29. November 2018
The quest for work-life balance continues to push higher up the employee agenda. Forbes estimates that by 2025 the "millennial generation" will comprise 75% of the workforce. These employees are increasingly striving for greater equilibrium, embracing practices like mindfulness to avoid stress and burnout at work. Given this, many employers seek to cultivate a deeper sense of community at work, support employee personal development and offer greater scope for employees to balance their work and life commitments.
Structurally, we see pressure from trade unions to share the benefits of automation by moving to a four day week. In its report "A future that works for working people", the Trade Union Congress estimates that around 1.4 million people in the UK now work a full seven days a week, racking up £32 billion worth of unpaid overtime. The union seeks to combat a culture of long working hours and high stress levels insisting that evolving technology and communications should cut the number hours spent at work. Governments are also responding with legislative agendas such as the French right to disconnect and the UK's Good Work Report (see our review of the findings and our review of the government response).
These approaches build the current legal entitlements – often linked to family rights – which form the basis of current work-life balance. So how useful are they, and what are the differences across a range of jurisdictions: Austria, China, Czech Republic, France, Germany, Hungary, the Netherlands, Poland, Singapore, Slovakia, Ukraine and the United Kingdom (UK)?
The most common statutory provision for "time off work" is, of course, holiday. Entitlements vary between countries and depend on various factors.
Controversially to some of us, age is one such factor. For example, in Slovakia, employees over the age of 33 are entitled to five weeks' holiday per year, compared with four weeks' for under-33s. Similarly, in Hungary, over-45s can take at least 30 days' leave, while younger employees can take just 20. Compare that with Ukraine, where younger employees get more: under-18s are entitled to 5 days more holiday than those over the age of 18.
Loyalty can also affect accrual rates. Under German law, employees only start to accrue holiday after they have been employed for six months. In China, employees with less than one year's service have no statutory entitlement to annual leave at all. Once employees in China have between one and ten years' service they can take five days' holiday; between ten and 20 years' grants 10 days'; and employees are entitled to 15 days' leave once they have over 20 years' service. Likewise in Austria, full-time employees can take at least 25 days' annual leave, increasing to 30 days with over 25 years' service. In Singapore, minimum holiday allowances depend on both the employee's period of service as well as their job level (ranging from seven days for one year of service, to fourteen days for seven years' service).
Public/private sector differences and family circumstances can also impact entitlements, reflecting enduring political/cultural traditions. In the Czech Republic, those employed by the state receive more holiday than those in non-state employment (five weeks' leave as opposed to four). In Hungary, having children also impacts statutory entitlement: two extra days for one child; four extra days for two children; and seven extra days for three or more children. These numbers increase further by two days if the employee's child has a disability.
Procedural deadlines for use of holiday also differ. In Austria, annual leave must be used within two years of the working year in which it was accrued, otherwise it is forfeited. In the Netherlands, employees must take statutory holidays within six months after the end of the relevant year (except where business or personal reasons mean this is not possible). In Germany, holiday must be used by 31 March the following year (save for exceptional circumstances), and in Poland, by the end of September of the following year. But there's a big trap for businesses relying on these deadlines: see the cases below.
Many organisations offer enhancements to minimum statutory holiday entitlements. For example, in the UK the statutory minimum entitlement is 20 days' holiday (plus 8 public holidays), but many employees enhance this to at least 25 days' holiday (particularly in financial and professional services). Collective agreements can also impact entitlements. For example, in Germany, collective agreements and industry specific regulations can increase statutory holiday, typically up to 30 days per year.
Deep liabilities relating to holiday and worker status are increasingly hot topics in employment law. As the European Court case of King v The Sash Window Workshop Limited C-214/16 showed, workers who are wrongly classified as self-employed contractors could be able to claim back pay in respect of unpaid annual leave going back many years if their 'worker' status is established. In this case, the European Court of Justice (officially the Court of Justice) had to decide whether a worker who had not taken holiday for a number of years because he would not be paid for it had the right to payment in lieu on termination of his employment. The court concluded that if a worker has not taken leave because they will not be paid for it, then the worker is entitled to say they have been prevented from exercising their right to paid holiday and the leave should carry over until either it becomes possible to take the holiday, or their employment terminates.
Following this, the recent European Court of Justice case of Kreuziger v Land Berlin and Max-Planck-Gesellschaft zur Förderung der Wissenschaften eV v Shimizu
held that a worker who does not apply for paid annual leave while they are employed does not automatically lose the right to be paid in lieu of untaken leave when his/her employment terminates. The worker must have been given an opportunity to take accrued leave and the employer must be able to show that it encouraged the worker to do so. In this case, the court made clear that the employer should have warned the employee, accurately and in good time, that they risked losing accrued leave at the end of the applicable reference period. As the right to paid annual leave is a fundamental health right, the court also stated that any contravening provision of national law would have to be disapplied.
In a similar vein, the German courts recently sought clarity on the issue of holiday pay where an employee had died in service. In 2014, the European Court of Justice ruled that if an employee dies while employed, any untaken annual leave entitlement should be converted into a compensation entitlement, for which the employee's estate could claim against the former employer (Bollacke/K + K Klaas & Kock B. V. & Co. KG, C-118/13). It is important to understand these types of latent liabilities in corporate mergers, acquisition and outsourcing scenarios, as they can badly impact low-margin, labour-heavy businesses.
Regulatory attitudes are also crucial, as businesses are increasingly operating in a climate of greater regulation, scrutiny and enforcement. Driven by the Director of Labour Market Enforcement, Sir David Metcalf (see the executive summary), HMRC is actively conducting employment status audits on those organisations perceived to be of higher risk. These audits can expose non-compliant business models, as well as giving rise to "iceberg" tax liabilities (such as years of unpaid holiday pay and minimum wage breaches) for both employer and worker. HMRC's need to collect tax, together with increasing political and regulatory concern for workers to have the opportunity to take holiday and be paid correctly for doing so, mean businesses need to be up-to-speed on their obligations to guard against these kinds of latent risks.
Some employers are opting for "unlimited holiday" policies, especially those with US based parent companies. While these types of policies offer greater flexibility for employees (often appealing to millennials), employers do still need to track the number of days holiday taken by each employee and pay out the remainder on termination (where an employee leaves without having taken the minimum annual entitlement accrued during that holiday year). In Poland, violation of this tracking duty, failure to grant outstanding periods of leave until 30 September of the following year, and/or failure to pay the correct holiday pay to employees on termination are punishable with a fine of up to PLN 30,000 (approximately €7,000/£6,000). Strict rules also apply in Poland in relation to tracking of sick leave. Keeping abreast of these types of issues is key for any organisation employing staff overseas. Care is needed when documenting these and other work-life balance related benefits, so that it is clear to all parties whether these are discretionary or contractual benefits, including the degree to which they are open to employer amendment. Drafting should consider whether there is scope for an employer to amend or delay provision of entitlements and whether these types of rights will be compensated in the event they are lost.
Turning to family-related rights, specific legal protections for employees who are pregnant or on maternity leave vary considerably in scope and structure – see the comparative table attached.
Employers with staff overseas need to be aware of these types of distinctions, not least because employees who are pregnant or on maternity leave often have greater legal protection from dismissal. In France, pregnant employees are protected from dismissal from when the employer is informed of the employee’s pregnancy until ten weeks after the end of the maternity leave. In Hungary, employees who have taken maternity leave are protected from dismissal until the child turns three.
Notably, changes to German legislation in force from January 2018 have strengthened the protections against dismissal for mothers of disabled children and for those who experience miscarriage. German law also tightened employer obligations regarding workplace safety and risk assessments. From 2019 onwards, German employers which do not comply with the regulations will be liable to fines. In the UK, a distinction is made between whether an employee returns within the period of "ordinary maternity leave" (ie the first 26 weeks' of available maternity leave) or whether she takes "additional maternity leave" (the further 26 weeks): her rights vary on return to work depending on how long she has been away.
In China, almost every provincial-level government has local regulations granting additional maternity leave days on top of the national rules, provided that the birth is in line with the national and local rules (for example, birth control policies). Additional days range from one month to three months (on top of the national rules): currently, 30 days extension in Beijing; 30 days extension in Shanghai; 80 days extension in Guangdong province (Guangzhou/Shenzhen). Chinese law also provides for a "nursing period" following maternity leave, during which female employees who have returned to work may take one hour off per day with full pay for nursing purposes until the child's first birthday.
Entitlements to maternity pay, including the degree to which a minimum period of service and/or insurance is required to receive payment and the extent to which social security authorities will reimburse statutory maternity payments vary. In some Chinese provinces (for example, Chongqing and Jilin), in theory maternity leave can be extended to one year or until the child's first birthday, if the employer agrees. Many employees though find this consent difficult to obtain in practice.
Employers can enhance statutory minimums and, as with holiday, many do. In the UK, it is not uncommon for businesses to provide up to six months' full pay for employees on maternity leave as a way of attracting and retaining talent. Statutory "keeping in touch" days (up to ten) also provide a useful way for employees to stay engaged while on maternity leave. Other employer initiatives, such as “lactation rooms” for women to express breast milk, pre-natal fitness classes and on-site childcare are increasingly on the rise, especially in the United States, where the statutory period of maternity leave is short. Goldman Sachs recently announced that its US offices will deliver freezing kits to nursing bankers’ hotel rooms and then arrange for their expressed milk to be couriered back to the baby for feeding. This follows companies like IBM, Twitter and Accenture who have previously offered this service to their US staff.
Recent years have seen various changes to paternity leave legislation across Europe. The start of 2018 (relatively late by Western standards) saw the Czech Republic introduce paternity rights of up to one week of leave (with up to €333 weekly paternity pay). New Czech legislation also made provision for fathers taking “maternity leave” in place of mothers in exceptional circumstances, for example, if a mother has died or has health issues.
Early 2018 also saw the Dutch legislator propose modifications to the paternity leave regime. Currently, employees in the Netherlands whose partner has given birth can take two working days of paternity leave (receiving their normal pay, subject to a maximum daily wage). It had been announced that from 1 January 2019 partners would be entitled to five days' leave on full pay within the first four weeks of delivery, plus an additional five weeks' leave at 70% of the employee’s pay at some point during the first six months post-birth. However, the Dutch government recently dropped this proposed change.
It remains to be seen whether the UK will move ahead with plans to extend the shared parental leave scheme to include grandparents ("grandparental leave"). The proposals are currently on hold while the government evaluates the shared parental leave scheme more broadly. Its findings are expected to be published in early 2019.
In Germany and Ukraine, there is no specific entitlement to "paternity leave". Instead, in Ukraine, extended families typically work together to co-ordinate childcare, as one of the parents, grandparents, or other relatives is able to take parental leave until the child reaches the age of three. This leave can be taken in full or in part by each of the family members, depending on how they wish to structure the leave. German law allows parents to split leave between them (see further below).
In Singapore, two weeks' paid paternity leave is available, but only if the parents are married and the child is a Singapore citizen. In China, with the absence of relevant national rules, paternity leave depends on local regulations, currently ranging from seven to 30 days in different locations.
Generally, specific statutory provision for time off in the case of adoption is limited. France does however allow seven days' state funded adoption leave before the arrival of an adopted child and ten weeks' after. This is extended to 18 weeks if the employee already has at least two children and to 22 weeks where more than one child is being adopted. Employees who are adopting also benefit from ten weeks' protection from dismissal.
Similarly, in Slovakia, an eligible mother (including those who are self-employed) is entitled to twelve weeks' of paid adoption leave to bond with and care for an adopted child, before the child's first birthday. In the UK, one of the adopting parents can take up to 56 calendar days' leave, for which statutory minimum pay applies.
Time off for dependants takes various forms across different jurisdictions (labels include "parental leave", "emergency time off for dependants" and/or "long term care" leave).
Many countries allow time off for employees to care for children. In the UK, for example, employees with over one year's service can take up to 18 weeks' unpaid parental leave for each child for the purpose of caring for that child. The leave must be taken in minimum one week blocks and employees cannot take more than four weeks per year. Employees also have the right to take a "reasonable" amount of unpaid time off work to take "necessary" action to deal with particular situations affecting their dependants (such as to arrange emergency childcare). Similar provisions (often including pay) are available under German, Dutch, Slovakian, Polish and Hungarian law.
In Germany, the revised parental leave regime allows employees with children born on or after 1 July 2015 to up to three different periods of leave (formerly two different periods) provided the child is under three years old. Up to 24 months can be taken between the child's third and eighth birthday (which can be split into various parts), although the employer can refuse a request for urgent operational reasons.
Many countries also make provision for employees to care for other family members. For example, in June 2018, the Czech Republic introduced up to 90 days' of the long-term care pay (covering 60% of the reduced daily salary) for employees to care for dependents. Of course, these situations do not only refer to parents caring for children. In China, while there are no national rules, a few provinces (for example, Chongqing, Henan) have local regulations granting employees who are single children in the family between ten and 20 days off with full pay for taking care of their ill parents.
Similarly, in Austria, employees can request reduced hours or unpaid time off (up to three months) to care for a dying next of kin or seriously ill child. Employees can also agree a period of unpaid leave or reduced working hours for the purpose of caring for a close relative, for a period from one to three months (if the employee has over three months' service).
In Ukraine, employees with adopted children or children with disabilities (medical certificate with the disability group) can take a one-off paid period of leave for up to 56 calendar days (adopters or family members looking after a disabled child can take an extra ten days' holiday). Similarly, in France employees are entitled to two days extra paid leave where they have a child with a disability.
Scope for staff to work more flexibly to balance work and personal commitments varies. For example, in Austria, each parent can ask to work part time until the end of the fourth (with dismissal protection) or seventh (with lower dismissal protection) year of their child. To do this: a) the employee must have at least three years' continuous service; b) the business must have over 20 employees; and c) the employee's weekly work time must reduce by at least 20%, but not reduce lower than 12 hours per week.
In the UK, any employees with over 26 weeks' employment have the right to request flexible working for any reason (the reason no longer needs to be dependent related). Employers must consider all requests in a "reasonable manner" and can only refuse the request on the basis of one of eight business reasons.
Of course not all employees need to take family related leave. Businesses themselves, and in some countries national laws, offer some interesting alternatives. For example, in France, employees with over three years' service or six years of professional activity can take unpaid sabbatical leave of between six and eleven months. Employees in France with over two years' service can also take up to one year of unpaid leave (which can be renewed for another year) to start a business. Notably, it has now been over a year since employees in France gained the legal right to disconnect from technology to tackle out-of-hours email checking.
Wider social policy also plays a part. In Poland, staff can take time off to give blood donations and attend medical examinations (which commonly take a whole working day). In the Netherlands, employees can take time off to vote. In the UK, an increasing number of companies (such as insurance company Aviva and retailer Timpson) are voluntarily offering workers an extra day of paid leave for their children's first day of school (albeit this is not a statutory requirement). Employers should take care though to ensure that benefit packages don't favour only one sector of the community.
Certain allowances are made for marriage. In France, employees who are themselves getting married or entering a civil partnership can take up to four days' leave. Parents can take one day for the wedding of their child. In Austria, many collective agreements entitle employees to take one to three days off for special occasions like marriage, change of residence, the death of a dependant, or medical appointments. Similarly, in China, couples getting married can enjoy at least three days marriage leave with full pay based on national rules. Extensions under provincial-level regulations mean total marriage leave can in fact range from three to 30 days in different locations across China. Typical figures at present are: ten days in Beijing; ten days in Shanghai; 13 days in Guangdong province (Guangzhou/Shenzhen).
Enduring national cultures play a clear part in defining the scope and specifics of employee rights to time away from work, as entitlements vary considerably from one jurisdiction to the next. That said, we see a common support across many national laws for key life events, such as birth and death. There is also a developing awareness of, and effort to accommodate non-conventional family related interests and commitments. It remains to be seen whether, and if so how, these will evolve as the workplace grapples with increasing automation and challenges after austerity.
Holiday rights also continue to develop. Following recent European Court of Justice cases, it is clear that employers are expected to take active steps towards ensuring staff have the opportunity to take holiday and, where they are not able to take it, are paid in lieu of their accrued entitlements (which can go back many years). The right to holiday is a fundamental health right, not just an economic benefit, so the European courts require employers to treat it as such. Businesses should be mindful too of the latent tax liabilities which can arise where historic holiday accruals are not dealt with correctly ("iceberg" liabilities).