Global Employment Tax and Compliance Newsletter. August 2023

Welcome to the 8th edition of the Express Global Employment Monthly Global Employment Tax & Compliance Newsletter. This is more than just a roundup; it's an expert roadmap designed to guide you through the evolving complexities of cross-border employment regulations. This August, we delve into game-changing regulations and compliance shifts from countries like the #Netherlands, #France, #Singapore, the #Netherlands, #Bulgaria, #South Africa, the #UnitedKingdom, and more.

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UK Country Spotlight: New Flexible Working Bill Enacted ????

1. Legislation Adopted

The UK has enacted the Employment Relations (Flexible Working) Bill, granting workers the right to request flexible working arrangements from the first day of a new job.

2. Why It Matters

This legislative change aims to modernize the workplace and fulfils a 2019 UK government commitment. It shortens the employer response time to two months from three and allows workers to make two yearly requests. The law broadly defines "flexible working, " including varied work hours and locations.

3. Implications for Employers

The new law poses both benefits and challenges for employers. Research indicates that flexible working boosts talent attraction, employee motivation, and retention. However, employers must now be prepared to handle an increase in flexible working requests and need to respond more quickly.

Key Provisions

• Mandatory consultation before rejecting a flexible working request.
• Two requests are allowed per 12-month period.
• Decision time was reduced from three to two months.

4. Immediate Actions

Employers should promptly review and adjust their work policies to comply with this new legislation to leverage the benefits and avoid penalties.

Australia Country Spotlight: Towards a Unified Labour Hire Regulation Scheme ????

1. Legislation in Progress

Australia's Industrial Relations Ministers have agreed to create a harmonized labour hire regulation model, the Model Harmonised LH Scheme, by the end of October 2023.

2. Why It Matters

This initiative follows the release of a consultation paper in March 2023 by the Department of Employment and Workplace Relations (DEWR), aiming to consolidate existing labour hire licensing schemes from various territories into a single national framework.

3. Implications for Employers

The proposed national scheme suggests:

• Uniform rules for labour hire providers in all Australian industries.
• Pre-licensing requirements for providers before offering labour hire services.
• A standard license duration of 12 months.
• Strict obligations and potential civil and criminal penalties for non-compliance.

While the exact features of the Model Harmonised LH Scheme are still to be confirmed, it is expected to include elements from existing schemes and offer a mechanism for mutual recognition of labour hire licenses across states to ease the regulatory burden.

4. Immediate Actions

Employers and labour hire providers should stay updated on the development of this scheme as it may introduce new compliance requirements and penalties.

South Africa Country Spotlight: Introducing the Trusted Employer Scheme for Streamlined Work Visas ????

1. What's New?

South Africa's President Cyril Ramaphosa is rejuvenating the work visa system by introducing the Trusted Employer Scheme (TES). Initially proposed in 2017, this scheme aims to simplify the visa application process for skilled foreign labour, aligning it with global best practices.

2. Why It Matters

The TES will significantly cut down administrative hurdles for vetted employers, making bringing in skilled foreign workers easier and more predictable. This initiative aims to share the government and companies' administrative burden and compliance risks.

3. How It Works

Employers qualifying for TES will benefit from:

• Faster visa processing times.
• Reduced documentation requirements.
• A dedicated account manager at the Department of Home Affairs.

To qualify, companies must demonstrate:

• Financial capacity to employ foreign nationals.
• Commitment to training South African citizens.
• Corporate responsibility.

4. The Points System

Companies will be evaluated based on:

• Investment in South Africa.
• Workforce composition (at least 60% South African employees).
• Sector of operation (priority sectors get additional points).
• Skills transfer programs.

5. Implications and Penalties

Companies will handle most compliance obligations, and non-compliance will result in strict penalties, including potential expulsion from the scheme and a ban on hiring foreign workers for up to three years.

6. Application Details

• The 30-day window for initial applications.
• Only 100 businesses will be accepted first, with a review after 100 days.
• Decisions will be made within 60 days, and there is no appeal process.

7. Immediate Actions

Companies interested in easing their visa application processes for foreign employees should prepare to apply for the TES as soon as it's launched.

Singapore Country Spotlight: Revised S Pass Eligibility and Quotas Starting 2023 ????

1. Overview

Singapore's Ministry of Manpower (MOM) is modifying the criteria for S Pass holders. The aim is to enhance the quality of this foreign workforce segment to match the top one-third of local APT workers. The changes began rolling out on September 1, 2022, and will continue to 2025.

2. Salary Requirements

Changes to minimum qualifying salaries for S Pass applicants will happen in phases. Age-dependent salary increases will persist.

Note: Final salary figures will be released based on the local APT wage landscape.

3. Changes in Levy Rates

The S Pass Basic/Tier 1 levy rate will rise in increments as follows:

Note: No changes to Tier 2 levy rates, remaining at $650.

4. S Pass Quotas

Starting January 1, 2023, the S Pass quota will be adjusted:

• Manufacturing, Construction, Marine Shipyard, and Process sectors: Down from 18% to 15% of the workforce.
• Services sector: No change.

5. Action Items

Employers should adjust their hiring and retention strategies to accommodate these evolving requirements for S Pass holders.

Singapore: Upgraded Medical Insurance Policies for Foreign Workforce ????

1. Key Points

• Effective Date: July 1, 2023
• Policy Update: Enhanced mandatory medical insurance for all Work Permit and S Pass holders, including migrant domestic workers.
• Annual Claim Limit: Boosted to S$60,000, with employer co-pay for claims exceeding S$15,000.

2. Summary

Starting July 1, 2023, Singapore's Ministry of Manpower will bolster the compulsory medical insurance requirements for all Work Permit and S Pass holders. The annual claim limit will be raised to S$60,000. Importantly, employers will be responsible for co-paying claims surpassing S$15,000.

3. Recommended Actions

1. Review Insurance Policies: Employers should update their insurance packages to meet the elevated claim limits.
2. Budget for Co-Payments: Prepare for potential co-payments on claims that exceed S$15,000.

4. Employer Risks

Non-compliance with the new medical insurance guidelines could result in penalties. It's crucial for employers to adapt their insurance policies to align with these changes.

New Zealand Country Spotlight: Important Updates to the Accredited Employer Work Visa Scheme ????

1. Overview

New Zealand has recently revised its Accredited Employer Work Visa (AEWV) rules, with significant changes taking effect from November 27, 2023.

2. Five-Year AEWV Grants

Starting November 27, 2023, any worker earning at least the median wage will be eligible for a five-year AEWV.

3. Extending Current AEWVs

AEWV holders with visas granted before November 2023 have the option to extend their visas to a total of five years, provided they meet specific conditions:

• Maximum continuous stay requirements
• Unchanged job role, location, and employer
• Wage not below the initial AEWV application rate

4. Partnerships

Partners of five-year AEWV holders may also be able to extend their Partnership Work Visas, pending policy amendments.

5. Median Wage Increase

Immigration New Zealand plans to hike the median wage to $31.61 (approx. US$18.80), up from the current $29.66, by February 2024.

6. Additional Points

After their visas expire, AEWV holders must spend at least 12 months outside New Zealand before re-entry unless they are on a residence pathway.

7. Action Items

Employers should review their current and future hiring strategies to align with these changes.

Spotlight on France: Key Changes in Employment Tax Obligations for 2024 ????

France's Finance Act 2022 has introduced new reporting and taxation changes for employers and employees, slated to take effect primarily from January 1, 2024. These pertain to 'reportable benefits,' Special Assignee Relief Programme (SARP), Personal Retirement Savings Account (PRSA), and more.

1. Enhanced Reporting Requirements (ERR)

Starting from January 1, 2024, employers will be obligated to report the following non-taxable benefits in real-time via Revenue Online Service (ROS):

• Small Benefits
• Remote Working Daily Allowance
• Travel and Subsistence

2. Preparation Steps for ERR

• Evaluate current data collection methods.
• Assess inter-departmental collaboration.
• Examine ROS system integration.
• Review data quality.
• Reconcile payment timelines.

3. Small Benefit Exemption

Effective January 1, 2022, the small benefit exemption has been raised from €500 to €1,000 annually. Employers can now offer up to two tax-free, non-cash annual benefits, capped at €1,000.

4. Special Assignee Relief Programme (SARP)

SARP has been extended until December 31, 2025. Qualifying individuals can now claim 30% tax relief on a basic salary of at least €100,000, up to a limit of €1m. A mandatory PPS number is required to avail of this benefit.

5. Pension Contributions to PRSA

Two noteworthy changes:

• Employer contributions no longer count as a Benefit-in-Kind (BIK).
• Employer contributions are not considered as employee contributions for tax relief.

6. Shares Options and Revenue Compliance

Revenue has initiated focused compliance activities based on discrepancies identified in annual share reporting forms. Employee obligations now include various reporting and tax-payment requirements.

7. PAYE Revenue Audits

Revenue has resumed PAYE audits. Employers are encouraged to self-review and make necessary corrections to avoid penalties.

Common Audit Areas

• BIK on company cars
• Employee benefits like vouchers
• PAYE application on share awards
• Tax-free mileage and subsistence
• Contractor status assessment

8. PAYE Settlement Agreements (PSA)

For ‘minor and irregular’ benefits, employers can opt for a PSA to remit the corresponding taxes to Revenue. Applications are due by December 31 of the relevant PAYE year.

9. Action Items

Employers should review and adapt their payroll and benefits policies to align with these legislative updates.

Czech Republic: New Whistleblowing Law Affects Employers with 50+ Employees ????

A recent legal change in the Czech Republic mandates employers with 50 or more employees to implement internal systems for whistleblowing. The law aims to align with the EU Whistleblowing Directive. Smaller companies, ranging from 50 to 249 employees, can collaborate with other employers to share these systems.

1. Key Changes

1. Impact Date: The law takes effect on August 1, 2023.
2. Employee Count & Deadlines: Employers with 250+ employees: Must comply by August 1, 2023. Employers with 50 - 249 employees: Must comply by December 15, 2023.
3. Employer Risk: Failure to meet these requirements could result in fines up to CZK 1,000,000 (approximately €41,000).

2. Recommended Actions

1. Policy Update: Review and update, if necessary, existing policies on protected disclosures to ensure compliance with the new law.
2. Implementation of Reporting Systems: Employers should either set up an independent whistleblowing system or collaborate with other employers to create a shared system, depending on the company size.
3. Compliance Check: Ensure that all steps are taken to fully comply with the new regulation by the stipulated deadlines to avoid significant financial penalties.

3. Action Items

Companies operating in the Czech Republic should act swiftly to meet the new whistleblowing compliance requirements by the respective deadlines. This involves updating existing reporting channels or setting up new ones in collaboration with other employers, if applicable.

Czech Republic: Upcoming Labour Code Amendment Addresses Remote Work ????

A proposed amendment to the Czech Republic's Labour Code outlines new guidelines for remote work. Employers and employees must note several key changes, including documentation requirements, expense reimbursements, and special provisions for parents with young children.

1. Key Points

1. Effective Date: The changes will be effective on September 1, 2023.
2. Written Agreement: Remote work will now require formalized written consent between the employer and employee.
3. Employer Discretion: Employers may mandate remote work under specific conditions, such as during a pandemic.
4. Expense Reimbursement: Employees can claim reimbursement for expenses incurred while working remotely, either based on actual costs or a flat hourly rate of a minimum of CZK 2.80 (approximately €0.10).
5. Special Provisions for Parents: Employees with children under 15 years old are eligible for remote work under certain circumstances.
6. Employer Risk: Failure to comply with these remote work guidelines could result in fines up to CZK 1,000,000 (approximately €400,000).

2. Recommended Actions

1. Review Existing Policies: Employers should examine their current remote work arrangements and update them to align with the new guidelines.
2. Documentation: Ensure written agreements for remote work are in place, as stipulated by the amendment.
3. Expense Policy Update: Revise expense policies to include options for actual cost reimbursement or flat hourly rates for remote work.
4. Parental Policies: Create or update policies that cover the right of employees with children under 15 to work remotely under specific circumstances.

Netherlands: New Minimum Wage Rates Effective 2023 ????

The Netherlands has announced an increase in the minimum monthly wage for employees aged 21 and over. This marks a notable change that employers must be aware of, given the financial and reputational risks associated with non-compliance.

1. Key Details

1. Effective Date: The new minimum wage comes into force on July 1, 2023.
2. New Rate: The minimum monthly wage will rise from €1,934.40 to €1,995.00, exclusive of the 8% statutory holiday allowance, for full-time employees aged 21 and over.
3. Employer Obligations: Ensure all employees aged 21 and over receive at least the new minimum wage. Verify compliance for special wage cases, such as when the holiday allowance is bundled into salaries that are three times the minimum wage.
4. Risks for Employers: Employees' Wage claims, including a 50% statutory increase. Fines ranging from €500 to €10,000 per employee from the Labour Authority. Potential reputational damage.

2. Recommended Actions

1. Review Current Salaries: Audit existing employee salaries to ensure they meet or exceed the new minimum wage.
2. Adjust Payroll Systems: Update payroll settings to reflect the new minimum wage from the effective date.
3. Revisit Special Cases: Double-check salary levels for employees who are exceptions, like those with bundled holiday allowances.
4. Communication: If applicable, notify employees of the change and how it will affect them.

Netherlands: Changes to Salary and Termination Rules for Post-Retirement Employees ????

The Netherlands is modifying its employment laws that affect those who work beyond the state pension age and fall ill. The change significantly shortens these employees' mandatory duration of continued pay during illness.

1. Key Details

1. Effective Date: July 1, 2023.
2. New Duration: Continued salary payment during illness for employees working beyond state pension age will now be 6 weeks, down from 13 weeks.
3. Transitional Provision: For those who have reached the state pension age by July 1, 2023, and are already ill, the 13-week period will still apply. For those who fall ill after this date, the new 6-week rule will be applicable.
4. Employer Obligations: Be aware of the reduced 6-week continued pay rule for employees working beyond the state pension age. For employees already at state pension age and sick as of July 1, 2023, the original 13-week rule remains.
5. Employer Risks: Overpaying salaries if the updated 6-week rule is not followed.

2. Recommended Actions

1. Policy Update: Review and amend company policies to align with the new 6-week rule.
2. Payroll Adjustment: Make necessary adjustments to payroll systems to implement the new rules from July 1, 2023.
3. Employee Communication: Inform all relevant employees about the changes and how it will affect their continued salary in case of illness.

Netherlands: New Minimum Hourly Wage Law Affects Full-time Workers ????

Key Points

• Effective Date: January 1, 2024
• New Rule: Transition from a minimum monthly to a minimum hourly wage.
• Implication: Affects full-time employees, regardless of whether they work 36, 38, or 40-hour weeks.

Bulgaria: Upcoming Changes to National Minimum Salary Calculation ????

1. Key Points

• Effective Date: Determination by September 1, 2023
• New Formula: Minimum salary to be set at 50% of the average gross wage, based on the previous year's last two quarters and the current year's first two quarters.
• Wage Floor: Minimum salary cannot be lower than the previous year's rate.

2. Summary

Bulgaria's Council of Ministers will define the national minimum salary for the next calendar year by September 1, 2023. The new salary will be calculated as half of the 12-month average gross wage, encompassing the final two quarters of the preceding year and the initial two quarters of 2023. Importantly, the newly set minimum salary cannot be lower than the rate established for the prior year.

3. Recommended Actions

1. Economic Preparedness: Employers should anticipate the financial implications of an increase in the minimum wage.
2. Document Update: Revise employment contracts or any standard documents that mention the minimum wage to align with the new rate.

4. Employer Risks

Failure to adapt to the new minimum wage criteria could lead to legal repercussions. Employers should proactively adjust their financial planning and employment documents to meet the new guidelines.

Conclusion

In a rapidly evolving global employment landscape, staying abreast of the latest tax and compliance updates is not just an option—it's a necessity. We hope this month's Global Employment Tax & Compliance Newsletter has provided actionable insights and a clearer roadmap for international operations. Don't forget to explore our new Global Payroll Calculator for a comparative analysis that could be a game-changer for your business.

Thank you for allowing us to be your trusted partner in global employment solutions. Stay tuned for next month's edition, where we promise to deliver even more invaluable insights.

Until then, let's build a compliant and competitive global workforce together.

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