Since its declaration of independence in 1991, which precipitated the dissolution of Yugoslavia, Croatia has had a difficult path transitioning to a market economy.  Now, Croatia is set to become the newest member of the European Union in July 2013, provided its accession treaty is ratified by the other 27 member countries.  As part of Yugoslavia prior to 1991, about three-quarters of Croatia’s labor force was employed in the public sector, largely employed by state-controlled enterprises.  Private sector employment accounted for only about thirteen percent of the working population in 1990.  Although public sector employers employ fewer Croatians today, the number is still high, and Croatia still struggles with rigid and uncompetitive regulations and the cost of a very generous social welfare system.   
 
Croatia is a unitary democratic parliamentary republic of approximately 4.3 million people.  Despite the challenges inherent in transitioning such a high number of employees to private-sector employment, Croatia has a highly-educated and skilled workforce and occupies a strategic position within central Europe, bordering the Adriatic Sea, as well as the countries of Hungary, Serbia, Bosnia and Herzegovina, Montenegro, and Slovenia.  Although many young, educated Croatians left Croatia to seek employment elsewhere in past years, the economic slump in Europe has brought many skilled Croatians back to the country.  Its capital is Zagreb, and its currency is the Kuna. 

The Croatian Labor Act

Employment in Croatia is governed by the Croatian Labor Act, the Constitution, collective bargaining agreements and individual employment agreements, as well as international conventions and treaties.  The Labor Act, which is the main source for labor law in Croatia, regulates leaves, wages, strikes, and prohibits discrimination, among other subjects.

The Employment Contract

Under Croatian law, all employment relationships are governed by contract, which must be in writing.  The contract may specify an indefinite term, which is common, or a definite term, which is only permitted in limited circumstances. Each contract must include provisions enumerating the parties to the contract, working hours, periods of annual leave, duration of the contract, amount of salary and any salary supplements, and pay and notice periods.

Although the employee and employer may negotiate certain terms of the employment agreement, many provisions are mandatory.  Some of the key mandatory provisions are summed up here:

• In general, the work week may not exceed 40 hours, and overtime may be worked only under special circumstances, and then only up to eight additional hours per week; 
• Minors age 15-18 are not permitted to work overtime (no one under age 15 may be employed);
• Employees who work in “harmful” occupations may work less than 40 hours per week pursuant to law; 
• Women are generally not permitted to perform night work, and may not work underground, under water, or in very physically demanding jobs;
• Wages must be paid at regular intervals, but not less than once per month;
• Employees are entitled to four weeks’ vacation each year;
• Pregnant women must take leave beginning 28 days prior to the expected birth of her child, and maternity leave may last up to 6 months, although the leave must last for a minimum of 42 days following the birth of a child.  Fathers are also entitled to parental leave;
• Employees who work six or more hours per day are entitled to at least one 30-minute break;
• Employers with at least 20 employees must permit its employees to participate in decisions that affect their “economic and social rights and interests.”

Termination

An individual work contract may be terminated by the employer only for “legitimate” reasons, and pursuant to the notice period set out in the employment contract.  Legitimate reasons include employee misconduct, employee inability to continue performing his or her job duties, or a change in technology, organizational structure, or economic reasons such that the work need no longer be performed.

Employers who seek to discharge 20 or more employees at one time must present a “redundancy plan” within 90 days of the planned action, and must work with the regional employment council and workers’ council to design and implement the plan.

The Croatian Constitution and Gender Equality Act

Under Article 4 of the Constitution, and the 2003 and 2008 Gender Equality Act, discrimination in employment is expressly forbidden.  The Constitution protects citizens from discrimination based on their race, color, gender, religion, and political beliefs.  The Gender Equality Act defines sexual harassment, and makes it illegal to engage in sexual harassment in the workplace, or to discriminate based on an employee’s gender, marital status, family status or sexual orientation.  Any alleged violations of the Gender Equality Act may be brought before the Ombudsperson for Gender Equality or through the traditional court system.  Despite these protections, sexual harassment and discrimination against women in the workplace is not uncommon.  Further, although the war following the breakup of Yugoslavia ended many years ago, there is a great deal of ethnic tension within the workplace between and among ethnic Croatians and the almost 30 different ethnic minorities living in Croatia.  In particular, the Roma and Croatian Serbs complain about rampant discrimination, harassment and tension in the workplace.  Any would-be employer in Croatia will want to ensure that its employment policies comport with Croatian law and that there are mechanisms in place to adequately address workplace discrimination and harassment.

This is the sixth article in a series about Central and East European employment law issues.

Since 1990, Poland has been steadily transitioning to a liberalized economy, and although progress has been rocky at times, Poland stands out as a bright spot among its fellow transitional economies.  Poland still struggles with rigid labor and employment laws, low-level corruption, and creaky infrastructure, but boasts an educated workforce, and according to the World Bank, ranks 62 out of 183 economies for ease of doing business (a slight decrease from 2011).  As of the post date of this entry, Poland is in the midst of co-hosting the Euro 2012 competition (for those of you who may be scratching your heads – the Euro 2012 is a showcase of the world’s most popular sport – the “beautiful game” known as football the world over, and soccer to most Americans), which to date has gone off fairly smoothly, and has served to introduce many to the beauty of Poland and its capability to host a major international event.   

Background

Poland is a democracy, with its current constitution in place since 1997.  The head of government is the president, who serves a 5-year term, and a prime minister.    There is a bicameral parliament, with a lower house, the Sejm, consisting of 460 members, and an upper house of 100 members, the Senat.  The Polish economy has continued to remain fairly strong during the global recession, and as of early 2012, had not entered recession.  Although many Polish citizens took advantage of their European citizenship to see work elsewhere, a number of highly-educated, English-speaking Poles have returned to Poland in the last couple of years as jobs in western Europe have dried up and those economies struggle with stagnant growth.  Tourism, banking, and energy are all important  industries in Poland, and Poland exports textiles, machines, and chemicals, among other products.  The zloty is the Polish unit of currency, and as of the date of this post, one Euro was roughly equal to 4.27 zloty and one dollar equal to approximately 3.40 zloty.    

The Labour Code

The Labour Code, along with secondary legislation and collective bargaining agreements, are the primary sources of labor and employment law.  The Labour Code was enacted in 1974, but has been amended numerous times.  Employers doing business in Poland are advised to review relevant Labour Code provisions on a regular basis.  Perhaps surprisingly, given Poland’s history with organized labor, only about 20% of all Polish employees are covered by some type of collective bargaining agreement.

The employment contract

As in most European countries, the employment contract establishes the essential terms of the employment relationship.  Under the Labour Code, the employment contract must be in writing and must include the following information, at a minimum:

• The names of the parties to the contract;
• The date employment commences and contract execution date;
• The type of contract (e.g., fixed term, unlimited term, or contacts for specific tasks);
• Type of work to be performed;
• Location where work will be performed;
• Salary amount, how often wages are paid;
• Working hours (on a daily and weekly basis);
• Entitlement to holidays;
• Required notice period.

Employers should note that these terms are required to be in writing at the outset of the employment relationship, and seven days after the commencement of employment for additional terms.  

Termination of employment

Employment contracts may only be terminated based on the grounds enumerated in the Labour Code.  For an individual dismissal without notice, the employee may only be dismissed for (1) gross violation of job duties; (2) employee committing a crime which makes it impossible for him or her to continue with his or her job duties; or (3) employee loss of necessary license/authorizations, etc.  Under certain circumstances enumerated under the Labour Code, employees may be entitled to severance, and terminations in violation of the Labour Code may be appealed to the Labour Court.  Remedies include reinstatement or payment of damages

Non-competition agreements valid

Under the Labour Code, employees may be subjected to post-employment restrictions on employment provided they are paid a minimum salary for the duration of the on-competition period.  Although the contract must specify the period of the restriction, the period is not limited by law, but cannot be unreasonable. 

Equal Treatment under the Labour Code

The Labour Code requires equal treatment of all employees, with respect to commencement and termination of employment, pay and work-related benefits, promotions, and training.  Employees are protected on the basis of gender, age, disability, race, religion or belief, nationality and ethnic origin, political views, trade union membership, sexual orientation, and employment contract status (i.e., whether unlimited, fixed term or specific task).  The burden to prove there was no discrimination rests with the employer, and sexual harassment can lead to criminal liability, including fines and/or imprisonment. 

Although this is only a brief overview, it is important to note that trade unions, collective bargaining, and employee work councils are also permitted under the Labour Code, and foreign employers doing business in Poland should take care to review all potential contracts and agreements pertaining to its operations before taking any actions that may affect employee rights, or the terms and conditions of employment.

In the face of a growing economic crisis, a 23% unemployment rate and an unemployment rate of 50% affecting the youth, the Spanish Parliament recently passed drastic reforms relevant to Spanish labor law known as Royal Decree Law 3/2012 (“Spanish Labor Reforms”). The enactment of these reforms will make it easier and cheaper for employers to lay off workers, will provide incentives for employers to hire younger workers, and is expected to increase employer confidence.  This article will provide some basic information relevant to labor law in Spain and introduce some of the more critical provisions of the reform law.

Sources of Spanish Labor Law

The basic sources of labor law in Spain are the Constitution of 1978, treaties such as the International Labour Organization Agreements No. 87 (Agreement on Trade Union Freedom and Protection of the Right to Form Trade Unions of 1948) and No. 98 (Agreement on the Right to Form Trade Unions and Right to Collective Bargaining of 1949), the 1995 Labor Act, Parliament Acts, Royal Decrees, the government regulations that implement the 1995 Labor Acts, collective bargaining agreements, individual labor contracts and case law.

General Requirements of Employment Contracts

Although not required in all situations, it is recommended that employers utilize written employment contracts with their employees. The Spanish government has created model form contracts; however, additional clauses may be added.  At a minimum, all employment contracts should include the name of the employer and employee, the domicile and work location of the employer, the date of commencement of employment, a summary of the job position, amount of base salary and any additional compensation, work hours and schedule, the amount of vacation time permitted, and if applicable, prior notice relevant to termination.

The duration of an employment contract is presumed to be entered into for an indefinite period of time unless the contract sets forth a specific term of employment.  Employers should review current collective bargaining agreements prior to executing definite term contracts in order to ensure that the definite term contracts are in compliance with such agreements.

Employers should note that pursuant to the Spanish Labor Reforms, employers may now deviate from the provisions of a collective bargaining agreement for certain economic, technical, organizational or production reasons.

Contract Termination and New Rules Applicable to Severance Payments

The Labor Act provides a list of various reasons that an employment relationship can be terminated, including but not limited to: mutual agreement of the employer and employee;  reasons set forth in the contract to the extent permitted by law; disciplinary reasons; constructive dismissals (for economic reasons, technical reasons, organizational reasons, and production reasons); resignations and death; or disability of the employee.  Collective bargaining agreements typically set forth in detail the various permissible grounds for terminating employment and required procedures to be followed by the employer.

Prior to the Spanish Labor Reforms, the Labor Act required, under certain circumstances such as unjustified dismissals, that employers make severance payments to the terminated employee computed on the basis of 45 days’ gross salary per year of employment with a maximum of 42 months’ salary. The reform law reduces the required severance payments to 33 days per year of employment and caps payments at a maximum of 24 months.  Additionally, if an employer can demonstrate three consecutive quarters of losses, the employer will now only be required to pay 20 days of severance per year of employment.

Additionally the Spanish Labor Reforms have eliminated the need to obtain official authorization prior to proceeding with collective dismissals and, as a result, the reasons for and procedures applicable to the dismissals are monitored exclusively by the labor courts.

Leave Entitlement and New Rules Applicable to Paternity Leave

Leaves of absences pursuant to Spanish law include short-term paid leaves of absences to which employees are exceeding their vacation and holiday time. Paid leaves of absences are typically governed by the employment contracts or collective bargaining agreements. Types of paid leave include, but are not limited to: leave for marriage (a minimum of fifteen days); maternity or adoptions (sixteen weeks for a single child); paternity (two days); leave for serious illness of a relative (two-to-four days depending upon the circumstances); and leave to perform public duties.  The time permitted depends on the purpose of the leave. Pursuant to the recent reforms, an employee seeking to take paternity leave must give fifteen days notice prior to commencing leave and specify a start and end date for the leave.

New Incentives Created by the Spanish Labor Reforms for Employers to Hire More Employees

The Spanish Labor Reforms create various incentives for employers to employ more staff, including  providing  tax incentives to employers with fewer than 50 employees and providing a reduction to employer’s social security payments for hiring employees 45 years and over, women in sectors which traditionally employ few women and individuals under the age of 30.

South Africa, a country with over 50 million people, has the largest economy in Africa.  Among its major sources of business are tourism, agriculture and mineral resources.  Many U. S. and multi-national companies have locations in South Africa.  This article will provide some basic information about employment law in South Africa for companies who already employ workers in South Africa or who are considering hiring employees in that country.

The Basic Conditions of Employment Act, 1997 (“the Act”) is South Africa’s current employment law governing an employer’s duties and obligations to most workers in the country.  This law applies to all employees and employers except members of the National Defence Force, National Intelligence Agency, South African Secret Service and unpaid volunteers working for an organization with a charitable purpose.  The basic conditions of employment as set forth in the Act form part of the contract of employment with each covered employee.  However, some of the employment conditions enumerated in the Act may be revised by individual or collective agreement.

Employment contracts

In South Africa, employment agreements must be in writing.  The employer is required to provide workers the following information in writing when employment begins:  the employer’s full name and address; the employee’s name and occupation or a brief description of the work; the various locations of work; date of employment; ordinary hours of work and days of work; wage or the rate and method of calculating compensation; rate for overtime work; any other cash payments; any payment in kind and the value of such payment; frequency of remuneration; any deductions; leave entitlement; period of notice or period of the employment agreement; description of any council or sectoral determination which covers the employer’s business; period of employment with a previous employer that counts towards the period of employment; and a list of any other documents that form part of the contract, indicating a place where a copy of each may be obtained.

Affirmative action requirements

South Africa’s Employment Equity Act requires employers with more than 50 employees, as well employers in certain other categories, to develop employment equity plans.  The purpose of these plans is for employers to show reasonable progress in the workforce pertaining to certain “designated groups”, defined by the Act as “black people” and “women and people with disabilities”, and to identify barriers adversely affecting individuals who are members of these “designated groups”.

Regulation of working time

South Africa’s laws regulate working time for both ordinary hours of work and overtime.  This section of the Act, however, does not pertain to senior management employees, employees engaged as sales staff who travel and employees who work fewer than 24 hours a month.  For ordinary hours of work, employers may not require or permit an employee to work more than 45 hours in any week; nine hours in any day if an employee works for five days or less in a week; or eight hours in any day if an employee works on more than five days in a week.  An employer may not require or permit an employee to work overtime except by an agreement, or require permit an employee to work more than ten hours’ overtime a week.  An agreement may not require or permit an employee to work more than twelve hours on any day.  However, a collective agreement may increase overtime to fifteen hours per week for up to two months in any period of up to twelve months.  Overtime must be paid at 1.5 times the employee’s normal wage or an employee may agree to receive time off.  The Act also provides rules for a compressed work week, averaging of hours of work, meal intervals, daily and weekly rest periods, pay for work on Sundays, night work and public holidays. 

Leave Entitlement

South Africa’s law on leave entitlement does not apply to employees working fewer than 24 hours a month for an employer, or to leave granted in excess of the leave entitlement under the statute.  For all other employees, the law guarantees annual leave (21 consecutive days’ annual leave or by agreement, one day for every seventeen days worked or one hour for every seventeen hours worked); sick leave (six weeks’ paid sick leave in a period of 36 months); maternity leave (four consecutive months’ maternity leave); and family responsibility leave (full-time employees are entitled to three days paid family responsibility leave per year, on request, when the employee’s child is born or sick, or in the event of death of the employee’s spouse or life partner, or the employee’s parent, adoptive parent, grandparent, child, adopted child, grandchild or sibling).

Collective Bargaining Agreements

A collective bargaining agreement negotiated by a bargaining council replaces or excludes the basic conditions of employment as set forth in the Act except for the following employer obligations:  a) the duty to arrange working time with regard to the health and safety and family responsibility of employees; b) protection afforded to employees who perform night work; c) annual leave entitlement of at least two weeks; d) maternity leave entitlement; e) sick leave entitlement; and f) the prohibition of child and forced labor.  The Minister of Labour may make a determination to vary or exclude a basic condition of employment upon application by an employer or employer organization.

Separation of Employment

The section of South Africa’s law governing termination of employment does not apply to an employee who works fewer than 24 hours in a month for an employer.  For all other employees, a contract of employment may be terminated on notice of not less than:  a) one week, if the employee has been employed for more than six months or less; b) two weeks, if the employee has been employed for more than six months but not more than one year; and c) four weeks, if the employee has been employed for one year or more, or if a farm worker or domestic worker has been employed for more than six months.  A collective agreement may shorten the four weeks’ notice period no less than two weeks, and notice must be given in writing, unless such notice is provided to an illiterate employee.  The fact that an employer has provided the notice of employment termination does not prevent the employee from challenging the fairness or lawfulness of the dismissal in terms of any applicable law.

Severance Pay

An employee dismissed for operational requirements or whose employment agreement contract is terminated is entitled to one week’s severance pay for every year of service under the terms and conditions of the Act.