Employment-based insurance

The Unemployment with Company Allowance Regime: The Most Recent Adjustments

One of the action points of the Di Rupo I government was to tighten access to the unemployment with company allowance regime. At the end of December 2011, the age and career conditions specified in the Royal Decree of 3 May 2007 were adjusted (cfr. our newsletter of 13 January 2012).

As a consequence, the regime of unemployment with company allowance as of 58 years for employees with professions involving heavy work was ended with effect as from 1 January 2015. This led to strong protests from the social partners, after which the competent Minister De Coninck announced he would take their comments into account. With the Royal Decree of 20 September 2012, the "old" regime has been restored. Therefore, it remains possible for employees with such professions, aged 58 years or older and a career of at least 35 years to benefit from the unemployment with company allowance regime, as was previously the case.

In addition, the Royal Decree of 20 September 2012 fixes the right of access to unemployment with company allowance as of 60 years or within the scope of a long career, enabling an employee who meets the age and career conditions to keep his/her right to unemployment with company allowance. In the event the age and career conditions have meanwhile become stricter, he/she will still be able to benefit from the unemployment with company allowance regime under the previously applicable, more favourable age and career conditions.

An employee who wishes to benefit from his/her acquired rights can ask the Director of the unemployment office to determine whether he/she meets the age and career conditions.

Action points

  • Examine the age and career conditions for unemployment with company allowance, even if there is no longer a collective bargaining agreement applicable at the end of the employment contract of the employee.
  • When dismissing employees with professions involving heavy work, keep in mind the fact that unemployment with company allowance remains possible.

Major EU-level Social Security Changes

By Sophie Maes of Claeys & Engels (the Belgium member of Ius Laboris)

AirplaneTakeoffII.jpgOn June 28, 2012 two changes to European Union rules on social security came into force and will have significant implications for national legal regimes. One specifically applies to airlines, whilst the other affects cross-border employment more generally.

Airline Crew Members

Until now, pilots and cabin crews have been treated as working in all the countries over which they flew or to which they travelled. Social security contributions were only payable in an individual's country of residence if he or she worked at least 25% in that country, which was relatively unusual. Otherwise, contributions were payable in the country in which the airline's registered office or place of business was located.

Changes to EU Regulation 883/2004, the measure which determines the country in which social security must be paid, will now require airlines to pay contributions for crew members in their "home base". This is the place where a shift generally starts and ends and where the employee can provide his or her own accommodation.

Simultaneous Employment in Different EU Countries

The second reform concerns the rules regarding the applicable national security regime for employees who work in two or more EU member states.

The rules have been changed to clarify the position of employees who are employed by two or more employers which have their registered office in different member states. Such employees will normally only be subjected to the social security regime of their country of residence if they work there at least 25% of the time. (Until now, this has only been the position for employees employed by one employer in different EU member states.)

If employees work less than 25% in their country of residence, they will be subjected to social security regime of the registered office or place of business of the employer which is not located in their country of residence. However, if an employee has two or more employers that are not located in the country of residence, the social security regime of the country of residence nonetheless will apply, even if the employee does not work in that country.

This change has important implications for companies entering into cross-border joint employment contracts and salary-split arrangements.

However, note that transitional measures apply for those employees whose arrangement was already in place before 28 June 2012.

When Must U.S. Companies Register with Ontario Workers' Comp Authorities?

In Ontario, workers' compensation is administered by the Workplace Safety and Insurance Board (WSIB), which is governed by the Workplace Safety and Insurance Act, 1997 (WSIA). Appeals from decisions of the WSIB are heard by the Workplace Safety and Insurance Appeals Tribunal (WSIAT).

In its recently published annual review of significant cases from 2011, the WSIAT highlighted Decision No. 382/10, 2011 ONWSIAT 707, which considered the issue of whether employers whose operations are based outside Ontario but whose employees occasionally work in Ontario are considered "employers" within the meaning of the WSIA such that they are required to register with the WSIB and remit premiums just like other employers in the province.

In the case concerned, the WSIAT affirmed a WSIB decision that an employer incorporated under the laws of Michigan and operating in Troy, Michigan was required to register with the WSIB and remit premiums, even though it had purchased workers' compensation insurance for its employees in compliance with Michigan law. One of the employer's workers resided in Ontario but regularly worked in Michigan. However, as part of his duties he also travelled to a number of manufacturing facilities, notably one in Ontario, which later led to his filing a WSIB claim for chemical exposure.

To learn more about the decision and its potential implications for employers, please continue reading at Heenan Blaikie's Workplace Wire blog.

Non-compete Agreement Concluded After the Severance Notification But Before the Effective End of the Employment Contract: Indemnity Exempt from Social Security Contributions

It was generally admitted that a non-compete indemnity was exempt from social security contributions only if, among other things, the non-compete agreement was concluded after the effective end of the employment contract.

The Supreme Court nuances this principle in a judgment of 19 March 2012. In this case, two agreements were concluded on the same day between an employee and his employer: on the one hand, a transactional agreement on the termination of the employment contract (after the severance notice), and on the other hand, a non-compete agreement. Parties also agreed that the employment contract would effectively end only on the second day after the conclusion of those agreements. In addition, the employment contract did not contain a non-compete clause.

The Supreme Court decided that even if paid by virtue of an agreement concluded after the severance notification, but before the effective end of the employment contract, the non-compete indemnity is not necessarily awarded because of the termination of the employment contract: it does not therefore constitute remuneration subject to social security contributions.

This ruling reduces the importance of the exact moment of the conclusion of a non-compete agreement concluded within the framework of the termination of an employment contract. In order for a non-compete indemnity to be exempted from social security contributions, such an agreement should not necessarily be concluded after the effective end of the employment contract. Note that the exemption from social security contributions always requires that the non-compete indemnity does not constitute, in reality, a veiled indemnity in lieu of notice.

Note that this judgment does not concern the validity conditions of the non-compete clause.

Dangerous International Employee Assignments: Littler Report Guides Employers Through the Issues

Man Walking Tightrope in Lightning StormThe current upheaval in Egypt and the rest of the Middle East serves as a reminder that overseas assignments can inherently be fraught with risk. The potential dangers of natural disasters, kidnapping, and terrorist attacks are wide-ranging, but the key legal, and practical, inquiries remain constant: to what extent did the employer have a legal or ethical obligation to prevent what occurred, and could the employer have prevented what occurred by implementing a thoughtful plan. 
A February 2011 Littler Report, "Managing the Global Workforce: A Legal and Practical Guide to Dangerous International Employee Assignments," examines the issues facing employers under U.S. law and in a sampling of other jurisdictions. This guide also outlines a series of practical steps that employers can and should take to mitigate the risks inherent in international assignments. While there may be no way to absolutely prevent incidents of this nature, there is no substitute for effectively planning for the contingencies that may arise in international assignments. To learn more, continue reading this Littler Report, written by Philip M. Berkowitz and Michael G. Congiu

Photo credit: Captura

Enhanced Employment Insurance Benefits End

Two temporary employment insurance enhancements, introduced by the federal government to provide increased benefits to unemployed workers and stimulate the economy during the recession, have ended. The first measure, contained in Bill C-10 (pdf), the Budget Implementation Act, S.C. 2009, c.2, increased the maximum duration of employment insurance benefits from 45 to 50 weeks in high unemployment regions. The second measure, contained in Bill C-50 (pdf), an Act to amend the Employment Insurance Act and to increase benefits, S.C. 2009, c.301, provided up to 20 additional weeks of benefits to long-tenured workers who had not previously collected employment insurance benefits. Both measures ended on September 11, 2010.

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.

Accidents at Work Insurance

Companies will be obliged to pay premiums for accident insurance for all civil contractors. Until 2010 these contributions did not have to be paid for contractors working outside the company's seat or outside the place where the company conducts business. This results from the amendment to the Act on the Social Security System coming into force as of 1 January 2010.

New European Social Security Regulations as of 1 May 2010

On 30 October 2009, the implementing regulation of Regulation (EC) No. 883/2004, that will replace Regulation (EEC) No. 1408/71, was published in the Official Journal of the European Union.

Regulation (EC) No. 883/2004 provides a series of rules to determine which social security regime is applicable in the event of cross-border employment.  The basic principle is that a worker is subject to the social security regime of one Member State, namely the country of employment. Secondment and simultaneous employment are two exceptions to the rule.  For an overview of the most important changes, we refer to our newsletter: 'Expats: the summer of 2009' (pdf).

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New Employment Insurance Statistics Hint at Labour Market Recovery

Employment Insurance (EI) statistics released recently by Statistics Canada are the latest sign that the recession may be over and the Canadian labour market may be recovering.

According to Statistics Canada, the number of people receiving regular EI benefits in July decreased by 3.8%, the first decrease in almost a year.  The largest declines occurred in Ontario (5.9%), Quebec (5.3%), and Alberta (4.4%).  Only Newfoundland and Labrador had a significant increase, where the number of beneficiaries increased 6.5%.   

Despite these encouraging signs, the number of EI beneficiaries is still 57.4% above the level seen in October 2008.  Youths and men have been particularly hard hit.  The number of young men receiving EI benefits has increased by 122% in the last year, while the number of men between the ages of 25 and 54 receiving benefits has increased 86.4%.  In comparison, the rate of growth in the number of female EI beneficiaries was just 32.5%. 

The complete report is available online at Statistics Canada.