Hr european news roundup - may 2008

Our habitue human resources management news roundup from across Europe from the Federation of European Employers (FedEE). Includes: Czech democracy: Denial or illness benefit unlawful, EEA: growing of labor costs, The Netherlands: Cutbacks in child care support.

Czech democracy: Denial or illness benefit unlawful
The Czech Republic's Constitutional Court has ruled that it is unlawful to deny sick pay to employees for the first three days of illness absence. This is because the denial of benefits adversely affects those who are truly ill, even although the measurement was introduced to discourage abuse of the illness insurance scheme. Those denied pay for the three-day waiting time period are also required to continue contributing to sociable security funds.
 
The Czech authorities now has two calendar month to draft an amendment to sociable security statute law. This could well revert to the previous system, which set sick pay at 25 percentage of convention remuneration for the first three days of absence and 69 percentage thereafter.
 
EEA: growing of labor costs
though industrial labor costs per unit of end product fell by 0.7 percentage in the eurozone over the year to Q4 2007, they grew significantly in European Economic Area (EEA) state outside the eurozone. The year to Dec 2007 saw industrial unit labor costs rise by 8.9 percentage in Kingdom of Norway, 4.4 percent in Kingdom of Denmark, 3.3 percent in the UK and 3.2 percentage in Kingdom of Sweden. In private-sector services such as retailing, hotels, conveyance and financial intermediation, unit labor costs grew by just over 2 percentage throughout the EEA over the same time period, but the lowest rise was in the UK (+0.5 percentage).
 
Rises in unit labor costs indicate that the growing in norm employee wage (and associated employment costs) exceeds growth in labor productivity. Such rises will narrow profit border, fuel price rising prices and finally feed back into a recessionary cycle in which productiveness falls and employers are forced to shed labour at an ever-increasing rate.
 
Netherlands: Cutbacks in childcare support
Details are emerging about the planned cutbacks in Dutch state childcare support.
 
The changes will not take place until 2009 and the biggest losers will be families earning over 100,000 euros per year, who will no longer be entitled to any childcare benefit. The current facility for grandparents to receive financial compensation for acting as childcarers will also be removed, although some adjustment to income tax credits may be given for working parents to help them come to flexible arrangements with family members and friends.
 
As a consequence of the changes, the average parental contribution to childcare costs will rise from 19 percent to 23 percent, although those on lower incomes may continue to receive their current level of financial support.
 
Turkey: Social Security bill secures parliamentary support
A controversial social security bill has been passed by the Turkish parliament and will come into force on October 1st 2008.
 
Under the reform, the normal retirement age will gradually be raised from 58 for women and 60 for men to 65 for all employees. To qualify for a pension, an individual will also have to work for a minimum of 7,200 days and certain workers such as airline pilots and postal workers will no longer be able to claim extra pension credits. However, women who have dependant children will be able to retire after working 20 years.
 
All employees and their dependants will now be covered under the general health insurance system. The new law introduces daily statutory allowances for sickness absence and maternity leave (including an allowance for non-working spouses of male employees covered by the social security system) but maternity allowances will be payable only twice for a maximum combined period of two years.
 
In an attempt to combat the 'grey economy', the reform package includes a provision requiring employees to be paid through transfers to individual bank accounts. Banks will not be allowed to charge fees on such payroll transactions.
 
Other European news in brief
 
Croatia:
Agreement has still not been achieved on the final text of Croatia's proposed minimum wage law. Employers want the wage to be set at 35 percent of the average wage but trade unions are pressing for the minimum wage to be set at 41 percent of the average wage, rising each year to 50 percent by 2011. The current deadline for the Croatian cabinet to adopt the proposed law is May 15th 2008.
 
ECJ:
A reference has been made to the European Court of Justice (ECJ) from a Finnish court for a preliminary ruling about the obligation to consult employees or their representatives when contemplating collective redundancy. The court is seeking clarification about the meaning of 'in good time' under Article 2(1) of the Collective Redundancies Directive (98/59/EC). For example, whether consultations should commence when a parent company is considering a redundancy programme, but it has not taken concrete form and no decision has yet been made about whether redundancies will take place at a specific subsidiary company (Case C-44/08).
 
France:
The minimum wage (SMIC) in France rose on 1 May 2008 by 2.3 percent in an effort to compensate for the change in consumer prices since May 2007. A further rise will take place on July 1st 2008.
 
Germany:
A working group set up last December by Germany's SPD ruling coalition partner to examine executive remuneration has just issued its policy proposals. These include setting an annual limit of one million euros for full corporate tax deductibility of individual top executive pay and severance packages, assigning responsibility to supervisory boards (rather than compensation committees) to approve management board salary changes, and simplifying the process by which shareholders can gain legal redress and compensation from supervisory board members for share price reductions brought about by excessive executive pay levels.
 
Hungary:
Over the year to February 2008, average gross monthly wages and salaries (excluding bonus payments) in Hungary's private sector rose by 10.4 percent. Bonus payments in the finance sector led to year-on-year increases of almost 34 percent, whilst pay in the real estate sector increased by an average of 15 percent.
 
Ireland Republic of:
The Irish Congress of Trade Unions (ICTU) has voted in favour of entering into negotiations with employers and the government on a new national wage agreement. ICTU's 50 member unions will be seeking pay increases that are at least in line with inflation, plus improved pensions and greater protection for agency workers.
 
FedEE news
 
Leading lawyers deal with key HR issues
Two new features have just been published on FedEE's public website:   
 
Dr Markus Kappenhagen, a Düsseldorf-based partner with Baker & McKenzie, writes about business transfers in Germany, focusing on the difficult question of which employees are considered to "accompany the transfer".   
 
www.fedee.com/transfers_de.html   
 
Employment law partners and other senior lawyers from several of Allen & Overy's European offices have also contributed to our first employment law clinic. This deals with three questions frequently asked by FedEE members:   
 
 * What is the 'going rate' for out of court redundancy compensation?
 
 * Would you generally advise employers to include a post- employment non-competition clause in employment contracts for senior commercial personnel?
 
 * Is there any sign that sectoral collective bargaining is breaking down?  
 
www.fedee.com/lawclinic.shtml
 
 
 Copyright: FedEE Services Limited 2008