Global HR Newsletter

Ontario courts continue to reject ‘at any time’ termination clauses

In a recent decision (Chan v NYX Capital Corp., 2025 ONSC 4561), the Ontario Superior Court of Justice reaffirmed that termination clauses allowing employers to end employment ‘at any time’ and ‘for any reason’ are unenforceable under the Employment Standards Act, 2000 (ESA).

Case overview

The plaintiff was terminated after less than three months of employment.

The employer claimed the plaintiff was a probationary employee and not entitled to notice.

The employment contract included a clause stating termination could occur “at any time and for any reason” without notice or pay.

Court findings

The court ruled the termination clause violated the ESA and was therefore void in its entirety (including the probationary period clause).

The clause failed to define ‘cause’ in line with ESA standards (i.e., wilful misconduct).

As a result, the plaintiff was not considered a probationary employee and was awarded three months’ reasonable notice under common law.

Key takeaways for employers

This decision follows the Court’s reasoning in Dufault v The Corporation of the Township of Ignace, 2024 ONSC 1029 and Baker v Van Dolder’s Home Team Inc., 2025 ONSC 952 where generic termination language like “at any time” or “for any reason” was also found unenforceable.

Contracts must explicitly reference ESA standards, especially when defining termination terms.

Employers should regularly review employment agreements to ensure compliance with evolving case law.

Nova Scotia mandates Workplace Harassment policies for employers

Effective 1 September 2025, all provincially regulated employers in Nova Scotia are required to implement a written Workplace Harassment Prevention Policy under amendments to the Occupational Health and Safety Act. The regulations define workplace harassment as  objectionable or unwelcome conduct, including bullying and inappropriate sexual conduct.

Key requirements

Employers must:

• develop a written policy that defines workplace harassment, including bullying and inappropriate sexual conduct
• train all employees on the policy
• review and update the policy at least every three years.

The policy must include a clear definition of workplace harassment aligned with regulations, and include positive statements affirming:

• every employee’s right to a harassment-free workplace
• employee responsibility to avoid harassment
• encouragement to report incidents
• protection against retaliation for good-faith complaints
• confidentiality, except where disclosure is legally or operationally necessary.
• Additionally the policy must include the following commitments from the employer:
• prevent harassment
• investigate complaints
• take corrective action when necessary.

Employers should act promptly to ensure compliance, including policy drafting, employee training, and internal reporting procedures. Legal guidance may be beneficial to meet all regulatory expectations.

Proposes expanded employee rights on leave and breastfeeding support

On 6 August 2025, the Parliamentary Gazette published three legislative proposals aimed at strengthening employee protections under the Federal Labour Law (LFT). These initiatives focus on paid leave for caregivers, bereavement leave, and enhanced breastfeeding accommodations in the workplace.

1. Paid leave for parents or guardians of persons with disabilities
   A proposal by Deputy Petra Romero Gómez would grant two hours of paid leave per month to employees who are parents or legal guardians of individuals with disabilities. This time may be used for:
   • medical appointments
   • therapy sessions
   • school-related activities (e.g. parent-teacher meetings).
   Employees must provide documentation from relevant medical or educational institutions to exercise this right.
2. Bereavement leave
   Deputy Brígido Ramiro Moreno Hernández proposed a bill to provide five working days of paid leave following the death of a close relative (up to second-degree consanguinity or first-degree affinity). This leave would apply regardless of contract type and be non-waivable.
3. Enhanced breastfeeding support
   Senator Rafael Alejandro Moreno Cárdenas (PRI) proposed amendments to increase the daily breastfeeding rest period to one hour and establish minimum standards for workplace breastfeeding areas, including:
   • ergonomic seating and clean surfaces
   • electrical outlets for breast pumps
   • refrigeration for milk storage
   • sink with potable water and hygiene supplies
   • visual and acoustic privacy with signage
   • adequate lighting, ventilation, and sanitation.

If such facilities cannot be provided, employers and employees may agree to reduce the workday by up to two hours during the breastfeeding period. Non-compliance could result in fines ranging from 250 to 5,000 UMA.

All three proposals are currently under legislative review. Employers should monitor developments and prepare to update workplace policies if the reforms are enacted.

Federal Court clarifies employer obligations on set-off clauses and record keeping

A recent decision by the Federal Court of Australia has significant implications for employers using annualised salary arrangements under modern awards. The ruling in Fair Work Ombudsman v Woolworths Group Limited; Coles Supermarkets Australia Pty Ltd ([2025] FCA 1092) addresses two key areas: the use of set-off clauses and the adequacy of record keeping.

Key findings from the court:

1. Set-off clauses limited to single pay periods
   It's customary for employers to include offset clauses in employment contracts which purport to avoid the payment of allowances, overtime, annual leave loading etc required by Modern Awards by offsetting these against any salary that is paid in excess of the minimum salary rates published in the Modern Award. The court clarified that offset clauses cannot rely on excess payments made in one pay period to offset underpayments in another. The Court ruled that set-off clauses in employment contracts only apply within the same pay cycle. This means each pay period must independently satisfy award entitlements and employers will need to ensure accurate reconciliation of payments per cycle.
2. Stricter record keeping requirements
   The court found that relying on rosters or clock-in/out data is insufficient. Employers must maintain:
   • detailed records of actual hours worked, including overtime
   • clear documentation of start and finish times for overtime
   • records that are easily accessible to both employees and Fair Work Inspectors.
   Raw data that requires interpretation does not meet the legal standard. Records must clearly show how award entitlements, such as penalty rates and loadingsare calculated.
   To comply with this ruling, employers should:
• audit payroll systems to ensure award entitlements are met in each pay periodreview employment contracts, especially set-off clauses, to ensure they are legally effective
• maintain comprehensive time records for all salaried employees covered by awards.
• consider individual flexibility agreements where appropriate
• ensure payslips or other records are accessible and transparent for employees.

SafeWork NSW halts redundancy plans over mental health concerns

SafeWork NSW, the  workplace safety regulator for New South Wales, issued a prohibition notice to the University of Technology Sydney (UTS), temporarily halting its plans to make hundreds of staff redundant. Although the notice has since been lifted, the intervention marks a significant shift in regulatory focus,highlighting the growing importance of psychosocial safety in the workplace.

Why it matters

This is believed to be the first time SafeWork has paused a redundancy process due to concerns about psychological harm. It signals that regulators are increasingly willing to intervene in organisational change processes where mental health risks are not adequately addressed and not just restrict intervention to matters concerning physical safety.

Employers in Australia should be aware that SafeWork can now scrutinise change management decisions,not just for physical safety risks, but also for psychological wellbeing.

What is a prohibition notice?

A prohibition notice is issued when SafeWork reasonably believes that a workplace activity poses a serious and imminent risk to health and safety. It can require the activity to stop entirely or be modified, and remains in effect until the risk is resolved.

Key actions for employers

To avoid similar interventions, employers should take proactive steps to manage psychosocial risks:

• assess upcoming changes for potential psychological impact
• implement controls to mitigate identified risks
• regularly review the effectiveness of those controls.

SafeWork NSW’s Model Code of Practice for Managing Psychosocial Hazards at Work provides practical guidance and should be reviewed by all employers.

For redundancy programmes in addition to complying with relevant provisions of the Fair Work Act, Modern Awards, and Enterprise Agreements an employer should engage in genuine consultation with ‘at risk’ employees before making final decisions and allow employees to share how proposed changes may affect them and suggest alternatives. Outcomes should be 
communicated empathetically and transparently. Access to psychological support, such as an Employee Assistance Program (EAP) should also be considered.

This case serves as a reminder that psychological safety is now a core component of workplace health. Employers should integrate mental health considerations into all aspects of workforce planning and change management.

TerraCom fined $7.5 million for whistleblower victimisation

In a landmark ruling, the Federal Court of Australia has imposed a $7.5 million penalty on mining company TerraCom Ltd for breaching whistleblower protections under the Corporations Act 2001 (Cth). This marks the first enforcement action under the current whistleblower provisions and sends a strong message about the importance of protecting individuals who report misconduct.

Background to the case

The case centred on Justin Williams, TerraCom’s former General Manager, Commercial, who raised concerns about the alleged manipulation of coal quality certificates. He claimed that TerraCom’s independent lab was altering results to present more favourable data to customers.

After raising these concerns internally and later with the Australian Securities and Investments Commission (ASIC), TerraCom published several public statements, including ASX announcements and open letters, discrediting Mr Williams and suggesting his allegations were false and financially motivated.

Court findings

TerraCom admitted to publishing statements that caused harm to Mr Williams, including humiliation, distress, and reputational damage, and acting in a way that constituted victimisation, as defined under the Act, being motivated, at least in part, by the belief that Mr Williams had made a protected disclosure.

The Court found that TerraCom’s conduct involved senior management, was deliberate, and extended over a two-month period. Although TerraCom did not financially benefit from the conduct, the harm caused was significant.

The $7.5 million penalty represents around 30% of the maximum possible fine and was deemed proportionate given the seriousness of the breach. TerraCom also agreed to pay $1 million in ASIC’s legal costs.

Key takeaways for employers

This case highlights the need for organisations to:

• implement robust whistleblower policies and ensure they are regularly reviewed
• investigate allegations impartially and avoid public statements that could harm whistleblowers
• train staff and leadership on whistleblower protections and foster a ‘safe to speak up’ culture
• ensure senior management leads by example in upholding ethical standards.

Uber’s $81 million payroll tax ruling: a wake-up call for the gig economy

In a landmark decision, the NSW Court of Appeal has ruled that Uber must pay over $81 million in payroll tax, finding that payments made to its drivers constitute ’wages’ under the Payroll Tax Act 2007 (NSW). This ruling has far-reaching implications for platform-based businesses and service industries across Australia.

Key takeaways from the ruling

1. Drivers deemed employees for payroll tax purposes
   The Court unanimously held that Uber is a ‘deemed employer’ and that payments to drivers are ‘taxable wages’. This interpretation stems from the ‘relevant contract’ provisions in the Act, which apply broadly to service arrangements,even those outside traditional employment models.
2. Substance over form
   Despite Uber’s argument that it merely facilitates payments between riders and drivers, the Court found that the driving service is central to Uber’s business. Therefore, payments to drivers are directly related to the performance of work and fall within the scope of payroll tax.
3. No ancillary service exemption
   Uber’s claim that driving was ancillary to the use of the driver’s vehicle was rejected. The Court ruled that driving and vehicle use are inseparable, disqualifying Uber from the exemption under section 32(2)(a) of the Act.
4. Implications beyond uber
   With payroll tax laws harmonised across Australian states, this decision sets a precedent. Revenue authorities may now:
   • initiate audits of similar platform-based businesses
   • reassess arrangements in industries like health services, financial planning, and broking
   • apply payroll tax more broadly to contractor relationships.
   If your organisation engages contractors or operates within the gig/platform economy, this case is a timely reminder to:
   • review service contracts and assess payroll tax exposure
   • consider restructuring arrangements to mitigate risk
   • explore exemptions or de-grouping relief where applicable.

Delhi high court declares post-termination non-compete clauses unenforceable

In a significant ruling, the Delhi High Court reaffirmed that post-termination non-compete clauses in employment contracts are unenforceable under Indian law, unless they are narrowly tailored to protect confidential information or proprietary interests.

Case overview

In Varun Tyagi v. Daffodil Software Pvt. Ltd., the employer sought to enforce a clause preventing the former employee from joining a “business associate” for three years after leaving the company. The employee joined the Digital India Corporation (DIC) — a business associate — after serving notice, prompting the employer to seek an injunction.

Court’s findings

• The Court held that the non-compete clause violated Section 27 of the Indian Contract Act, which prohibits restraints on lawful professions or trades.
• It ruled that partial restraints are also void, regardless of their reasonableness.
• The employer’s claim of protecting confidential information was rejected, as the intellectual property belonged to DIC, not the employer.
• The Court emphasised the balance of convenience favoured the employee, who would suffer financial hardship if restrained.

Implications for employers

The case reinforces the very strict approach Indian courts take when assessing post-employment restrictions and highlights that they are only permitted in very narrow circumstances when the employer has must be limited to protecting genuine proprietary interests, such as trade secrets or confidential data. Broad non-compete clauses are likely to be struck down.

Employers should review and revise employment contracts to ensure compliance with Indian legal standards.

Supreme court upholds minimum tenure clause in employment contracts

In a landmark decision, the Supreme Court of India has upheld the enforceability of minimum service clauses in employment contracts, confirming that such provisions do not amount to unlawful restraint of trade.

Case overview: Vijaya Bank v. Prashant B. Narnaware (2025 INSC 691)

The employee was promoted to Senior Manager in 2008, subject to a clause requiring three years of minimum service. The contract stipulated INR 200,000 in liquidated damages for premature resignation. The employee resigned in 2009 to join another bank and paid the amount under protest, later challenging the clause.

Court’s ruling

The Karnataka High Court initially sided with the employee, declaring the clause a restraint of trade.

The Supreme Court reversed this, holding:

• The clause applied only during employment, not after termination.
• It did not restrict future employment opportunities.
• The clause was reasonable, especially given the employee’s senior role and the costly recruitment process in public sector banks.
• It did not violate Sections 23 or 27 of the Indian Contract Act or Articles 14 and 19(1)(g) of the Constitution.

Implications for Employers

Minimum tenure clauses tied to reasonable compensation are enforceable if:

• They apply during employment, not post-termination.
• They are clearly stated and proportionate to the role and recruitment costs.

Supreme Court expands compensation rights to cover commuting accidents

In a landmark ruling, the Supreme Court of India has confirmed that accidents occurring during an employee’s commute to or from work can now be considered as arising ‘out of and in the course of employment’ under the Employees’ Compensation Act (EC Act). This decision significantly broadens the scope of compensable workplace accidents and has direct implications for employers across India.

The case involved a night watchman who died in a road accident while commuting to his job at a sugar factory. His family sought compensation under the EC Act, but the employer and insurer argued that the accident occurred outside work hours and premises and therefore did not qualify.

The Court ruled in favour of the employee’s family, stating the doctrine of notional extension applies, meaning employment-related risks can extend beyond the physical workplace.

A clear nexus between the accident and employment such as time, place, and purpose can justify compensation. Section 51E of the Employees’ State Insurance Act (ESI Act), which explicitly covers commuting accidents, was deemed relevant ,and its principles apply to the EC Act as well.

This ruling harmonises the interpretation of the EC Act and ESI Act and reinforces a welfare-oriented approach to employee protection. Employers should now treat commuting risks as part of their occupational safety framework and review insurance policies to ensure coverage includes commuting accidents.

Introducing partial retirement from 1 January 2026

Starting 1 January 2026, Austria will launch a new partial retirement scheme aimed at helping older employees transition smoothly into retirement while remaining active in the workforce.

What is partial retirement?

Partial retirement allows eligible employees to reduce their working hoursby 25% to 75%while drawing a proportional pension. This flexible model is designed to support older workers who may no longer wish to work full-time but are not ready to fully retire.

Eligibility criteria

An employee must meet the requirements to receive an old-age pension and agree with their employer to reduce working hours by at least 25% and no more than 75%, and continue earning above the marginal earnings threshold (set at €551.10/month in 2025).

How it works

The pension account is split so that one part is ‘closed’ and used to calculate the partial pension payout, and the remaining part continues to accrue contributions from the reduced working hours.

The pension payout is based on the extent of the working time reduction:

25–40% reduction → 25% of pension
41–60% reduction → 50% of pension
61–75% reduction → 75% of pension

Important considerations

Overtime risks: If working hours exceed the agreed reduction by more than 10% for over three months in a calendar year, the partial pension may be forfeited.

Additional income: Taking on another job or earning above the marginal income threshold can suspend the pension entitlement during those periods.

Flemish government clarifies rules for Employers of Record

The Flemish Government has issued its first formal guidance on the legal status of Employers of Record (EoRs) operating in the region. This clarification is a significant development for businesses using EoR models to engage talent in Belgium.

What is an EoR?

An EoR is a third-party organisation that legally employs workers on behalf of a client company, handling payroll, tax, and compliance obligations. While the EoR model has grown in popularity, especially among foreign employers, it has operated in a legal grey area in many countries, including Belgium due to local rules on employee lending.

Flemish government’s position

The Flemish Government now requires that any entity offering EoR services in Flanders must hold a valid licence as a temporary work agency. This means EoRs must apply for formal recognition and meet specific conditions. A financial guarantee of €75,000 is required, paid in two instalments. EoRs must limit their activities to legally permitted forms of temporary agency work, such as:

• employee replacement
• temporary workload increases
• exceptional tasks
• ‘iIn-flow’ employment.

This position is not yet codified in legislation but will guide inspections by the Flemish Social Inspectorate, which has increased audits of EoRs in recent years.

Companies using EoR services in Belgium should:

• ensure their EoR provider is properly licensed in Flanders
• review contracts and service models to confirm compliance with the Employee Lending Act
• be aware that Brussels and Wallonia have not yet issued similar guidance, but may follow suit.

Major labour law reforms on the horizon for 2026

The Belgian federal government has introduced a draft act proposing significant changes to labour law, aimed at increasing workforce participation and flexibility. While not yet passed by Parliament, the act is expected to come into force by the end of 2025.

Key proposed changes

Notice period cap

From 1 January 2026, notice periods for employer-initiated dismissals will be capped at 52 weeks. The revision only applies only to new employment contracts from 2026 onward and will only affect employees with 17+ years of service, meaning practical impact begins around 2043.

Night work reform

The general ban on night work will be abolished.

In e-commerce and logistics, night work is redefined as work between midnight and 5:00 a.m (other sectors remain unchanged with hours between 20.00 and 06.00).

New rules apply only to new contracts and must be implemented via collective agreements or internal work rules.

Voluntary overtime expansion

Employees may work up to 360 hours of voluntary overtime annually (450 in hospitality).

Of these hours 240 (360 in hospitality) will benefit from favourable tax and social security treatment. The arrangement will require a written agreement, renewable annually, with a two-month notice period for termination. Employees are not permitted to require employees to enter such an agreement and cannot subject an employee to unfavourable treatment for not agreeing to enter an agreement.

More flexible part-time work

The minimum weekly working time requirement for part-time contracts is abolished.

However, each work period must still last at least three hours.

Simplified internal work rules

Employers can now define working time frameworks more flexibly in internal rules.

Dispute resolution procedures involving joint committees are also being streamlined, requiring fewer votes for approval.

These reforms reflect Belgium’s broader push to modernise its labour market and align with evolving work patterns. Employers should begin reviewing internal policies and preparing for implementation in 2026.

Centralised monthly reporting for employers

A major step toward administrative simplification is underway in the Czech Republic. On 21 August 2025, the President signed a landmark law introducing centralised monthly reporting for employers,replacing up to 25 separate reports with a single digital submission.

What’s changing?

Employers will submit all required employment-related data through one unified monthly report

The system defines clear roles for both employers and state authorities. An additional supporting act is expected in late September or early October.

Timeline

• 1 January 2026: Legislation takes effect.
• 1 April 2026: Full rollout of the centralised reporting system.

Why it matters

This reform is part of a broader digitisation initiative aimed at reducing bureaucracy and improving efficiency. Employers should begin preparing for the transition by reviewing current reporting processes and anticipating system updates.

Expands maternity leave rights for parents of hospitalised newborn babies

Effective 1 January 2026, Denmark will significantly extend maternity leave and benefits for parents of newborn babies requiring hospitalisation. The Danish Parliament has passed amendments to the Act on Maternity Leave, offering greater support to families during critical early months.

Key changes:

Extended leave for hospitalised newborn babies

Parents will now be entitled to up to 12 months of maternity leave and benefits per parent,a substantial increase from the previous maximum of three months. This applies when a newborn child is hospitalised and notably includes cases of ‘early home stay’, where medical treatment is administered at home but is considered equivalent to hospitalisation.

This extended entitlement will apply to children born on or after 1 January 2026.

Bereavement leave and unemployment benefits

Parents who lose a child and have experienced a loss of income due to caring for a sick child at home for more than two years will benefit from changes to bereavement leave rules. Specifically, periods of lost earnings will be disregarded when calculating eligibility for unemployment benefits during bereavement leave. This amendment is already in force.

Employers should prepare for longer parental absences in cases of hospitalised newborns and update policies accordingly.

Court decision a win for transatlantic data transfers

On 3 September 2025, the EU General Court dismissed a legal challenge seeking to annul the European Commission’s adequacy decision on the EU-U.S. Data Privacy Framework (DPF). This ruling provides a strong endorsement of the DPF and offers greater stability for businesses relying on transatlantic data flows.

Background: What is the DPF?

The DPF is a certification mechanism allowing U.S. organisations to receive personal data from the EU, provided they meet strict privacy standards. It replaces the invalidated Privacy Shield and Safe Harbor frameworks, which were struck down over concerns about U.S. surveillance practices.

The European Commission adopted the DPF adequacy decision in July 2023, concluding that the framework bolstered by Executive Order 14086 offers sufficient safeguards due to reforms to U.S. intelligence activities, and a new redress mechanism for EU citizens.

The legal challenge

The case was brought by Philippe Latombe, a French MP and member of the French Data Protection Authority (CNIL), who argued that the DPF failed to meet EU privacy standards. The Court rejected the challenge, finding that Latombe lacked standing to bring the case, and the DPF meets the requirements of Article 45 of the GDPR, which governs international data transfers.

The ruling reinforces the legal basis for data transfers to certified U.S. organisations and reduces uncertainty for companies relying on cross-border data flows.

However, businesses should remain vigilant. The DPF may still face future legal scrutiny, and organisations must ensure ongoing compliance with certification requirements. EU data controllers must ensure that US based receivers of EU personal data either have a valid DPF certification or they have executed a set of the EU standard clauses for data transfers.

Key changes to sick leave regulations

Recent legal developments in France have introduced important changes to sick leave regulations, with implications for both employee entitlements and employer obligations. Here are the three key updates:

1. Annual leave can be carried over during sick leave
   In a landmark ruling on 10 September 2025, the French Supreme Court confirmed that employees who fall ill during their scheduled vacation are entitled to carry over unused annual leave. This decision aligns French law with EU standards and requires employers to reassess their leave management policies to ensure compliance.
2. New secure sick leave certificate form
   As of 1 July 2025, healthcare professionals must use a newly secured Cerfa form when issuing sick leave certificates, unless submitted electronically. This form includes seven security features,such as a hologram and magnetic inkand is the only format accepted by local health insurance offices (CPAM). Copies, scans, or older versions will be rejected. The change aims to reduce fraud and improve the integrity of medical documentation.
3. Stricter rules on gaps between sick leave periods
   Since September 2024, the National Health Insurance Fund (CNAM) has tightened its stance on compensation for gaps between two sick leave periods. Any non-certified break,regardless of length will not be covered. The implications vary depending on the duration and classification of the subsequent medical certificate:

• Gaps of two days or less: If the new certificate is marked as ‘initial,’ a new waiting period applies and employers must submit a fresh salary certificate. If marked as ‘continuation’, no waiting period applies, but the gap remains uncompensated.
• Gaps of three days or more: The new certificate is automatically treated as ‘initial’, triggering a new waiting period and requiring a new salary certificate.

These changes underscore the need for updated HR policies and close coordination with payroll and benefits teams.

Proposes key reforms to Employment Contracts Act

A working group in Finland has proposed several amendments to the Employment Contracts Act, with legislative progress expected in autumn 2025. If approved, the changes would take effect on 1 January 2026.

Highlights of the proposal

Simplified fixed-term contracts

Employers may enter into fixed-term agreements without specific justification.

For first-time employment contracts

If the employee has worked for the same employer for over five years.

These contracts may last up to 12 months, with the option to renew twice within that period.

Shorter lay-off notice period

The current 14-day notice for lay-offs may be reduced to seven days, offering more flexibility for employers.

Re-employment obligations adjusted

In redundancy cases, the obligation to offer re-employment would apply only to employers with 50 or more employees.

These changes will not affect collective labour agreements, which may contain stricter provisions. A government proposal is expected in early autumn, with final approval pending.

Employers cannot deduct ‘omitted income’ during garden leave

A recent decision by the Federal Labour Court of Germany has clarified the rights of employees who are released from duties during their notice period (garden leave). The ruling confirms that employers cannot deduct hypothetical earnings from final salary payments unless the employee has acted in bad faith by deliberately avoiding other employment.

In this case, a senior consultant was dismissed with notice and released from work duties until the end of June 2023. During the release period, the employer sent the employee 43 job vacancies but stopped paying wages in June, arguing the employee had failed to seek alternative income. The employee applied for only seven roles after June and sued for unpaid wages.

The Federal Labour Court ruled that the employee was entitled to full pay during the notice period. The employee was not malicious in failing to secure another job, and therefore the employer could not deduct ‘omitted alternative income’. The obligation to seek other income must be assessed fairly, considering whether the employer could have continued to employ the individual during the notice period.

This ruling reinforces that employees released from duties during their notice period are still entitled to full remuneration.

Employers cannot assume or deduct potential earnings unless there is clear evidence of bad faith. The burden of proof lies with the employer to show that the employee deliberately avoided income opportunities.

No dismissal protection for Works Council Initiators in first six months of employment

A recent decision by the Munich Regional Labour Court confirms that employees in Germany do not receive special protection against dismissal for initiating a works council election within the first six months of employment.

Case background

A newly hired security guard documented his intent to initiate a works council election just days after starting work.

He informed his employer of this intention via email two weeks later.The next day, he was dismissed.

The employee claimed the dismissal violated Section 20(1) of the Works Constitution Act (BetrVG), which prohibits employers from obstructing works council elections. He also argued for special protection under Section 15 of the Protection Against Unfair Dismissal Act (KSchG), which safeguards employees involved in election activities.

Court’s decision

The court ruled that special dismissal protection only applies once formal steps — such as issuing an invitation to an election meeting — have been taken.

Since no official election process had begun, and the employee was not afforded any special protection and the standard rule on protection against dismissal rights applied ( i.e. an employee needs a minimum of six months service to bring a claim for unfair dismissal).

Key takeaways for employers

Employees do not gain automatic protection from dismissal simply by expressing intent to initiate a works council election. Special protections under the KSchG apply only after formal election procedures begin.

However, employers must still avoid any actions that could be interpreted as obstructing election processes, which may carry criminal liability under the BetrVG.

This ruling clarifies the limits of dismissal protection for new employees and reinforces the importance of understanding procedural thresholds.

Procedural fairness is key,even in cases of serious misconduct

A recent decision by the Workplace Relations Commission (WRC) in Ireland has reinforced the importance of procedural fairness in disciplinary processes,even when the misconduct appears clear-cut. The case involved a manager dismissed for serious sexual harassment, yet the dismissal was found to be procedurally unfair, resulting in compensation of €22,500.

Case summary

The employee admitted to sending sexually explicit messages from colleagues’ phones without consent. Despite this, the WRC found that the employer’s disciplinary process was flawed in several key areas:

Failure to critically assess the investigation report

The disciplinary panel relied heavily on an external investigator’s classification of the misconduct as ‘severe sexual harassment’ without independently evaluating the findings.

Use of un-investigated prior incidents

The panel referenced a previous incident that had not been formally investigated, undermining the fairness of the process.

No appeal offered

Although the company’s internal policies allowed for appeals, none was offered. Confusion between outdated disciplinary and harassment policies contributed to procedural gaps.

Insufficient consideration of the employee’s defence

The panel deliberated for only 20 minutes before deciding to dismiss, suggesting a pre-determined outcome. The WRC found this inadequate to properly assess proportionality or alternative sanctions.

This case highlights that substantive misconduct alone is not enough to justify dismissal. Employers must:

ensure disciplinary and investigation policies are up-to-date and aligned

• critically engage with investigation findings
• offer a clear appeal process
• consider the employee’s defence and proportionality of sanctions
• avoid any perception of bias or pre-determined outcomes.

€85,000 award highlights risk of discrimination in promotion processes

A recent decision by the Workplace Relations Commission (WRC) in Emily Williams v Board of Management St Tola's NS (ADJ-00055461) underscores the importance of fair and transparent promotion procedures, especially when employees are on protected leave such as maternity leave.

Case summary

Emily Williams, a teacher on maternity leave, was eligible for a Contract of Indefinite Duration (CID) after completing two fixed-term contracts. When a permanent vacancy arose, the school appointed another candidate without notifying or considering Williams. The school justified its decision based on a previous interview score, despite having no written policy to support this approach.

Williams later applied for a fixed-term role. During the interview, the Principal congratulated her on the birth of her child and commented that she should “enjoy every moment at home with the baby.” Williams argued this remark revealed her maternity status to the panel and influenced the outcome.

WRC findings

The WRC found that the school discriminated on the grounds of family status by failing to consider Williams for the CID. The interview process was flawed due to a lack of transparency, poor documentation, and inadequate scoring. The Principal’s comment about her baby, made before scoring concluded, amounted to differential treatment.

Williams was awarded €85,000 in compensation, with the adjudicator noting the need for a real deterrent against future breaches.

Key lessons for employers

This case highlights critical obligations under the Employment Equality Act 1998:

• notify all eligible employees of vacancies, including those on maternity or other protected leave
• avoid assumptions about availability or interest based on family circumstances
• ensure interview processes are fair, consistent, and well-documented
• avoid personal comments that could be perceived as discriminatory
• use predefined questions and scoring criteria, and maintain clear records of how decisions are made.

Court confirms vacation days continue to accrue during long-term illness

A recent ruling by the Gelderland District Court has clarified a long-standing debate in Dutch employment law: can employees continue to accrue vacation days even after two years of illness, despite not receiving wages?

Background

Historically, Article 7:634 of the Civil Code has been interpreted so that vacation days are only accrued when an employee is entitled to wages. This led many employers to assume that after two years of illness when wage entitlement typically ends vacation accrual also stops.

However, in a recent case, the court ruled that this interpretation conflicts with European law, which guarantees a minimum vacation entitlement regardless of wage entitlement.

The case

The employee in question had been unfit for work since 2019 and received IVA disability benefits after two years of salary continuation. Although no work was performed and no salary was paid, the employment contract remained in place — a so-called dormant employment relationship.
Upon initiating termination proceedings, the employee requested payment for all accrued but unused vacation days. The employer argued that vacation accrual had ceased after the second year of illness. The court disagreed.

Key ruling

The court found that European law overrides Dutch law in this context.

Employees continue to accrue vacation days throughout the entire period of illness, regardless of wage entitlement or work performed.

The employer was ordered to pay €13,149.74 in compensation for unused vacation days.

Implications for employers

Employers should reassess the vacation balances of employees who are no longer receiving wages but remain formally employed during long term sickness absence and prepare for higher final settlements.

Confirms Minimum Wage increase for 2026

The Polish government has officially announced new minimum wage rates for 2026, following the publication of the regulation in the Journal of Laws on 15 September 2025.

New rates effective 1 January 2026

• Monthly minimum wage: PLN 4,806 gross.
• Hourly rate for civil law contracts: PLN 31.40 gross.
• These rates will remain unchanged throughout 2026, with no mid-year adjustment planned.

Impact on employment-related benefits

The increase will also affect several employment-related payments, including:

• downtime remuneration
• guaranteed pay
• compensation for unequal treatment or mobbing
• termination compensation due to mobbing
• night work allowance, which is calculated as 20% of the minimum hourly rate.

Employers should update payroll systems and employment contracts to reflect the new rates and ensure compliance from January 2026.

Parental leave changes

The Spanish government has approved a significant extension to parental leave for birth and childcare, enhancing work-life balance for families.

What’s new?

• Leave extended from 16 to 19 weeks per parent.
• Single-parent families now receive 32 weeks in total.
• Leave remains individual, non-transferable, and fully paid by Social Security at 100% of the regulatory base.

How is it structured?

The leave allowance is managed in two blocks:

• Main block: 17 weeks per parent (28 for single parents), to be used within the first 12 months after birth, adoption, or fostering.
• Flexible block: two additional weeks (4 for single parents) can be used anytime until the child turns eight.

Effective from when?

The increase to the main block of leave is effective immediately and the flexible block (two weeks to be used until the child reaches eight) will be activated from 1 January 2026 and will apply retroactively to children born on or after 2 August 2024.

How to apply

Applications can be submitted online via the Your Social Security portal, under the section for birth, adoption, and childcare benefits.

Supreme Court clarifies rules on non-compete clauses

A recent ruling by the Swiss Federal Supreme Court (BGer 4A_5/2025) has clarified key legal principles surrounding post-contractual non-competition clauses, particularly when compensation is involved.

Case overview

An employee resigned after 15 years with a Swiss subsidiary of an international company. The employment contract included a two-year non-compete clause and compensation equal to 50% of the last salary (excluding bonuses). After the resignation, the employer attempted to cancel the clause and compensation via a separation agreement, which was not signed. The employer then unilaterally terminated the clause, leading to a legal dispute.

Key findings from the court

Geographical scope is not always required

Although the clause lacked a geographical restriction, the court ruled it valid.

Based on mutual intent and context, the clause was deemed to apply reasonably within Switzerland.

Unilateral termination is invalid

The court confirmed that a non-compete clause with compensation cannot be unilaterally terminated unless this right is explicitly agreed upon.

The employer’s attempt to cancel the clause to avoid payment was unenforceable.

No automatic offset of replacement income

The employer argued that any income earned (or not earned due to fault) should reduce the compensation owed. The court rejected this, stating that offsetting is only allowed if contractually agreed.

Implications for employers

Non-compete clauses must meet strict legal standards, including clarity on scope, duration, and compensation. Compensation matters: If compensation is agreed, employers cannot unilaterally withdraw it without prior contractual rights or the employee's agreement.

New data law - what employers need to know about the DUAA

The Data (Use and Access) Act 2025 (DUAA), which received Royal Assent in June, marks a major update to the UK’s digital information framework. Designed to modernise data protection while easing compliance burdens, the DUAA introduces practical changes for organisations that handle personal data especially employers and HR teams.

Key highlights for employers:

1. Simplified Data Subject Access Requests (DSARs)
   Under the DUAA employers must conduct reasonable and proportionate searches when responding to DSARs. Exhaustive searches are no longer required, reducing the administrative burden. The standard one-month response deadline remains, but can be extended by up to two months for complex or multiple requests provided the data subject is notified within the first month.
2. More flexibility in Automated Decision-Making (ADM)
   The DUAA relaxes restrictions on ADM, allowing organisations to use factual, inferred, or profile-based data in automated decisions (e.g. recruitment tests or loan approvals), and proceed without prior consent, provided individuals are informed and given the chance to contest decisions or request human review.
   Note the use of special category data (e.g. health or ethnicity) in ADM remains tightly regulated and requires explicit consent or a public interest justification.
3. New right to complain directly to employers
   Individuals now have the right to raise data protection complaints directly with the organisation before escalating to the Information Commissioner’s Office (ICO).
   Employers must acknowledge complaints within 30 days, investigate promptly and keep the complainant informed and notify the individual of the outcome once resolved.
   Employers should implement or update internal complaints procedures and train staff to handle data-related concerns effectively.

The DUAA is being rolled out in stages through to June 2026 and will affect any organisation that processes personal data. For employers, it’s a chance to streamline compliance, improve transparency, and strengthen trust with employees.

Share plan communications: Caution for employers

A recent High Court ruling in Dixon v GlobalData PLC serves as a stark warning to employers about the risks of informal assurances regarding employee share options.

Key takeaways:

• Informal promises can be binding: The case centred on Mr Dixon, a former employee who was assured by the CEO that his share options would remain valid post-employment. Despite the formal plan rules stating otherwise, the court found that Dixon had reasonably relied on the CEO’s assurance, leading to a successful proprietary estoppel claim.
• Micklefield clauses aren’t foolproof: UK employers rely on exclusion clauses (referred to as a Micklefield Clause) to protect against share option claims from ex-employees. What is clear from this case is that the wording in such clauses have limitations. The clauses prevent a terminated employee from seeking remedies for loss of rights under the share option plan including lapsed or unvested options that are a consequence of their termination. The court in this case held that the plaintiff was not pursuing a claim for lost options because of their termination but instead was claiming equitable relief for a denial of promised rights which fell outside of the scope of the Micklefield Clause.
• Governance and communication: This judgment underscores the need for meticulous handling of share plans and termination arrangements. Employers should review their governance processes and ensure that only authorised personnel make representations about share entitlements.

Overhaul of employee dismissal laws

On 4 September 2025, South Africa introduced a major reform to its dismissal laws with the publication of a new Code of Good Practice: Dismissal under the Labour Relations Act (LRA). This marks the most significant update in nearly 30 years and consolidates previously fragmented guidance into a single, unified frameworks.

1. Unified framework for all dismissals
   Dismissals for misconduct, incapacity, and operational requirements are now governed by one comprehensive code. This simplifies compliance and ensures consistent standards across all dismissal types.
2. Greater flexibility for small employers
   Recognising the limited HR capacity of smaller businesses, the Code allows for less formal procedures provided fairness is maintained. However, employers must still:
   • inform employees of allegations
   • allow them to respond
   • communicate the outcome clearly.
3. Expanded grounds for incapacity
   The definition of incapacity now includes:
   • Incompatibility: Where an employee’s behaviour or inability to integrate disrupts the workplace.
   • Imprisonment: If an employee is incarcerated and unable to fulfil duties.
   • Substance Abuse: Employers are encouraged to offer support or rehabilitation before considering dismissal.
4. Probation now includes suitability
   Probation is no longer just about performance, it now covers cultural fit, conduct, and attitude. Employers must:
   • provide feedback and support
   • document performance and suitability concerns
   • offer a fair chance to improve before termination.
5. Progressive discipline still preferred
   Dismissal should remain a last resort. However, serious misconduct (e.g. theft or assault) may justify immediate termination if trust is irreparably broken.
6. Operational requirement dismissals codified
   Retrenchments (economic terminations) are now fully integrated into the Code. Employers must use the prescribed Section 189(3) notice format, consult in good faith, apply fair selection criteria, and offer severance pay and consider re-employment opportunities.
7. Emphasis on substantive and procedural fairness
   Dismissals must be both procedurally and substantively fair. Employers should assess the seriousness of the breach, the harm caused, the employee’s response and disciplinary history, and their level of responsibility.
   Employers should review and update disciplinary, probation, and retrenchment policies.
   Train HR and managers on the new framework, especially around suitability and procedural flexibility. Document all processes thoroughly to demonstrate fairness and consistency.