Frontline APAC - September 2018

26 September 2018

In this issue of Bird & Bird's APAC Frontline, we will look back at the significant changes that came into effect in the last quarter across Australia, Hong Kong, the People's Republic of China (PRC) and Singapore. 

In our Case Updates we look at two Australian rulings which provide a reminder regarding the categorisation of an employee's status and insight regarding the management of employee mental health issues at work.  

Our Legal Updates include changes to statutory entitlements and benefits across the APAC region, including the regulatory approach to the issue of modern slavery in Australia, new guidelines on the  National Registration Identification Card for personal data protection purposes in Singapore, changes in the Employment Ordinance, immigration dependent policy, statutory minimum wage and proposed changes regarding maternity leave, paternity leave and the abolition of MPF offsetting mechanism in Hong Kong, as well as the availability of Mainland Residence Card for Hong Kong, Macau and Taiwan Residents and changes in  the collection of social insurance premiums in the PRC. 

Case Updates

Australia

"But their contract says 'casual'!?!" – A reminder that 'casual' employees may actually be permanent staff

The entitlement to annual, sick and other paid leave depends on whether an employee is employed on a permanent (full-time or part-time) or casual basis. Although the Court's discussion in this case of who will be considered a casual employee was not novel, this decision in WorkPac Pty Ltd v Skene [2018] FCAFC 131 is a timely reminder for employers to review their employment contracts and relationships, including employment arrangements that operate under a Labour Hire Regime. See our article on the new labour hire regime, included in the May edition of Frontline.

Read more here.

Managing employee mental health issues at work

In a society with a significantly increased awareness of mental health issues and a much greater willingness to discuss these issues in an attempt to address them, employers are increasingly being encouraged to identify the signs of mental health issues at work and to foster a culture of open communication about mental health.

How do employers draw distinctions between behaviour and conduct that is concerning because it is a new behaviour from an employee or conduct that is simply "different" to that which you are accustomed to seeing amongst your workforce? A recent decision of the NSW Civil and Administrative Tribunal, Stefanac v Secretary, Department of Family and Community Services [2018] NSWCATAD 106 demonstrates the risks associated with an employer forming a view about and managing an employee on the basis of a presumed mental health issue. The case also demonstrates the apparent drafting deficiencies in the Anti-Discrimination Act 1977 (NSW) (ADA), where an employee is discriminated against on the basis of a presumed disability.

Read more here.

Legal Updates

Australia

Australia's regulatory approach to the issue of modern slavery

In June 2018, the New South Wales State government and the Australian Federal government each took important steps towards addressing the issue of modern slavery.

The New South Wales government leads the way in Australia, as the first State to pass legislation with the key objective of combatting modern slavery. The Modern Slavery Act 2018 (NSW) (NSW Act) seeks to achieve this through mandatory reporting in the supply chains of commercial organisations. The rationale behind mandatory reporting is that it will require reporting entities to conduct due diligence on their supply chains and not contract with suppliers that may place them in breach of the legislation.

At almost the same time the Federal Government introduced the Modern Slavery Bill 2018 (Federal Bill), which has the same broad objectives as the NSW Act. In this article, we will be addressing some material differences in application and enforcement between the State and Federal legislation, as well as important takeaways for employers.

Read more here.

Hong Kong

Commencement of the Employment (Amendment) (No.2) Ordinance 2018

In our Frontline legal update of May 2018, we discussed the Legislative Council passing the Employment (Amendment) (No.2) Ordinance 2018 (the "Amendment Ordinance"), which empowers the Labour Tribunal to make an order for reinstatement or re-engagement for unreasonable and unlawful dismissal without the employer's agreement if the Labour Tribunal takes the view that making such order is appropriate and practicable.

If an employer fails to reinstate or re-engage the employee as required by the Labour Tribunal's order, the employer will need to pay a further sum to the employee, which is three times the employee's average monthly wages, subject to a cap of HK$72,500. This amount is in addition to the statutory termination payments and compensation payable to the employee. If an employer wilfully and without reasonable excuse fails to pay this further sum, this will constitute a criminal offence.

On 8 June 2018, the government has gazetted that the Amendment Ordinance will come into operation on 19 October 2018.

Update in immigration dependent policy

In the landmark case of QT v Director of Immigration [2018] HKCFA 28 at the Court of Final Appeal (CFA), the CFA held that the Director of Immigration's refusal to grant dependant visas to same-sex partners of employment visa holders was unlawful and discriminatory for the purposes of the immigration dependent policy. Following the CFA's decision, the Hong Kong government has updated its dependent policy. 

From 19 September 2018 onwards, individuals who are eligible to apply for a dependent visa under Hong Kong's visa policy now include the other party to a same-sex civil partnership, same-sex civil union, "same- sex marriage", opposite sex civil partnership or opposite sex civil union entered into in accordance with the applicable local law in force of the place of celebration, and with such status being legally and officially recognised by local authorities of such place of celebration. 

The policy clarified that the terms "civil partnership" and "civil union" refer to a "legal institution of a nature which is akin to a spousal relationship in a marriage". Therefore, individuals who are: de facto spouses, partners in cohabitation and fiancé of the applicants still are not eligible to apply for a dependent visa under the revised policy. 

However, it is important to note that the revision in the policy does not mean that Hong Kong law now recognises  same-sex civil partnership, same-sex civil union, "same- sex marriage", opposite sex civil partnership or opposite sex civil union. The definition of "marriage" under the Marriage Ordinance remains as the union between one man and one woman to the exclusion of all others. The revision only impacts the immigration policy for non-local dependents and does not change any other existing government policies or existing rights under Hong Kong law. 

Review of the Statutory Minimum Wage

In accordance with the Minimum Wage Ordinance (Cap 608), the Chief Executive has required the Minimum Wage Commission (MWC) to submit its recommendation report on the Statutory Minimum Wage (SMW) rate.

In April to May 2018, the MWC commenced a six-week public consultation to invite views from the community on the review of the SMW rate, currently at HK$34.5 per hour.

In June 2018, the MWC conducted consultation meetings with stakeholders to understand their views on the review of the SMW rate.
In September 2018, it was reported that an initial consensus had been reached between the business and labour representatives to raise the SMW to HK$37.5, being a record high increase of 8.7%. 

The MWC has been having regular meetings to examine Hong Kong's socio-economic and employment conditions, and will be submitting its recommendation report by 31 October 2018.

Extension of Paternity Leave

On 15 June 2018, the government proposed to extend the statutory paternity leave to five days.  The bill was gazetted and introduced to the Legislative Council on 20 June 2018.

Under the current statutory regime, a male employee is entitled to three days of paternity leave in accordance with the Employment Ordinance (Cap 57) for each confinement of his spouse or partner if he (i) is the child's father, (ii) has been employed under a continuous contract immediately before taking the leave and (iii) has given the required notification to the employer. 

The proposed extension proves to be controversial. Some lawmakers criticised that it will put pressure on small to mid-sized businesses, whereas other lawmakers welcomed the extension but expressed concerns that the proposed extension is still below international standards.

A Labour Department spokesman said the proposed bill was supported by both the Labour Advisory Board and the Legislative Council Panel on Manpower.

It is expected that the bill will be passed within 2018. 

Extension and subsidies for Maternity Leave

The government has commenced a study on improving maternity leave and there is incentive to extend statutory maternity leave from the current statutory entitlement of 10 weeks to 14 weeks, so as to bring Hong Kong in line with the standards of the International Labour Organisation.

The government is currently considering subsidies to help offset the costs of extending the statutory maternity leave.

This government study is underway and expected to be completed by the end of the year.  

Government proposal on the abolition of MPF offsetting mechanism

On 29 March 2018, the government proposed to business and labour representatives in closed-door meetings to abolish the Mandatory Provident Fund (MPF) offsetting mechanism.  

Under the current offsetting mechanism, an employer can use the accrued benefits attributable to the employer's contributions to offset a statutory severance payment or long service payment made to an employee.

The government has committed to a HK$17 billion subsidy to ease the burden on businesses over a period of 12 years. The subsidy scheme is said to be in a form of a two-tiered system with a 50 to 75 per cent subsidy provided for the first three years. From the fourth year and onwards, the subsidy percentage would decrease gradually until it falls to below 10 per cent in the 12th year.

On 13 June 2018, a Labour Advisory Board meeting was held between the labour and business representatives and an initial consensus have been reached on the abolition of the offsetting arrangement.

The government is likely to revise its proposal based on the meeting and further discussions are expected to be underway.

PRC

Mainland Residence Card Available for Hong Kong, Macau and Taiwan Residents as of 1 September 2018

On 3 August 2018, the State Council issued its Decision to Abolish a Batch of Administrative Licences (the "Decision"). The application and issuance of work permits which enable Taiwan, Hong Kong and Macao residents (the "THM Residents") to legally work in Mainland PRC is due to be abolished, meaning the THW work permit will be withdrawn and no longer used. Instead, THM Residents are now encouraged to apply for a Mainland Residence Card.

The Measures on Application of Mainland Residence Card for THM Residents ("Measure") came into effect on 1 September 2018. In accordance with the Measure, cardholders will benefit from the following opportunities (among others):

participation in PRC social insurance system;

ability to contribute and utilize housing provident funds;

access public services, such as compulsory education, basic public employment/health/cultural and sports services, and legal assistance, etc.; and

ability to use the card to take domestic flights or trains, book hotel accommodations, conduct financial transactions, obtain a driving license, etc.

Social insurance premiums will be uniformly collected by the tax authorities from 1 January 2019

On 20 July 2018, the General Office of the State Council endorsed the Regulations on the Reform of the Taxation and Administration System of National Taxes and Local Taxes (the "Regulations"), which clarifies that social insurance premiums will be uniformly collected by the tax authorities from 1 January 2019. This is the most stringent form of social security collection in the history of Mainland PRC.

On 20 August 2018, the State Administration of Taxation, the Ministry of Finance, the Ministry of Human Resources and Social Security, the National Health and Health Council, and the National Health Insurance Bureau jointly held a mobilisation and deployment meeting to discuss social insurance premiums and non-tax revenue collection and management duties in Beijing. During this meeting, it was decided that the transfer of social insurance premiums and the first batch of non-tax revenue collection and management duties must be completed by 10 December 2018. From 1 January 2019, these will be officially administered by the taxation department.

While social insurance premiums will be collected and managed by the taxation department, the payment base, rate or equivalent will remain governed by current social insurance laws and regulations. Therefore, there will not be any major change in these aspects.

In China, the national network of tax authorities has the highest administrative efficiency in the collection of fees, compared to its human resource and social security counterparts. It is expected that this transformation will strengthen the collection of social insurance. Paying social insurance is a statutory obligation for all enterprises in the PRC. Enterprises are advised to review their payment process and correct any non-compliant behaviour as soon as possible in order to avoid associated legal penalties.

Singapore

PDPC issues new Guidelines on NRICs

On 31 August 2018, the Personal Data Protection Commission of Singapore ("PDPC") issued the new Advisory Guidelines on the Personal Data Protection Act for NRIC and Other National Identification Numbers (the "Guidelines"). These Guidelines clarify how organisations should collect, use, and disclose personal data contained in the National Registration Identification Card ("NRIC") and similar national identification documents, including birth certificate numbers, work permit numbers, and foreign identification numbers.

The general rule under the Guidelines is that organisations are not allowed to collect, use, or disclose NRIC numbers or copies of NRICs, unless it is:

a) legally required, or an exception under the Personal Data Protection Act ("PDPA") applies; or 

b) necessary to accurately establish or verify an individual's identity to a high degree of fidelity, which generally is where:

i) the failure to accurately identify the individual to a high degree of fidelity may pose a significant safety or security risk; or

ii) where the inability to accurately identify the individual to a high degree of fidelity may pose a risk of significant impact or harm to an individual and/or the organisation (e.g. fraudulent claims).

The PDPC has given organisations up to 1 September 2019 to comply with the new Guidelines. Employers should promptly review their existing policies and procedures, and adopt the necessary additional measures to ensure that they are in accordance with the Guidelines.