Benefits and executive compensation

Most Large Employers Will Make Changes to Their Health Care Plans, Study Finds

A survey report (pdf) of 72 large employers finds that most anticipate an increase in health health insurance2.JPGcare costs in 2011 as a result of the Patient Protection and Affordable Care Act ("Affordable Care Act"), and are making changes to their plan designs in order to comply with the new health care law and its regulations. The Affordable Care Act will require health care plans to comply with a number of new standards as of September 23, 2010. To learn more about the survey report and how employers will ensure compliance with the Affordable Care Act and manage costs, please continue reading at Littler's Healthcare Employment Counsel blog.

 

Photo credit:  MBPHOTO, INC.

Financial Reform Act Contains Many Executive Compensation Provisions

Money Bag II.jpgOn July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173) (the "Act"), which is intended "to promote the financial stability of the United States by improving accountability and transparency in the financial system" and "to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes." While the Act is directed at the financial system, it incorporates broad executive compensation provisions that apply beyond the financial services industry. Publicly-traded companies need to understand and prepare for these new requirements. Included in Subtitle E of Title IX - Accountability and Executive Compensation ("Subtitle E") - of the Act are laws generally related to executive compensation practices of publicly-traded companies and certain financial institutions. The laws enacted under Subtitle E amend the Securities Act of 1933 and Securities Exchange Act of 1934 (the "Exchange Act"), and also direct the Securities Exchange Commission (SEC) and certain other Federal Regulators to adopt rules consistent with the new law. Continue reading about this development in Littler's ASAP: Executive Compensation and the Wall Street Reform and Consumer Protection Act by Nick Linn, Ilyse Schuman, and Ellen Sueda

New Rules on Paying Social Security Dues in Cross-Border Employment

The new Regulation No. 883/2004 on coordination of social security systems entered into force on 1 May 2010 and superseded the previous one - Regulation No. 1408/71, which has governed this matter for nearly 40 years. The new Regulation changes little but does introduce certain new details. The main rule remains the same: the insured person is subject to social security legislation of the Member State in which he or she pursues a gainful activity. One of the details changed is that when an employer sends an employee to another Member State, that employee will remain subject to the legislation of the first Member State for up to 24 months. In the previous Regulation that period was 12 months, and it could be extended by a further 12 months. Another change is that a person who is normally employed in two or more Member States will be subject to the legislation of their Member State of residence if they pursue a substantial part of their activity in that Member State. If they do not pursue a substantial part of their activities in their Member State of residence, they are subject to the legislation of the Member State in whose territory the registered office or the place of business of their employer is located. Before, to be subject to the legislation of the Member State of residence, it was sufficient to pursue any part of work in that Member State.

Golden Parachutes

The problem of "golden parachutes" is very interesting and complicated, especially in connection with labour relations in Russia. At the time of the world financial crisis this problem becomes more crucial than ever before. Due to the lack of financial resources in the market, employers rarely conclude agreements with the clause of golden parachutes and even if they do so the amount of the parachutes is significantly less than before the crisis.

Golden parachutes are also of great interest now because some large judicial trials concerning these provisions occurred recently. Continue reading ALRUD's Golden Parachutes in Russia (pdf) for a discussion of these judicial trials along with a description of the main provisions of golden parachutes.

ALRUD's discussion first appeared in Executive View's "Labour & Employment 2009 Digital Guide."

New UK Coalition Government - Prospects for Employment Law

UK Parliament II.jpgThe outcome of the UK's general election on May 6 was a Conservative/Liberal Democrat coalition government headed by the Conservative Party leader David Cameron (prime minister) and Liberal Democrat leader Nick Clegg (deputy prime minister).

Coalitions are unusual in the UK - the last one being during the Second World War - so there is a real sense of the country entering uncharted political waters. It is too soon to be certain what the new administration's priorities will be in terms of potential employment reforms. However, a few clues can be gleaned from the Coalition's programme for government, outlined below.

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Final Productivity Commission Report Released

On 4 January 2010, the Productivity Commission's Final Report into Director and Executive Remuneration (Report) was released by the Federal Government.

The Report contains 17 recommendations covering areas such as remuneration principles and disclosures, shareholder engagement and conflicts of interest. In the main, these recommendations reflect those contained in the draft report, including the draft recommendations to restrict remuneration report disclosures to key management personnel and to simplify the remuneration report, and the draft recommendation that cessation of employment be removed as a taxing point for deferred equity subject to forfeiture.

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Private Use of a Mobile Phone - Still No Flat-Rate Assessment

The benefit a worker derives from his/her private use of a company phone constitutes a remuneration benefit and is subject to social security (NOSS) contributions and tax.

In practice, the question which arises is how can a monetary value be assigned to this benefit?

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Seniority Bonus: The Tax Administration Follows the NSSO

The tax administration has changed its position on the seniority bonus (Circular of 25 February 2010) having been "inspired" by the instructions of the NSSO (National Social Security Office) (see our Newsflash  (pdf) of 12 March 2009). The changes concern the following elements.

The alternative calculation method to determine the maximum amount of the seniority bonus exempted from social security contributions, as provided by the NSSO, is now also accepted by the tax administration. This means that the seniority premiums awarded from 1 January 2009, are also considered as exempted social advantages, when they are calculated on the average gross amount of a monthly salary in the company.

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Tags: Bonus

Interruption Benefits - Eligibility Conditions Modified

In the Belgian Official Gazette of this 1 March, a Royal Decree was published that modifies the conditions that must be met in order to receive interruption benefits in case of time credit.

A first modification concerns the employees who suspend their work entirely or who switch to half-time employment in the framework of the general time credit regime. In order to be entitled to interruption benefits, these employees must from now on have a seniority of at least two years with their employer and this at the moment they notify in writing their intention to take time credit. 

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Compensation Trend: Semiannual Bonuses

Many U.S. companies, particularly those in the retail and high-tech industries, are replacing their annual incentive structure with semiannual bonuses, The Wall Street Journal reports.  Changing to a semiannual bonus structure is intended to help retain key employees, decrease turnover, and increase morale as the economic climate has led some companies to cancel 401(k) contributions, freeze pay or cut salaries.

Those who argue against the wisdom of semiannual bonuses contend that under this structure employees are rewarded for short-term achievements that might not produce long-term results.  However, business leaders who have instituted semiannual bonuses argue that shortened performance periods allow them to set more realistic goals for their employees.