Message from the Editor
Welcome to the first edition of the Jones Day Asia-Pacific Labor & Employment News, which will be published quarterly and will examine labor and employment law developments across the Asia-Pacific region. Each quarter, we will provide you with a rundown of upcoming changes in law and recent key decisions of courts and regulators across the region. Jones Day has significant experience advising clients on labor and employment issues, both in transactions and disputes, throughout the Asia-Pacific region. We have decided to put this experience to use to keep our clients, colleagues, and friends abreast of changes in this rapidly developing area of law. We hope you enjoy this, our first of many legal updates on labor and employment law developments in the region.
Larry Dinardo
Upcoming and Recent Changes in the Law
Taiwan: Legislative changes to regulate use of agency workers
According to the statistics published in May 2013, Taiwan has
more than 590,000 agency workers and that number is continually
rising at an unprecedented rate. As such, existing labor laws
governing agency workers have become both inadequate and outdated.
To address this issue, Taiwan's Ministry of Labor approved the
submission of the draft Protection of Agency Workers Bill on
February 6, 2014.
In essence, the draft bill seeks to discourage the use of agency
workers as a matter of principle, The bill achieves this by
limiting the types of work in which an agency worker can engage,
and by setting a maximum percentage of agency workers that an
enterprise ("User") may employ. The draft bill also
affords agency workers the same rights as the full-time employees
of the User, such as the agency worker's right to tender a
formal labor contract to the User if he or she continues to work at
the User after one year. The agency and the User will be jointly
and severally liable if the agency worker is not duly paid or
suffers damages due to work performed.
China: Government limits opportunity for the use of contractors by foreign corporations
On March 1, the Interim Provisions on Labor Dispatch
("Interim Provisions"), which were promulgated by the
Chinese Ministry of Human and Social Security on January 24, came
into effect. This move demonstrates the intention of the Chinese
legislature to limit the use of dispatch workers, whose rights are
akin to those of contract workers in common law countries, by
Foreign Invested Enterprises ("FIEs"). The history of
dispatch labor can be traced back to the early stage of China's
opening to foreign investment more than three decades ago.
Initially, measures were adopted to restrict the development of
representative offices set up by foreign investors and to control
the scale of their local employment. The representative offices of
foreign entities are not allowed to engage employees directly but
may have certain government-appointed employment service agencies,
such as the Foreign Enterprises Human Resources Service Company
Limited, to hire and then dispatch local employees to
them.
By using labor dispatch workers, FIEs can circumvent the operation
of the Employment Contract Law, which took effect January 1, 2008.
The Employment Contract Law includes rigorous dismissal
requirements, but these do not apply to dispatch workers, who have
only limited protections. To remedy the situation, the Chinese
legislature has promulgated the Decision regarding the Modification
of Employment Contract Law ("Decision") and its
associated Regulations to provide greater protection to these
workers. The Decision and the Regulations expressly provide that
labor dispatch shall be an ancillary method of employment and be
confined to the temporary and substitutable positions. Moreover,
the Decision places a cap on the number of labor dispatch workers
that an FIE may employ: 10 percent of the total
headcount.
Singapore: Government balances needs of employers with the rights of employees
The Employment, Parental Leave and Other Measures Act 2013
("EPLOM Act") makes significant changes to the Singapore
Employment Act ("EA"), extending protection for workers
and improving employment standards, while recognizing that
employers have practical business concerns and a need to remain
competitive. The EPLOM Act also introduces certain amendments to
the Child Development Co-Savings Act. Most of the changes, with the
exception of Section 45 of the EA relating to retrenchment
benefits, took effect on April 1, 2014.
The key amendments to the EA include: (i) extending EA protection
to more workers by increasing the income ceiling for employees to
which the EA in general and Part IV of the EA apply; (ii) improving
employment standards and benefits for employees in the areas of
certain deductions from salaries, retrenchment benefits, and
collective agreement for union representation; (iii) reducing
rigidity and augmenting flexibility for employers in the areas of
overtime pay, redress for unfair dismissal, working on public
holidays, and sick leave and medical expenses for cosmetic
consultations and procedures; and (iv) enhancing enforcement and
compliance with employment standards by increasing certain
penalties and granting more power to employment inspectors.
Key Decisions of Local Courts and Regulators
Japan: Mass redundancy vindicated on account of economic necessity
Japan Airlines International Co., Ltd. ("JALI"), the
core airline business company of the JAL Group, filed an
application for the commencement of corporate reorganization
proceedings together with Japan Airlines and JAL Capital Co., Ltd.
in January 2010. After the commencement of these proceedings, and
as a part of the corporate reorganization plan, the JAL Group made
a decision to reduce its workforce by approximately 16,000
employees within its group companies, including JALI, by the end of
March 2011.
Based on this decision, JALI began its workforce reduction by
repeatedly offering an early retirement program with favorable
conditions (such as additional special severance) to its employees,
including cockpit crew members and flight attendants. Despite
JALI's efforts to achieve its workforce reduction target by
holding explanatory meetings and collective bargaining sessions
with the labor unions (to explain the corporate reorganization plan
and the necessity of workforce reduction), and having individual
meeting with employees, the number of employees who applied for the
early retirement program did not meet JALI's target
number.
Accordingly, at the end of December 2010, JALI dismissed 81
cockpit crew members and 84 flight attendants (all of whom were
indefinite term employees). Among those who were dismissed, 76
cockpit crew members and 72 flight attendants filed separate suits
against JALI in the Tokyo District Court, claiming that their
dismissal by JALI was void, seeking affirmation of the existence of
employment relationship and back pay including wages to the date of
confirmation of the court's judgment.
Both of the district court judgments indicated that the
requirements for dismissal under Article 16 of the Labor Contract
Act also apply to a company under corporate reorganization or
rehabilitation proceedings. Article 16 of the Labor Contract Act
provides that any dismissal of an employee that is "deemed to
be objectively lacking reasonable grounds and socially
unacceptable" will be void. Further, under Article 16, in
order for termination of employment due to business necessity
("economic dismissal") to be effective, the following
four factors should be considered: (i) the necessity of decreasing
employment levels, (ii) the necessity of choosing dismissal as
means of restructuring, (iii) the fairness in selecting employees
to be dismissed, and (iv) whether the procedure was fair. It should
be noted that the district courts considered these four factors to
be factors that should be considered overall and not as four
separate conditions which must be met for an economic dismissal to
be valid. In March 2012, the Tokyo District Court rejected the
plaintiffs' claims in both cases on the basis that there was a
valid "economic dismissal".
The plaintiffs in both cases appealed to the Tokyo High Court. On
June 3 and 5, 2014, the Tokyo High Court rejected both appeals. The
plaintiffs made a final appeal to the Supreme Court of Japan on
June 17, 2014. A decision from the Supreme Court remains
pending.
Australia: Full Bench of the Fair Work Commission confirms that multinational employers not obligated to relocate employees overseas in the event of Australian redundancies
The claimant in Murray v Ventyx Pty Ltd [2014] FWCFB
2143 was employed as a technical project manager by Ventyx Pty Ltd
pursuant to a Modern Award and was one of nine employees made
redundant in Australia. Ventyx notified Murray of the redundancy on
July 1, and was told that it was to occur the next day. On that
date there was a meeting at which Murray was told he should supply
Ventyx with any additional information relevant to the decision.
Despite expressing an interest in relocating overseas during that
discussion, Murray was made redundant. Murray challenged the
decision in the Fair Work Commission on the basis that the
dismissal was unfair.
The Fair Work Commission held that Ventyx ought to have considered
options for redeployment and discussed those options as early as
practicable, as set out in the Modern Award. The Full Bench of the
Fair Work Commission upheld an appeal by Ventyx for the reason that
the cost of relocation was prohibitive and the discussion was in
fact held as early as possible, having regard to the importance of
keeping client data, that Murray had been working with,
confidential. The employer was not obliged to redeploy Murray
overseas. The obligation to notify an employee of redundancies
'as early as practicable' as prescribed in a Modern Award
is tempered by security and confidentiality considerations and does
not mean "immediately." The Full Bench also held that
relocation must be practical. Accordingly, an employer could
decline to fund a relocation overseas in the event of redundancy
were there no business case for it.
Australia: Competition watchdog at last confronts union misbehaviour
The Australian Competition and Consumer Commission
("ACCC") has recently confirmed that it is investigating
two separate instances of trade union misconduct. These
investigations are occurring against the background of recent
criticism of the ACCC in its approach to these matters and a Royal
Commission into Union Governance and Corruption.
The first investigation relates to one union's conduct of a
secondary boycott of one company for the reason that it supplied
goods to another company, with which that union had a dispute. This
conduct is in breach of the Australian Competition and Consumer Act
2010 (Cth), which prohibits unions and their members from acting so
as to prevent one party from supplying goods to
another.
The second investigation is into the lawfulness of an agreement
between a transport company and the trade union for that industry.
The agreement allegedly provided for payment from the transport
company to the union. In return, the union would instigate safety
complaints about the operations of competitors of the transport
company. Both investigations are ongoing and illustrate the
aggressive investigative posture that the Australian Federal
Government and its agencies are taking toward union misconduct.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.