Employment laws in every country have anomalies that can catch employers off-guard because they do not seem to make sense—until you look under the surface. Three examples of this are from Italy, the Netherlands, and Australia, involving rules governing voluntary employment resignations in Italy to vacation leave accruals in the Netherlands to surprising redundancy pay entitlements in Australia. Here is a quick look at some fascinating features of these countries’ laws.
In Italy, employees who want to resign from their private-sector jobs must do so via a Ministry of Labor and Social Policy online portal using a unique identifier–otherwise, the resignations might not be legally recognized. Why all the bureaucracy around a resignation? This requirement was passed to address the problem of unscrupulous employers making employment candidates sign undated resignation letters to be kept on file along with their employment contracts. Having a pre-signed letter on file would give an employer the power to easily and cheaply discharge an employee at any time. This practice especially impacted women, who would sometimes be involuntarily “resigned” when they became pregnant. The resignation law originally became effective in 2007, but it was considered too cumbersome to implement and it has morphed over the years from chronologically numbered paper forms that expired after fifteen days, if not filed, to a new secure online process in 2016. Some courts have suggested that a resignation that fails to meet these requirements might still be considered valid, but only because the employee demonstrates his or her will to resign by his or her behavior, such as by taking leave without permission and not responding to the employer, and not just on the say-so of the employer..
In the Netherlands, unused statutory vacation days expire six months after their accrual year, but extra vacation days voluntarily given by employers do not expire for five years. Why should employees have more rights to days provided in excess of the statute? In the Netherlands, full-time employees are entitled to at least twenty days (four weeks) of paid vacation. Nevertheless, many employers give extra days, so for example, a total of twenty-six days is very common. When the law changed to limit year-over-year accrual of vacation days, which used to be for up to five years (in order to force employers to make their employees take vacation when first accrued), the lawmakers forgot to address what should happen to any nonstatutory days. Employers are still able to set limits on nonstatutory vacation day accruals in their employment contracts.
In Australia, employees with nine years of service are entitled to sixteen weeks of redundancy pay upon employment termination, but those with ten or more years of service are entitled to only twelve weeks. While this does not seem to make sense, it is due to the Redundancy Test Case decision handed down by the Australian Industrial Relations Commission (AIRC) on March 26, 2004. The AIRC reasoned that the drop of redundancy pay at ten years was warranted, as this is when departing employees can also be paid out their unused long service leave, giving them an extra cushion upon termination of employment. Some states now require employers to pay out accrued pro rata long service leave at a point in time that is less than ten years or even allow employees to use the long service leave before ten years (e.g., Victoria at seven years), so this seems to have defeated the original reasoning for the drop in redundancy pay at the ten-year threshold.
U.S. multinational employers with employees outside of the United States may need to be especially cognizant that there may be odd employment law entitlements or requirements in other countries that are not especially intuitive. Employers may want to make sure to check when they are planning any actions in order to stay nimble and compliant with respect to ever-changing employment laws and their effects.
Ogletree Deakins’ Cross-Border Practice Group will continue to monitor and report on developments affecting employers with global operations and will post updates on the firm’s Cross-Border blog as new information becomes available. Important information for employers is also available via the firm’s webinar and podcast programs.