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Archives for February 2014

27 February 2014: Employee Contracts in Hungary – Q & A

27 February, 2014 by John Tinsley Leave a Comment

Compandben’s International Employment Services –

Employment Service Partner in Hungary –

Hungary flag

 

Here follows a brief question and answer session on some aspects of employment contracts in Hungary.

 

 

Q 1. Suppose there is a contract for 12 months and after 5 months the Employer wants to TERMINATE it ?

A1. You can terminate the 1 year contract say 5 months based on an agreement with the employee or during the 3 months probation period both parties can terminate the contract or based on an extraordinary termination of the contract. If the employer terminates the contract based on other aspects the employer has to pay for the 7 months that are left the average salary of the employee.

 

Q 2. How often can one EXTEND a fixed term contract ?

A2. With an agreement with the employee you can expend the validation of the temporary employment contract as many times as you would like to. But if the employee will work only 1 day after the deadline of the fixed period and the validation of the employment contract will be not expended the contract will became permanent.

 

Q 3. If the employee is on a “permanent contract” how long is the NOTICE period ?

A3. Depends on the time you spend in employment at the company. The minimum is 30 days.

 

Q 4. Can one pay in EUROs ?

A4 . No, the salary has to be paid in HUF. But it can be denominated in Euros – in fact a lot of employees insist on this.

 

Contact Compandben or visit Compandben Main Website – Hungary Employment Services for more information.

John Tinsley

Filed Under: all, Employment Services (PEO) Tagged With: currency, Employee contract, employee termination, euro, extension, HUF, Hungary, international employment, notice period, Partner Company

25 February 2014: New Dismissal Rules in Belgium

25 February, 2014 by John Tinsley Leave a Comment

Compandben’s International Employment Services –

Belgium Employment Service Provider Partner –

Belgium flag

 

 

New Dismissal Rules in Belgium apply as of 1 January 2014:
1.2.3 The notice periods in the event the employer gives notice

 

The aim of the legislator was to foresee relatively short notice terms in the early stages of employment, to clear the barrier to recruitment and in that way to facilitate better mobility on the labour market. Subsequently, the duration of the notice period progressively increases as the seniority ascends. With this progressivity, the legislator wants to offer the employee job security. The building-up of the notice period entitlement however slows down as of 20 years of seniority.

The following table gives an overview of the notice periods which apply in the event it is the employer who gives notice:

Seniority                                                            Notice period

less than 3 months                                            2 weeks

between 3 months and < 6 months                4 weeks

between 6 months and < 9 months                6 weeks

between 9 months and < 12 months             7 weeks

between 12 months and < 15 months           8 weeks

between 15 months and < 18 months           9 weeks

between 18 months and < 21 months         10 weeks

between 21 months and < 24 months         11 weeks

between 2 years and < 3 years                      12 weeks

between 3 years and < 4 years                      13 weeks

 

Contact Compandben or visit Compandben Main Website – Belgium Employment Services for more information.

John Tinsley

Filed Under: all, Employment Services (PEO) Tagged With: Belgium, dismissal, international employment, legislation, mobility, notice period, Partner Company, security, seniority

19 February 2014: Some Advice about the Dismissal Process in Spain

19 February, 2014 by John Tinsley 2 Comments

Compandben’s International Employment Services –

Spain Service Provider Partner –

Spain flag
Here is some advice about the dismissal process in Spain. NOTE we are not employment lawyers: this is our understanding of the processes but you are encouraged to use a lawyer if you ever actually fire anyone in Spain. We can recommend to you a cost effective labour lawyer if you wish.

 

I. Regular dismissal

This is the most straightforward way to terminate an employment relationship in Spain and does not need to be supported by specific facts or details. The steps to follow would be:

1.- Drafting of a dismissal letter that must be handed over to the employee. Let’s assume that the employee has not committed any act of grave misconduct. This means that the dismissal may be regarded as an unfair dismissal. The employee will then be entitled to a severance payment equivalent to 45 days payment per year of service until February 11th 2012 and 33 days per year of service for each full year of service from February 12th 2012.

The dismissal can be formally justified by for instance the employee’s low productivity, or – an excuse sometimes used – “differences in opinion on policies and strategic direction”. though you can verbally explain to the employee that this is a formality. Alternatively, the dismissal could officially be based on economic reasons, which is probably more likely to be the real scenario. However, we do not recommend using this justifying reason because it is easy for the employee to challenge and likely that the dismissal is declared unfair in a Spanish Labour Court. Note that dismissals based on economic grounds convey a lower severance payment (20 days / year) than normal dismissals (33 days / year), as explained in point II below. This is why the former are normally challenged by the affected employees in Court.

2.- Calculate the severance and termination payments and write up a waiver document. Regarding the termination payment, this should consist of
the monthly salary till the actual termination date,

plus the accrued and unused holidays

and any other outstanding payments such as agreed notice period, accrued bonus, commissions, etc.

Our partners fees for preparing the documents 1 and 2 are 800€.

3.- Conciliation hearing: both parties should attend a conciliation hearing after the dismissal. This way the severance will be tax-free. The settlement and severance payments will be made after the conciliation hearing.

Our partners’ fees for attending the conciliation hearing are 600€. If you need the assistance of our Legal Department to prepare the power of attorney in favour of our partner firm in Spain the cost is 700€.

4.- Prepare and send a special certificate to the Spanish Employment Agency by electronic means with the contributions made by the company on behalf of the employee to the Spanish social security. This will enable the employee to have access to an unemployment pay from the government.

All documents need to be in Spanish, though our partners can provide English versions too for client review if requested.

 

II. Dismissal for economic or organizational reasons (redundancy)

The procedure to follow a redundancy dismissal is of great importance. In case it is not properly implemented, the dismissal might be declared unfair. The following provisions should be complied with:

(i) A dismissal letter must be served to the employee setting out the reasons in detail. According to Spanish law, the dismissal letter is the beginning of the dismissal procedure and the employee has to prepare his defence in view of the facts stated in the letter. This means that, after the letter is delivered to the employee, the employer cannot allege anything further before the labour court. For this reason, as much detail as possible needs to be provided in the letter. If we try to allege new facts before the labour court that were not stated in the initial letter, the labour judge could rule that the employee could not adequately prepare his defence, and so the dismissal is unfair.

Obviously, a detailed dismissal letter would be also essential to have a strong position within a potential negotiation with the employee.

(ii) Simultaneous to the written notice, the legal severance payment should be made available to the employee. In this sense, a bank check would need to be prepared for the amount of 20 days’ salary per year of service up to a maximum of 12 months salary.

(iii) A notice period of 15 days must be granted to the employee, calculated from the date of the delivery of the notice of the termination of the employment contract, unless the employment contract states a longer notice period. This notice period can be substituted by payment to the employee of salary in lieu of notice, so the employment could be terminated at the same time that the letter is delivered.

Note that the company must receive and keep a copy of the letter signed by the employee in order to prove that it has been delivered. If the employee refuses to sign a copy, two witnesses should sign the letter stating that it was offered to him and this should also be sent to the employees by certified mail.

If the employee does not agree with the decision, he can file a claim before the Labour Court, which will decide whether the dismissal is fair (if the alleged reasons are proved and valid), unfair (if there are no valid and proved reasons) or null (because of discrimination or violation of fundamental rights or due to carrying out the dismissal without following the proper procedure mentioned above).

In the case of an unfair dismissal, the employer will be required to pay a severance equivalent to 45 days per year of service up to February 11th 2012 and 33 days salary per full year of service after February 12th 2012.

If the dismissal is declared null and void, the employee must be reinstated.

Compandben’s Spanish partners can handle all the steps involved in a regular dismissal. However, if you decide to go for the redundancy alternative, you will need to hire the services of a specialised law firm, due to the high chance that the employee challenges the dismissal in Court (we can recommend one if requested).

Our advice is to prepare the calculations of both regular dismissal severance payments and redundancy costs, and compare the figures. If the differences between both alternatives are significant, then it could be taken into consideration going for the redundancy and hiring the services of a law firm rather than going for regular dismissal.

Let us know if you have further queries about these processes.

Contact Compandben or visit Compandben Main Website – Spain Employment Services for more information.

John Tinsley

Filed Under: all, Employment Services (PEO) Tagged With: employee termination, employment services, fees, lawyer, Partner Company, Redundancy, Regular Dismissal, Spain

12 February 2014: Social Charges in Switzerland

12 February, 2014 by John Tinsley Leave a Comment

Compandben’s International Employment Services –

Switzerland Service Provider Partner –

Switzerland flag

 

The following is an example breakdown of Social Charges etc. related to a Gross Salary.

 

Breakdown                                                                                        Employer’s Costs
Gross Salary                                                                                    6 500.00SFr.
+ 5.15% Old Age Insurance (AHV)                                                  334.75SFr.
+ 2.50% Administrational costs AHV                                                16.74SFr.
+ 1.10% Loss of job insurance (ALV)                                               71.50SFr.
+ 0.50% Additional Loss of job insurance (ALV2)
+ 1.29% Mandatory accident insurance (UVG)                               83.85SFr.
+ 2.00% Family allocation fund (FAK)                                            130.00SFr.
+ 1.56% KTG                                                                                       101.40SFr.
+ Mandatory pension fund (BVG) Estimate                                                200.00SFr.
+ 0.30% Collective Labour Agreement (GAV)                                 19.50SFr.
Total costs employer                                                                   7 457.74SFr.

Deuxieme Pilier
The pension (Deuxieme Pilier) is difficult to calculate perfectly because it can vary with age, occupation, and with the vagaries of insurance companies. We have used the mandatory maximum salary of CHF59700 X 8% divided 50/50 between employer and employee.
But a lot of employers base the 2me Pilier on the whole base salary and frequently the payment is 12% split 4% employee 8% Employer .

Employment Services
IF A CLIENT WANTS Compandben’s local partner to Employ staff on their behalf the cost is 11.5% of salary.

Contact Compandben or visit Compandben Main Website – Switzerland Employment Services for more information.

John Tinsley

Filed Under: all, Employment Services (PEO) Tagged With: deuxieme pilier, employment services, insurance, international employment, international payroll, Partner Company, pension, Social Security, Switzerland, Tax

5 February 2014: International Employment Expansion

5 February, 2014 by John Tinsley Leave a Comment

Compandben’s International Employment Services –

Employment Methods –

 

A note written by Compandben’s CEO, John Tinsley

John Tinsley CEO

John Tinsley CEO

international employment servicesThese comments have not been submitted to a lawyer and they may not apply in every country. They represent my understanding of the law, regulations and practices worldwide.

If you have found an employee you want to employ or located a business need outside your “home” country there are several ways in which you can proceed.

 

 

1. Branch or Subsidiary Formation

Your company can form a Branch or Subsidiary in the country concerned. It is usually recommended to form a subsidiary rather than a branch because this limits legal liability to the limited company in the country concerned. If you form a branch the head office is technically fully liable.

ADVANTAGES

With a branch or subsidiary you can carry out any form of business, employ staff, take out local contracts with suppliers- for instance for company cars, offices, cell phones. Your employee can take decisions, sign deals, offer prices and generally the unit can operate as a profit centre. The employee will get an employment contract from your company and can be put on the e mail listings, can work full time for you, is excluded from working for other firms, can be asked to sign non competition clauses etc. Ongoing costs vary for each country but one could say that in Europe there is an average of €50 per employee per month for payroll administration but with a minimum charge of €150 per month (thus covering up to 3 employees).

DISADVANTAGES

It will normally cost between US$4000 -7000 for a local lawyer to set up a Branch. There are some bureaucratic hurdles including getting Apostilled copies of certificates of incorporation, and passports. In a lot of countries it is required that a local bank account be established which entails bank recommendations. The local branch or subsidiary is a legal taxable entity. It will be taxed on the profits. The finance department may not relish creating taxable entities elsewhere in the world, subject to tax rules with which they are not familiar. There is a need for quarterly or annual returns, and accounts have to be kept and filed with the local country authorities. In general I would not recommend a branch unless you are planning to expand the operation to 10 or more employees. In terms of employment the local branch is fully legally responsible for the actions of its employee(s) and must employ and terminate staff in line with employment legislation, which may be a lot different to their “home” location.

2. Registration as an Employer

This is the same as setting up a Representative Office. The idea is that the head office (or a branch in another country) is registered as a foreign employer with the local social security and for employment tax withholding.

ADVANTAGES

No legal or taxable entity is created. There are no accounts to keep. The cost is much lower -between US$250 (Germany for instance) to US$1500 (Italy where there are three registrations with three separate social security organisations). The employee will get an employment contract from your company and can be put on the e mail listings, can work full time for you, is excluded from working for other firms, can be asked to sign non competition clauses etc. This is the cheapest solution. Ongoing costs vary but one could say that in Europe there is an average of €50 per employee per month but with a minimum charge of €150 per month (thus covering up to 3 employees).

DISADVANTAGES

The employee cannot sign contracts, issue prices, credit terms etc without Head Office approval. (In fact you might see this as an advantage not a disadvantage!). Because there is no legal entity established your company cannot take out local contracts for company car, mobile phone, maintenance, local benefits and insurance etc. The Employee can have a mobile phone and your company would have to reimburse the costs. The tax authorities MAY claim that the operation is really a Permanent Establishment and should be subject to taxation like a branch. But in practice as long as employee income taxes are paid and social security is paid this is unlikely. In 10 years I have only seen this once – in Slovakia – and the company successfully said “no we are not a branch”. The comments above about having to employ and terminate staff in line with local laws apply in this case too but in this case the Head Office is legally liable.

3. Employment through a Third Party

This is sometimes referred to as PEO (Professional Employment Organisation). A local company will employ the employee on your behalf.

ADVANTAGES

The local company will be legally liable for the employee (although their contract will ensure that any final costs – for instance in a termination case – are paid by you the client). The local employer will be able to offer extra insurances and other benefits (although we tend to warn American clients in particular not to be in a rush to offer USA style benefits like private health coverage, 401k, private pension, life insurance as these are not required in the local labour market). If there are disputes involving the employee it is the local firm’s job to manage this -even if you end up paying the bill.
This solution is the one favoured by the “social media” companies and we have a client that employs 400 employees in UK but employs its entire staff outside UK using this “PEO” method, including 27 in USA.

DISADVANTAGES

The authorities may still say that your company is really an employer and that there is a permanent establishment – but in practice your firm is less liable to this approach. The EMPLOYEE may be a little disappointed at getting a job offer from a company he has never heard of rather than your company. But he will be on your company’s e mails, will have your company’s business card etc. This solution will on an ongoing basis be the most costly. Tariffs vary from …say 10% of salary and social charges in Portugal to 20% in Japan. There are sometimes minimum charges inserted.

4. Using a Consultant or Contractor

Your firm can decide to have the employee work as a contractor or consultant. The employee is paid on presentation of invoice. The invoice will normally cover the employee’s salary and the employee and employer social charges payable.

ADVANTAGES

Your firm has technically no legal liability. The consultant is liable for his own taxes and social security charges .

DISADVANTAGE

In some countries individuals are very uncomfortable with this approach. They worry that their social security coverage will be lessened, and that their health care and state pensions may suffer. British employees are usually quite relaxed about such arrangements but Italians and French are less keen. There is also the potential problem that may arise if the consultant does NOT fully declare his revenues and pay his taxes and social charges and this is found out by the authorities in the country. They will attempt to get the funds from the consultant – but they may well also decide that he “was really an employee” and therefore will deem you the company deemed to be his employer for back taxes and social security – so you will end up paying twice.
If you do follow this route you should NOT put the employee on telephone lists and e mail lists as these will be used as evidence that “he was really an employee”. And most important, the consultancy contract must say somewhere that the employee may work for other companies at the same time as working for your firm. You cannot say that he must devote himself 100% to your firm because he will then be getting treated as an employee.

 

Contact Compandben or visit Compandben Main Website – International Employment Services for more information.

John Tinsley

Filed Under: all, Employment Services (PEO) Tagged With: 401k, Branch, Consultancy, Contractor, international employment, international payroll, legal entity, Social Security, Subsidiary, Tax, Third Party

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