Contingent workers

Extensive Changes to Italian Labour Law to Take Effect on July 18

By Valeria Morosini of Toffoletto De Luca Tamajo e Soci (the Italy member of Ius Laboris)

ItalyII.jpgA bill that will significantly reform the Italian labour market was approved last week and published into the official journal on July 3.

The reforms introduce a wide variety of changes to the employment rules from the hiring to the firing of employees. Reinstatement is no longer the only remedy for unfair dismissals; while it remains applicable in some cases, the judge can order the employer to pay capped compensation. In the case of redundancy, a new procedure is to be followed before the Labour Office whereby the parties must try to settle the dispute before giving notice of the dismissal. New rules will also apply before the court when the employee challenges the fairness of a dismissal.

Furthermore, new regulations dealing with flexible contracts have been introduced. These regulations include an increase to the social contribution rate due on fixed-term contracts as well as a stricter use of contracts with independent contractors, which can lead under specific circumstances, to their relabeling as open-ended employment contracts. It therefore will become very risky for companies to engage under these types of contracts.

On the positive side, it is now possible to enter into a first time fixed-term employment or agency contract with an employee for a period that does not exceed 12 months, without having to specify the reasons for the fixed term.

These reforms introduce considerable changes to the Italian labour market and will enter into force on July 18th.

Outsourcing Under the New Venezuelan Labor Law

The recent amendments to Venezuela's Organic Law of Labor and Workers (known as the "LOTTT," for its Spanish acronym) generally prohibit outsourcing. Specifically, the LOTTT, which became effective on May 7, 2012, prohibits contracting through a third party for services to be performed on a permanent basis and carried out within the beneficiary's premises, when the services are directly related to the beneficiary's production process, and the beneficiary's operations would be affected or disrupted without such services. Where a company is found to have "outsourced" a worker, the company and/or its representatives will be liable for severe sanctions, criminal penalties, orders of "reenganche" (reinstatement) and/or orders of appropriation.

For more information on the scope of the amendments and recommendations for companies to ensure compliance with the law, continue reading Littler's ASAP, Outsourcing Under the New Venezuelan Labor Law (click here for Spanish version), by Emma Neher.

Clarifying Contractor Management: Lessons from Biaida and Pilbara Infrastructure

By Kathryn Vanderloo and Harold Downes

The breadth of the primary duty under new harmonised WHS laws means that it more important than ever for businesses to understand their obligations to contractors and develop and implement sound contractor management strategies.

The recent decisions of the High Court of Australia in Biaida Poultry Pty v The Queen and the Supreme Court of Western Australia in Kirwin v The Pilbara Infrastructure Pty Ltd provide valuable guidance to businesses on what is expected to achieve compliance with work health and safety obligations (both pre- and post-harmonisation), particularly when engaging expert contractors.

This article provides an overview of the key principles that can be drawn from each case along with practical tips on what businesses should be doing with respect to contractor management. Choosing the correct contractor management strategy for each situation is important and doing so is likely to result in improved safety, legal and commercial outcomes.

Read the full post here.

Important Supreme Court Ruling on Employment Status

By Hannah Vertigen

CarWash.jpgThe UK's Supreme Court has held that for a contract to be deemed a 'sham', it is not necessary to show that the parties intended to deceive. It is enough that the reality of the situation is very different from the written terms and conditions.

The case, Autoclenz Ltd v Belcher and others [2011] UKSC 41 (PDF), concerned 20 car valeters. They claimed that they were 'workers' within the meaning of the National Minimum Wage Regulations 1999 and the Working Time Regulations 1998 and so entitled to the minimum wage and statutory paid annual leave.

The valeters had each signed a written contract describing them as "a self-employed independent contractor" with an express acknowledgement that they were not an employee. They paid their own tax (and indemnified Autoclenz for any liability to tax and/or national insurance) and were required to purchase their own overalls from Autoclenz.

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Equal Treatment of Contractors

According to the Act of 3 December 2010 "on implementation of certain European Union regulations regarding equal treatment," the prohibition of discrimination has been extended to contractors engaged on the basis of civil contracts. An entity engaging contractors on such basis must not differentiate their situation on the basis of sex, race, ethnic origin, nationality, religion, belief, philosophy of life, disability, age or sexual orientation. Contractors who establish facts from which it may be presumed that they have been treated unequally on the basis of one of the criteria listed above may claim compensation. In such a case the employer will have to prove that there has been no breach of the principle of equal treatment. Unlike in employment relations, the catalogue of protected categories is exhaustive.

Independent Contractors Count in Determining if Joint Health and Safety Committee Required

The Ontario Court of Appeal has ruled that independent contractors must be counted when determining if an employer has met the threshold number of employees required to establish a Joint Health and Safety Committee ("JHSC") under the Ontario Occupational Health and Safety Act ("OHSA").

In Ontario (Labour) v. United Independent Operators Limited (pdf), United Independent Operators Limited ("United") was charged with failing to ensure that a JHSC was established and maintained at its workplace. United operated as a load broker and retained independent truck drivers to perform work. It argued that it was not required to establish a JHSC because its independent contractors were not "regularly employed" and section 9 of the OHSA only required an employer to establish a JHSC where 20 or more employees are "regularly employed". The Court of Appeal rejected this argument and found that independent contractors are "regularly employed". The Court noted that making a distinction between traditional and non-traditional employment relationships would deprive workers in non-traditional relationships of the protections afforded by a JHSC and would be contrary to the purposes of the OHSA.

Does a Lack of Professional Knowledge Exclude the Possibility for a Worker to Have a Self-Employed Status?

The Employment Relations Act of 27 December 2006 establishes four criteria for assessing whether an employment relation is to be qualified as subordinate employment or independent self-employment. These criteria are:

  • the will of the parties as expressed in their agreement;
  • the freedom in the organization of working time;
  • the freedom in the organization of work;
  • the opportunity to exercise hierarchical control.

In its judgment of 6 December 2010, the Supreme Court made for the very first time a comprehensive interpretation of the 'freedom in the organization of work' criterion.

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Federal Government Changes Temporary Foreign Workers Program

The federal government has announced changes to the Temporary Foreign Workers Program to enhance the protection of temporary foreign workers. The program, which allows employers to hire foreign workers to deal with temporary labour shortages, will be changed to:

  • Require the government to conduct a more rigorous assessment of job offers;
  • Impose a two year hiring prohibition on employers who fail to meet the wage, working conditions, and occupation commitments they make to workers; and
  • Limit the length of a temporary foreign worker's employment to four years, after which he or she will be required to return home and re-qualify.

The changes, which do not apply to temporary foreign workers hired under NAFTA or other treaties, will take effect on April 1, 2011.

Restrictions on Temporary Work Discontinued

As of 24 January 2010 employers who conducted collective redundancies will not be restricted in the use of temporary work. However, it is still not allowed to use temporary work in the positions from which employees were dismissed for economic reasons. Also the company will be able to use a temporary worker for up to 18 months instead of 12 months.

Ontario Court of Appeal Clarifies "Dependent Contractor" Status

In McKee v. Reid's Heritage Homes Ltd., the Ontario Court of Appeal confirmed that the law recognizes "dependent contractor" as an intermediate status between employee and independent contractor and that dependent contractors are entitled to reasonable notice of termination.

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