Global HR News

Changes to ‘continuous contract’ rule

Currently under the Employment Ordinance an employee is deemed to be engaged under a ‘continuous contract’ if they have been employed by the same employer for four weeks or longer and have worked for 18 hours or more week.

Employees under a ‘continuous contract’ have increased rights over those that do not – namely access to annual leave, sick pay, maternity and paternity leave, severance pay etc.

The current rule is harsh on employees who only occasionally drop below 18 hours of work per week and are denied employment rights as a result.

To rectify this the Government has proposed that the 4-18 rule will be amended so that an employee will be deemed to work on a continuous contract if the work continuously for four weeks or more and for 17 ours or more per week OR for an aggregate of 68 hours or more during a four week period.

So far, no date has been announced for the change. 

Abolishment of MPF Offsetting

The government has announced the abolition of using the accrued benefits derived from employers' mandatory contributions under the Mandatory Provident Fund (MPF) System to offset Long Service Payment (LSP) and Severance Payment (SP) offsetting arrangement, effective May 1, 2025 (the Transition Date).

From the transition date onwards:

• The accrued benefits derived from the Employer's MPF Mandatory Contributions cannot offset the employee's LSP and SP in respect of the years of service from the Transition Date. However, it can continue to offset the employee's LSP/SP in respect of the years of service before the Transition Date.
• The accrued benefits derived from the Employer's MPF Voluntary Contributions and gratuities based on the years of service of the employees can continue to offset the LSP/SP of the employees (irrespective of the years of service before or after the Transition Date).
• Please note that the abolition of the offsetting arrangement is not retroactive. For employees employed before the Transition Date, MPF accrued benefits derived from Employer Contributions throughout the employee’s whole employment period, no matter if the contributions are mandatory or voluntary, and whether they are made before, on, or after the Transition Date, can still be used to offset LSP/SP for service years prior to the Transition Date.

Continues to relax its rules on hard copy, wet inked employment documents

Earlier this year the Fourth Bureaucracy Relief Act came into effect introducing significant changes to the form of documentation required in employment. The ‘written form’ requires an original hard copy document to be wet signed and was a requirement for employment contracts until January 2025 when the requirement was relaxed to allow ‘text form’ which simply requires that agreements are in a durable medium with a legible declaration – therefore electronic documents signed electronically are now enforceable (other than for fixed term contracts which still require the ‘written form’). 

Now effective from 1 May 2025 requests from an employee for parental leave or part time parental leave can be submitted digitally to their employer without the requirement for a wet-ink signature, and likewise a refusal from an employer to an employee’s request can take a similar form. This does however demand increased vigilance from the employer given that an employee will have protection against dismissal as soon as their email has been submitted and its no longer the case that the employer can rely on the absence of true ‘written form’ to deny an employee their protection.

Set bonus targets early or face the consequences

A recent case before the Federal Labour Court serves as a reminder to German employers that targets for variable compensation must be set in good time otherwise the employee could be entitled to their full target figure as a bonus regardless of performance.

In this case the employer was subject to a collective agreement which stipulated targets would be set by 1 March of each calendar year. In 2029 the targets were only provided in October, and the employee was terminated in November whereupon the employee claimed payment for 100% of his target bonus of €16,000. The court found in favour of the employee. Employers are advised to set targets well in advance of the start if the new bonus year and document their communication with their employee.

Planned increase to commuter allowance

The commuter allowance has remained unchanged at 30 cents per kilometre for more than twenty years, even though since 2021 there has been an additional charge of 5 cents starting from the 21st kilometre, and from 2022 of 8 cents. In the coalition negotiations, CDU/CSU and SPD agreed to grant this higher commuter allowance of 38 cents per kilometre starting from 2026 for the first kilometre. Unless the employee lump sum is significantly increased as well, the number of taxpayers claiming the commuter allowance will significantly rise starting in 2026.

Employer was not data controller for non-work related personal data held on work phone

Under the provisions of the GDPR a data controller has the responsibility, and liability, for the personal data under their control. In McShane v Data Protection Commission (DPC) McShane was employed by the Ireland Health & Safety Executive (HSE) and complained to the DPC that personal data on his work supplied phone was unlawfully breached and as a result he lost €1400 from his cryptocurrency account. The DPC dismissed the claim on the basis that the HSE was not the data controller of the non-work related personal data held on the phone. The fact that the HSE had a staff policy that prohibited non-work related use of their phones was a persuasive factor in the case and therefore employers are advised to operate an acceptable use policy to avoid liability for non-work personal data.

New gender pay gap platform

On 8 March the government announced that in scope employers will be required to use a new portal for gender pay gap reporting. This year the headcount threshold for gender pay gap reporting was reduced so that employers with 50 or more employees are now considered to be in scope.

The portal will be launched in Autumn this year ahead of the November reporting deadline.

As a refresh employers are required to report on the following

• Differences as a percentage between mean and median hourly rates of pay of female and male employees.
• Differences as a percentage between the mean and median bonuses of female and male employees.
• The percentage of female and male employees paid a bonus.
• The percentage of female and male employees receiving a benefit in kind.
• The percentage of female and male employees falling within remuneration pay bands.

Contractual retirement age changes

The Employment (Contractual Retirement Ages) Bill 2025 is currently progressing through parliament. The Bill seeks to allow employees subject to contractual retirement ages below the State Pension Age (currently 66) to object to retirement – on receipt of an objection the employer will only be able to enforce retirement if it can be objectively and reasonably justified.

Increased clarity on ‘psychological work environment’

The Working Environment Act sets out a duty on the employer to regulate the psychosocial work environment however without any clarification on the requirements.

The government has proposed revised wording introducing a new paragraph stating that work must be organised, planned, and carried out in such a way that the psychosocial work environment factors in the enterprise respect an employees’ health, safety, and well-being. A second paragraph will be added several factors that an organisation should focus on, which include:

• unclear or conflicting demands/expectations
• emotional demands and strain in connection to work involving people
• workload and time pressure resulting in an imbalance between work permed and the time available
• support and assistance available.

The government has stressed that the revisions don’t actually change the responsibilities of an employer given that there has always been a duty to consider the psychosocial aspects of the working environment – however the update does provide additional focus on an area that was previously ignored by many employers who should now be guided to take proactive steps to ensure that they are operating a safe working environment for their employees.

Proposed changes to health contribution for entrepreneurs

The Ministry of Finance has announced that there will be changes made to the way the social security health contribution is calculated for entrepreneurs (self-employed). From 1 January 2026 there will be a basic flat rate of 9% of 75% of the minimum wage and 4.9% applied to income in excess of 1.5 times the State average monthly salary (the rate will be 3.5% on income that exceeds three times the threshold).

Plans for salary transparency provisions

A parliamentary bill to update the Labour Code requiring the disclosure of all components of salary and benefits to candidates in addition to ensuring adverts are gender neutral and non-discriminatory has been reduced in scope – however it is still hoped that the bill is robust enough to have a positive impact. A date has yet to be announced for its launch.

Electronic Billing Deadline extension

Although the electronic billing law came into force in 2022, last Tuesday, April 1, the Council of Ministers approved the extension of the deadline, until 2026, for companies and professionals to adapt their invoicing programs to the new electronic invoicing obligations. Specifically, legal entities must do so until January 1, while the self-employed will have until July 1 next year.

Increase in nursery, cultural and meal vouchers

The value of nursery, cultural and meal vouchers will increase from April; accordingly, nursery vouchers will increase by 10 lei, and meal vouchers by 14 bani, in the first semester of this year. Furthermore, an order already published in the Official Gazette provides the increase of cultural vouchers as well.

Approval of the procedure for the application of the 3% tax incentive

Following the enactment of Emergency Ordinance No. 107/2024 on the regulation of certain fiscal-budgetary measures, the Ministry of Public Finance has adopted the procedure for the application of the 3% tax credit, applicable to taxpayers liable to corporate income tax or microenterprise tax for the 2024 fiscal year, or for the amended fiscal year commencing in 2024.

Furthermore, the standard templates for the issuance, amendment, or revocation of the Decision granting the 3% tax credit have been approved.

New guidance on what to include in a Modern Slavery Statement

We previously discussed modern slavery in our recent insight. As a reminder under the provisions of the UK Modern Slavery Act organisations doing business in the UK with annual revenue of £36 million are required to publish a Modern Slavery Statement.

As highlighted in our insight even if a UK company falls short of the revenue threshold the requirement can be triggered if the UK business activities are managed and controlled by an overseas parent company – in which case the revenues of the parent company and its global subsidiaries will also be included when assessing the £36 million revenue trigger.

When the requirements are triggered, the organisation must publish a Modern Slavery Statement each year. To date the quality of the statements published as been patchy and in response to this the Government has recently issued revised guidance on how to draft a statement.

The guidance provides more practical information on how to complete the six recommended categories of disclosure with examples of good versus best practice (the six areas being; organisational structure, organisational policies, assessing and managing risk, due diligence, training, monitoring and evaluation). The guidance also now contains a section on general principles covering areas such as stakeholder buy-in, and continuous improvement and much stronger messaging on the importance of fighting modern slavery.

Many sections in the guidance operate on a two-tier footing – level one guidance aimed at organisations completing a statement for the first time and level two guidance for organisations more familiar with the process.

The guidelines don’t actually change existing reporting requirements however they do offer much needed guidance on the information and level of detail that should be disclosed and linking to our earlier insight for any organisation that also has to submit a statement in Australia and Canada the requirements in the UK remain similar enough to enable a consolidated statement which is good news.

Revisions to immigration rules

UK immigration rules had a refresh in April 2025, the main changes are listed below.

• Nationals from Trinidad and Tobago now need to secure a visitor visa before entering the UK (previously the countries were included in the list of countries not requiring a formal visa).
• British National (Overseas) passport holders no longer need an Electronic Travel Authorisation (ETA) to enter the UK as a result they have the same status as British and Irish citizens who are also exempt from the ETA requirement.
• Global Talent Visa rules now require applicants under the Arts, Culture, Architecture, Fashion PACT and Digital Technology routes to supply a professional CV and letter of support demonstrating a relevant work experience with a referee in their field of expertise. For the Digital Technology route it is expected that the change to the endorsing body (currently Tech Nation) will be announced later this year.
• The Skilled Worker Visa category now applies restrictions on the costs that can be passed onto the visa holder. Sponsors should check their current practices to ensure that any cost sharing is within the new guidelines as a breach will likely result in the revocation of the sponsorship licence. Additionally, the minimum salary threshold for Skilled Worker Visas has been increased from £23,200 to £25,999.
• For the Health and Care Worker Visa the hiring organisation is now required to evidence attempts to hire from within the existing UK workforce and need a confirmation from regional partnerships showing genuine attempts.

In the last few weeks the UK government has issued a white paper focused on reducing immigration in response to mounting pressure from the UK public .

The white paper includes the following key areas

• Care worker visa route to be closed to new applicants ( visa extensions and in-country visa switching will be permitted until 2028 for anyone already in the UK.
• The timeframe required to apply for indefinite leave to remain (i.e. citizenship) will be extended from the current five years to 10 years of continuous residence.
• Skilled Worker route will be tougher – the qualification standard will be increased from RQF Level three to RQF Level six (bachelor degree), unless the role is listed as a shortage occupation.
• Immigration skills charge to increase by 32%.
• Graduate visas to be shortened from two years to 18 months.
• Tougher English proficiency requirements- skilled workers need to demonstrate proficiency at level B2 (equivalent to A level standard) – this level will also be required of dependents.

It is unlikely that any of the changes will become law until 2026.