to occur before that date.

The award modernisation process is a key aspect of the Australian Government’s ‘Forward with Fairness’ policy. It involves the simplification of the current complex array of state and federal awards which apply somewhat inconsistently throughout Australia.

This article touches upon some of the more significant developments which will have implications for employers arising out of the award modernisation process.

Why are awards still relevant?

The key significance of awards is that they:

• will apply generally to in-scope employees who are not regulated by enterprise agreements (although employees who would otherwise be award covered can be provided with a guarantee of annual earnings which, if it exceeds $108,300 per annum, excludes the application of the award), and 
• continue to be the relevant comparator for determining whether an enterprise agreement satisfies the Better Off Overall Test. Under the Act, Fair Work Australia (FWA) must be satisfied that each award-covered employee will be better off overall if the proposed enterprise agreement applies to them rather than the relevant modern award.

Transitional provisions

One of the most important features of the award modernisation process is the creation of a set of awards which will apply uniformly across the nation. The legislation specifically prohibits awards applying on a state-by-state basis or only to certain geographical locations.

There is an exception, however, which allows different conditions to apply during a transitional period, which might be as long as five years. On 2 September 2009 the Commission issued a detailed decision¹ relating to transitional provisions. This decision received significant attention in the press for the following statement:

‘However, the introduction of modern awards applying across the private sector in place of the variety of different provisions in the Federal and state awards inevitably means that some conditions will change in some states. Some wages and conditions will increase as a result of moving to the terms which apply elsewhere in the industry. Equally some existing award entitlements will not be reflected in the applicable modern award because they do not currently have general application.’

This statement by the Commission clearly highlights the need for business to quickly review the modern awards which will apply after 1 January 2010 and identify exactly where any increased costs might arise.

Miscellaneous Award

One of the exposure draft awards released in stage 4 of the modernisation process was the ‘Miscellaneous Award’. The creation of this award arises from a specific paragraph in the ministerial request directing the Commission to create a modern award ‘to cover employees who are not covered by another modern award and who perform work of a similar nature to that which has historically been regulated by awards (including state awards)’. The request goes on to say that this modern award ‘is not to cover those classes of employees, such as managerial employees, who, because of the nature or seniority of their role, have not traditionally been covered by awards’.

Arguably, the exposure draft proposed by the Commission goes significantly further than this. In its decision the Commission said:

‘It is unclear which employees will be covered by this award. It may be that it will have application in some areas of the workforce which have not been covered by awards before’.

The Commission went onto say that it had some doubt about what the existing conditions of employment were for employees who might be covered by the award.

Some employer organisations have been critical of this approach where the award is apparently proposed to be made in circumstances where there is some uncertainty as to the extent of its coverage.

It is clear however that:

• It will not apply to an employee who is covered by another modern award (including occupational awards such as the Clerks Award) or who works in an industry where another modern award applies. Essentially, the approach seems to be that if a modern award in a particular industry does not extend to an employee in that industry then the miscellaneous award should not so extend, and 
• The employee must not be a ‘high income employee’. This is an employee who has accepted a ‘guarantee of annual earnings’ from their employer which is a written undertaking to pay the employee an amount of earnings at a rate that exceeds $108,300 per annum during a period of 12 months or more.

It is expected that a number of submissions will be made to the Commission in relation to the terms of this award. Businesses that operate in industries that have traditionally not be covered by awards will be interested in monitoring the outcome of this process.

Enterprise awards

Employers with enterprise awards (that is, those only applying to their specific enterprise) currently have the opportunity to apply to the Commission for modernisation to occur before 1 January 2010, which is the designated commencement date for non-enterprise modern awards. Enterprise awards which have not been modernised will continue after 1 January 2010, but will ‘die’ on 31 December 2013 unless they are modernised in the meantime.

Implications for employers

With the modern award start date rapidly approaching, employers in Australia should consider:

• in light of the Commission’s decision on the transition to modern awards (including the phasing in of increased wages and conditions flowing from the modernisation process), reviewing the modern awards which will apply to their business after 1 January 2010, to identify exactly where and when any increase costs might arise, and
• reviewing those areas of their business where the ‘Miscellaneous Award’ might apply to employees who might not previously have been covered by awards, and continue to monitor the outcomes of the process.

This article was written by George Cooper, Practice Leader and Celia Yuen, Senior Associate, Freehills Workplace Law & Advisory–Asia.

Singapore court orders individual to pay damages to former employer for defamation

On 24 September 2009, the Singapore High Court delivered a judgment rejecting a former employee’s defences, and ordering that he pay SGD$150,000 in damages for defamation of his former employer and senior managers.

Background

Mr Basil was employed by Premier Security in April 2006. Premier terminated his employment on notice in December 2006 on the grounds of poor performance – amongst other things, he had failed to submit required weekly reports and incident reports and had been absent from work without good reason on several occasions.

After the termination of his employment, Mr Basil wrote a series of letters to government officials in Singapore, including the Minister for Manpower, the Commissioner of Police, the Deputy Prime Minister, and the Director of the Security Industry Regulatory Department. Mr Basil alleged in his letters that he had been wrongfully dismissed, that Premier and its managers had breached employment laws, that Premier was not deserving of its given rating as a security agency, and that Premier was fraudulent/dishonest in its operations and was cheating its clients.

Premier and two of its senior managers sued Mr Basil for defamation, and following the initial proceedings it was held in October 2007 that the statements made by Mr Basil were defamatory of the plaintiffs.

These proceedings

The most recent proceedings in the High Court considered whether Mr Basil could make out the defences of justification, fair comment or qualified privilege in relation to the various statements that he had made in the letters. The Court held that Mr Basil failed to make out any of the three defences. It was found that Mr Basil was unable to substantiate the truth of his defamatory statements, and the contents of the letters went far beyond the scope of any legitimate grievance.

As Mr Basil failed to make out any of the defences, the court proceeded to make an order that Mr Basil pay aggravated damages, amounting to a total of SGD$150,000 across the three plaintiffs.

Implications for employers

Many employers have experienced the difficulties that can arise from the actions of a disgruntled former employee. It may give employers some comfort to know that where an employee’s statements become defamatory and go beyond the scope of a legitimate grievance, the courts in Singapore are willing to give relief and make an award of damages against the individual.

This article was written by George Cooper, Practice Leader and Celia Yuen, Senior Associate, Freehills Workplace Law & Advisory–Asia.

Hong Kong’s new race law comes into effect

Hong Kong’s Race Discrimination Ordinance (RDO) came into effect in relation to workplaces in Hong Kong on 10 July 2009, upon the passing of the Code of Practice on Employment under the RDO (Code) by the Legislative Counsel of Hong Kong SAR.

The scope of the RDO

The RDO protects against discrimination, harassment and vilification on the ground of race in a number of areas, including employment.

The RDO imposes obligations on both employers and employees. Furthermore, like similar laws in countries such as Australia, employers can be held vicariously liable under the RDO for acts of discrimination or harassment by their employees, whether or not the employer is aware of those acts, if the employer has not taken reasonably practicable steps to prevent discrimination and harassment from occurring.

Employees who suffer discrimination or harassment on the grounds of race at work may lodge a complaint against their employer in the Equal Opportunities Commission or the District Court.

While the introduction of the RDO has been largely viewed as a positive step, the content and the scope of the RDO has been subject to criticism from various stakeholders including the United Nations Committee on the Elimination of Racial Discrimination (CERD) which has made a number of recommendations, including most notably that:

1. the definition of racial discrimination in the RDO be expanded to include indirect discrimination with regard to language, immigration status and nationality
2. the scope of the RDO be expanded to cover all government functions and powers
3. an equality plan be adopted and the powers of the Equal Opportunities Commission be strengthened, and
4. specific measures be taken to address particular concerns of domestic migrant worker groups.

Code of Practice

The Code is intended to provide practical guidance to employers in both the private and public sectors on the prevention of discrimination and harassment in the workplace. While the Code is not law, it will be admissible in court and evidence of compliance with the Code may assist an employer to demonstrate compliance with the RDO.

The RDO requires employers to take reasonably practicable steps to prevent discrimination and harassment in the workplace or in the course of employment. The Code suggests that employers can meet this burden by adopting a policy of racial equality, promoting and implementing such policy through good employment practice and procedures, and regularly monitoring and reviewing the policy and procedures.

The Code describes in detail measures employers ought to adopt in order to comply with the requirements of the RDO, including measures relating to the recruitment process, the terms and conditions of employment, remuneration, training, transfers and promotions, grievance procedures and termination of employment.

Implications for employers

Employers with operations in Hong Kong now have a legal obligation not to discriminate against or harass employees on the basis of race, and also face potential vicarious liability for racial discrimination or harassment engaged in by their employees. Employers can protect themselves against liability by implementing policies and procedures appropriate to the scale, structure and available resources of their business, to promote racial equality in the workplace.

Employers should now be reviewing their equal opportunity policies and practices in light of this development. Multinational employers who already have equal opportunity or like policies in place outside Hong Kong, which deal with the issue of race discrimination, may be able to extend such policies with suitable modification to apply to their workforce in Hong Kong.

This article was written by George Cooper, Practice Leader and Gillian McKenzie, Solicitor, Freehills Workplace Law & Advisory–Asia.

Changes to childcare leave laws in Japan

The Japanese Parliament passed important amendments to the Child Care Leave and Family Care Leave Act in June 2009, designed to remedy Japan’s declining birthrate and workforce demographics. Currently, approximately 70 per cent of female employees who become pregnant do not return to their jobs after giving birth. In addition, the statistics show that only two per cent of Japanese fathers avail themselves of childcare leave.

The provisions

The key changes brought about by the revision of the law are:

• a limit on working hours of six hours per day is established in relation to any employee with a child under the age of three
• any employee with a child under the age of three is exempted from being required to work overtime
• the entitlement for parents to take full-time unpaid childcare leave to care for a newborn child has been extended from 12 months after the child’s birth to 14 months after the child’s birth, and
• provisions designed to protect against unfair dismissal of an employee who takes childcare leave in accordance with the Act.

Implications for employers

Employers in Japan need to familiarise themselves with the new requirements, and implement policies and practices to ensure that they are complied with. Employers may also wish to consider availing themselves of the exemption from the six-hour working day limit by installing a nursery at the workplace for the use of employees with young children.

This article was written by George Cooper, Practice Leader and Celia Yuen, Senior Associate, Freehills Workplace Law & Advisory–Asia.

New regulation boosts funding for unions in Vietnam

Vietnamese regulators have announced a new regulation requiring foreign-invested enterprises and foreign partners in business cooperation contracts with local Vietnamese companies to pay one per cent of their payroll to trade unions.

The new regulation in context

The new regulation was announced following a joint meeting of the Vietnam General Confederation of Labor (VGCL), the Ministry of Finance and the Ministry of Planning and Investment in August 2009. The initiative follows a 2007 request by Prime Minister Nguyen Tan Dung at a working session with the VGCL Presidium that government ministries and agencies work closely with the VGCL on a range of matters including consideration of potential reforms requiring foreign invested enterprises to contribute funding for enterprise trade union activities.

Funding received by trade unions as a result of this new regulation is to be used primarily to support trade union operations, to pay unionists and to provide social welfare to workers. The Ministry of Finance will be responsible for overseeing the trade unions’ use of the funding generated by the new regulation. The chairman of the Vietnam General Confederation of Labor, Mr Dang Ngoc Tung has announced that he hopes trade unions will improve workers’ living and working conditions and become more actively involved in resolving labour-management disputes.

Implications for employers

Foreign companies with investments or partnerships in Vietnam should prepare their payroll processes for compliance with the requirements of this new regulation. Employers in Vietnam should also be mindful that this regulation is part of broader reforms to labour and industrial relations laws proposed by the Vietnamese government, and keep abreast of future changes.

This article was written by George Cooper, Practice Leader and Gillian McKenzie, Solicitor, Freehills Workplace Law & Advisory–Asia.

Changes to paid parental leave in Australia and Taiwan

The Australian Government recently announced the introduction of a government-funded paid parental leave scheme from 1 January 2011.

Paid parental leave in Australia

Currently there is no statutory paid parental leave in Australia. Some statutory workplace agreements contain provision for paid parental leave. In addition, some employers provide paid or partly paid parental leave as a matter of contract and/or company policy.

The new scheme to be introduced by the government will see the primary caregiver receive 18 weeks’ pay at the statutory minimum wage (currently AUD$543.78). The scheme will be available to primary carers earning less than AUD$150,000 who have worked continuously for at least 10 of the 13 months prior to the birth/adoption for at least 330 hours (ie about one day per week).

The introduction of the scheme complements the enhanced unpaid parental leave benefits for parents which will commence in January 2010 (ie up to 24 months shared between the parents). For more information, refer to our September 2008 edition of the Freehills Asia-Pacific Employee Relations Review.²

The announcement of the new paid parental leave scheme has generated significant media attention in Australia. While many have welcomed the changes, some employer groups have expressed concerns about the administrative costs and cashflow burden that the largely employer-administered scheme will create for businesses.

International observers might be surprised at the level of resistance that the paid parental scheme has attracted in Australia. Currently, of all the world’s advanced economies, Australia and the United States are the only countries that do not offer statutory paid maternity leave.

Comparison with paid parental leave in Taiwan

A comparison with recent changes to paid parental leave in Taiwan might place the Australian changes in some context. Female employees in Taiwan have since 1985 had access to eight weeks’ employer-funded maternity leave, on full pay, for employees with six months’ service.

In 2002, an entitlement to parental leave was introduced in Taiwan, which allowed male and female employees to take up to two years’ unpaid parental leave shared between the parents. Parental leave is separate from and additional to maternity leave.

In the most recent development, from 1 May 2009, male or female employees who take parental leave in Taiwan will receive up to six months’ pay each, or a total of 12 months altogether, at 60 per cent of their pre-parental leave salary. We foreshadowed these changes in our September 2008 edition of the Freehills Asia-Pacific Employee Relations Review.²

It is proposed that these entitlements will eventually be extended to cover monthly payments at 60 per cent of salary for up to the full two-year period of parental leave. Payments are made out of Taiwan’s compulsory labour insurance program.

Implications for employers

Employers in Australia will need to prepare for the new paid parental leave entitlements by considering how the scheme fits in with existing benefits, and ensuring that the necessary systems are put in place to administer the scheme from 2011 onwards. Multinational employers with operations in Australia may be able to learn from processes and procedures already in place to administer paid parental leave entitlements in jurisdictions such as Taiwan.

This article was written by George Cooper, Practice Leader and Celia Yuen, Senior Associate, Freehills Workplace Law & Advisory–Asia.

Endnotes

1. Decision by Australian Industrial Relations Commission, 2 September 2009 
2. ‘Regional developments in legislative parental leave entitlements’, Asia-Pacific Employee Relations Review, September 2008

More information

For information regarding possible implications for your business, contact