Our recent webinar Employment Law: A Tour of the European Union encouraged a lot of discussion. There were several interesting questions from attendees for HSP's employment law experts; here are some of the highlights, and answers:
Are there any key employment law differences between Ireland and the UK?
The UK and Ireland share many characteristics under the employment law and practices in both countries. However they are different countries and so the employment law of each country must be reviewed when addressing employment matters. Some differences may arise from the application of European law which Ireland tends to apply more rigorously.
The "complementary" French scheme - is that still mandatory? If you have a payroll/accounting firm on the ground, are they fully in-charge of ensuring all of your statutory and mandatory obligations are met (including these French costs)?
The “complementary” term is a little misleading. It is indeed mandatory if the prevailing collective agreement requires them. A payroll/accounting firm should take care of registering the company with the insurance companies and setup the employee and employer remittances to these schemes. However, employers should ensure that the payroll firm is also affiliating the individual employees with the schemes. This is often outside of the scope of a standard payroll firm and soothe funding will go to the plan but the insurance company has no record of the employees. This could impact the payout of benefits.
Within the UK, is the stakeholder plan mandate the obligation of the local payroll/accounting firm to communicate to the employer and implement - if mid-year the client reaches the 5 employee threshold?
There is no obligation on a payroll provider to advise an employer when they have reached the threshold and in fact many payroll firms will not. We recommend employers track workforce for when these thresholds are reached.
What if you extend a contract of employment that is missing a key element, such as language translation, etc. and the employee signs off on it. Shortly thereafter the deficiency is caught; can you have a new agreement executed correctly?
The new agreement would need to be signed and agreed upon by the employee and employer. It cannot be drafted and signed unilaterally and be enforceable. The amended agreement would continue the terms and entitlements under the original agreement and incorporate any of the changes which the employee has agreed to.
Is there a "formal" test that can be administered to identify whether someone should be classified as either an Employee or Contractor?
There is no formal test for this. Countries will vary according to their exact measures but most countries follow similar broad measures. Among these are characteristics in the relationship. The presence of subordination, the provision of equipment, regular pay in line with salary, “employee” like benefits (paid leave, etc) will all suggest an employment relationship.
I heard there are payroll services in France that can process payroll for a US company for the contractor "without" establishing PE or an employment relationship, is that true?
It is possible to appoint individuals through employment agencies or PEOs similar to co-employment arrangements. The individuals are still employees but are employed by the PEO agency. As in other countries, contractors will often engage through contracting companies which could be personal companies or commercial agencies acting as the contracting party and offering an “umbrella” arrangement for the contractor.
How sizeable is the exposure for failing to comply with the contractor/employee distinction?
The exposure varies from country to country. Risks come from the authorities applying sanctions for miscategorizing the relationship. These could include the requirement to pay all unpaid taxes and employee benefits plus penalties for failure to report correctly. Other risks include contractors making claims against the other party that they were incorrectly engaged and should have been treated as employees. This can result in a large liability for unpaid employee benefits, particularly unpaid overtime. Similar to this, the death or illness of a contractor may result in a claim for employee benefits (death, disability benefits, etc).
If you have a contractor that looks a lot like an employee, how can you comply to current regulations, in order to maintain their contractor status?
If a contractor looks and behaves like an employee it will be difficult to argue they are not an employee. We would not suggest taking action to further conceal the relationship. Countries have different measures on what constitutes a contractor. These measures would need to be reviewed to determine which most clearly show the relationship as a contractor relationship.