Asia-Pacific Labor & Employment News

Upcoming and Recent Changes in the Law

China: Administrative Requirements for Sino-Foreign Employment and Talent Agencies and Occupational Skills Training Institutions and Projects Eased
Elizabeth Cole and Cathleen Sun

In May 2015, the Ministry of Human Resources and Social Security of the People's Republic of China ("MOHRSS") amended a number of regulations. The regulations were amended to reflect recent changes in the registered capital system and company registration procedures and further the government's broader strategy to limit administrative interference in business. The regulations that were amended included the Administrative Measures for Sino-Foreign Cooperative Operation of Occupational Skills Training, Interim Administrative Provisions on Establishment of Sino-Foreign Equity/Cooperative Joint Venture Employment Agencies, Interim Administrative Provisions for Sino-Foreign Joint Venture Talent Intermediary Agencies, and Provisions on the Administration of Talents Markets.

The amendments involved the following key changes to the establishment and operation of Sino-foreign employment agencies, talent intermediary agencies (i.e., headhunters and executive recruiters), and occupational skills training institutions and programs: 

• The minimum registered capital and capital verification requirements were removed. However, as in other industries, the MOHRSS still requires such agencies and institutions to meet certain operational standards, such as having sufficient funds, qualified personnel, and appropriate facilities.
• Approval from MOHRSS to operate is required only after the business license of the joint venture is issued, instead of prior to its establishment. This will make it simpler to undertake initial investment and conduct pre-operational activities such as hiring, equipment purchase, and fit-out of premises.
• Approval from the local MOHRSS on holding of job fairs is no longer required.

Hong Kong: Statutory Minimum Wage Increase
Anita Leung and Cybil Chan

The statutory minimum wage rate has been raised from HK$30 per hour to HK$32.50 per hour with effect from May 1, 2015. Pursuant to section 8 of the Minimum Wage Ordinance, an employee is entitled to be paid wages of not less than the minimum wage, whether the wage is monthly-rated, daily-rated, hourly-rated, or piece-rated. According to section 63C of the Employment Ordinance, an employer who willfully and without reasonable excuse fails to pay wages to an employee when it becomes due is liable to a fine of HK$350,000 and to imprisonment for three years.  

It should be noted that the statutory minimum wage does not apply to domestic workers in a household, a student intern, or a work experience student. In particular, requirements regarding the nature and duration of the internship, the student's age, and statutory declaration have to be met before one can be considered a work experience student. The requirements for a student intern are less stringent, but a confirmation is usually required to show that the internship has been arranged by a specific educational institution in connection with a program.

Japan: Amendment of Worker Dispatching Act
Rika Sato and Yusuke Hanada 

On September 11, 2015, amendments to the Act for Securing the Proper Operation of Worker Dispatching Undertakings and Improved Working Conditions for Dispatched Workers ("2015 Amendment") were enacted. The 2015 Amendment abolished the "26 special job categories" for which there had previously been no restrictions on the period for which a worker could be dispatched and introduced new common rules governing this dispatch period that apply regardless of job category. Specifically: 

• The maximum dispatch period in which a single business place of an employer may continuously accept a dispatched worker(s) will be three years. However, a dispatch period of longer than three years is permitted after consulting with a labor union that represents the majority of the employees or a person representing the majority of the employees if there is no such labor union.
• The maximum dispatch period in which a specific dispatched worker may work in the same department is three years. 

The 2015 Amendment came into force on September 30, 2015. 

Singapore: Amendments to Employment Act—Employers Requires to Provide Payslips and Keep Records
Elaine Ho 

On August 17, 2015, Singapore passed amendments to the Employment Act. The amendments require employers to:  

• Provide itemized payslips to employees at least once a month, together with salary payments;
• Provide employees who have continuous employment of at least 14 days with the company with a written record of key employment terms; and
• Keep detailed employee records containing certain prescribed particulars. 

In addition, an administrative penalty framework was introduced to treat less severe breaches of the Employment Act as "civil breaches" rather than criminal offenses. 

While some minor operational changes have already taken effect from August 22, 2015, the key changes will not take effect until April 1, 2016. Taking into account feedback from small businesses, the Ministry of Manpower has also stated that it will provide a one-year grace period in enforcing the amendments, during which time it will take a light touch on enforcements, focusing on helping employers meet the additional requirements introduced.

Singapore: Higher Compensation for Workers under Work Injury Compensation Act
Elaine Ho 

On July 24, 2015 Minister for Manpower, Lim Swee Say, announced proposed changes to the Work Injury Compensation Act ("WICA"). The key changes announced were: 

• Increases in compensation limits for death, total permanent incapacity, and medical expenses under the WICA; and
• The inclusion of treatments that facilitate early return to work as part of claimable medical expenses under WICA. 

The proposed changes have not yet been passed. However, a document titled "Factsheet on Changes to the Work Injury Compensation Act," released by the Ministry of Manpower, states that the proposed increase in compensation limits and increased scope of claimable expenses as described above will come into effect on January 1, 2016. 

Taiwan: New Guideline on Employment-Related Noncompete Restrictions
Jean Kuo

In its recent public statement, the Ministry of Labor (the "MOL") has announced that it will soon publish a new administrative guideline with respect to employment-related noncompete provisions. This will be a first-of-its-kind regulation in the realm of noncompetes for employees.  

There is currently no legislation in Taiwan that specifically governs employment-related noncompete provisions. In practice, employers typically bind important employees to noncompete restrictions as part of the employment agreement. Binding employees to noncompetes during their term of employment usually does not raise too much of a concern. However, enforcement of post-employment noncompete provisions is generally decided by courts on a case-by-case basis. Courts will typically look at all circumstances of the case including: 

• The employee's rank, the scope of geographic restrictions, and scope of restricted activities;
• Other terms of the noncompete obligation;
• Whether the employer has a legitimate legal interest to be protected (e.g., IP or trade secret), and
• Whether any compensation is provided as consideration for the noncompete obligation.  

Although recent decisions suggest that courts are leaning toward requiring some compensation as consideration for the noncompete, case law does not yet provide any clear guidance as to what minimal level of compensation is required in order to make the noncompete valid and enforceable. 

The MOL has confirmed that the new guideline will provide that noncompete provisions should only be signed with the purpose of protecting trade secrets, intellectual property, or superior techniques, and the restricted period should not exceed two years (post-employment) at a maximum. Compensation is another key to upholding the validity of a noncompete provision. The new guideline will also provide that an employee subject to a post-employment noncompete restriction should be compensated by at least 50 percent of such employee's monthly salary. Employers will no longer be able to argue that compensation for the noncompete is included already in the employee's normal salary compensation.

Currently, the MOL is aiming to officially publish this new administrative guideline in mid to late October 2015.

Key Decisions of Local Courts and Regulators

Australia: Recent Increase in Disputes Relating to Strike Action
Adam Salter and Michael Whitbread 

In Australia, the concept of protected industrial action provides immunity from prosecution under state and federal laws. However, industrial action will be "protected" only if: 

• The nominal expiry date for the enterprise agreement has passed;
• The industrial action is in association with negotiations for the renewal of an existing or proposed agreement (but not a greenfields or multi-enterprise agreement);
• The industrial action is to support claims in relation to the agreement or in response to action on the part of the employer; and
• The majority of eligible employees vote in support of the action through a secret ballot.
• An application can be made to the Fair Work Commission ("FWC") for a protected action ballot order. The industrial action will be protected where the action relates to the questions included in the ballot, more than half of the eligible employees vote, and more than half of those votes are in the affirmative.

Where industrial action does not comply with the requirements set out above, it will be unprotected or "unlawful" industrial action. The FWC can make an order to stop unprotected industrial action when it has already begun or can prevent industrial action that is threatened, probable, or being organized. Two recent instances of industrial action—the Gorgon strike and the Hutchison strike—reflect the recent increase in disputes relating to industrial activity in Australia.

The Gorgon strike involved employees working on the Gorgon LNG Project in Western Australia. The project employed up to 10,000 people and was at risk of delays and cost blowouts. The previous enterprise agreement nominally expired in January 2015, and the employees were consistently rejecting proposed new enterprise agreements. The unions sought authorization for industrial action, and the FWC eventually granted a protected action ballot order.

The strike action was called off after unions and the employees reached an in-principle agreement in relation to rosters and a 5 percent pay increase. The Gorgon Project now provides some of the best roster and wage conditions in the construction industry in Australia. For employers, however, the Gorgon Strike highlights the importance of avoiding enterprise agreements expiring during phases or work where delays could have significant impacts upon operations.

The Hutchison strike arose when 40 percent of Hutchison Ports' workers were made redundant overnight. Hutchison sought an order preventing industrial action that was being organized on the basis that it was unprotected, which the FWC granted. The union sought an order from the Federal Court reinstating the employment of the redundant individuals, claiming that Hutchison was in breach of the enterprise agreement by failing to consult in relation to redundancies and failing to comply with dispute resolution processes.

The Federal Court saw merit in the union's argument and granted an order restraining Hutchison from making the employees redundant. Hutchison and the union have recommenced negotiations to avoid further action. For employers, the Hutchison strike demonstrates that employers taking action against unions engaging in unprotected industrial action should ensure that they have "clean hands" in order to avoid an adverse outcome.

Australia: Fair Work Commission Rules that Employees Can Appoint Only One Bargaining Agent
Adam Salter and Stephanie Crosbie

The Fair Work Commission ("FWC") has ruled that employees cannot nominate multiple bargaining agents to represent them in relation to the negotiation of a new enterprise agreement.

Three unions were bargaining with Spotless Facility Services Pty Limited for a new enterprise agreement following the nominal expiry of the Spotless Anglo Coal Facilities Management Enterprise Agreement 2012 on June 30, 2015. Various individual employees had signed letters of appointment purporting to appoint up to four bargaining representatives to represent them in the negotiations.

The unions applied to the FWC for bargaining orders under section 229 of the Fair Work Act 2009 (Cth) ("FWA") in relation to the letters of appointment. The unions argued that the nomination of multiple bargaining representatives to represent a single employee was not permitted under section 176(1)(c) of the FWA. Section 176(1)(c) provides that "a person is a bargaining representative of an employee who will be covered by the agreement if the employee appoints, in writing, the person as his or her bargaining representative."

The unions argued that the use of singular language in section 176(1)(c) makes it clear that an employee can appoint only one employee bargaining representative to represent him or her. Deputy President Sams of the FWC agreed with the unions and held that by virtue of section 176(1)(c), the employees could not properly appoint more than one bargaining representative. The Deputy President recommended that a written notice be issued under section 176(1)(c) stating that the nomination of a employee bargaining representative will have effect only if one employee bargaining representative is nominated.  

Hong Kong: Guidance on Application of Close Connection Test for Employer's Vicarious Liability
Anita Leung and Cybil Chan 

In Yeung Mei Hoi v Tam Cheuk Shing & Anor [2015] 4 HKC 1, the Court of Appeal considered whether an employee's tortious act and his employment were so closely connected such that it was fair and just to hold the employer vicariously liable for his actions. The first defendant and plaintiff worked as security guards in a residential estate managed by the second defendant. The first defendant assaulted the plaintiff, his supervisor, after being accused of not fulfilling his duties. The first defendant did not contest the case, and judgment on liability was entered against him. The second defendant, being the employer, disputed the claim.

At trial, the judge considered that the employer was not vicariously liable because it could not fairly be said that the first defendant carried out the assault in the course of executing his duties.

On appeal by the plaintiff, it was held that the trial judge had applied the close connection test too narrowly. That test holds that an employer will be held to be vicariously liable where the connection between the employee's unauthorized tortuous act and his or her employment is so close to make it fair and just to hold the employer vicariously liable. The Court of Appeal referred to Various Claimants v Catholic Child Welfare Society [2013] 2 AC 1, which set out five criteria to be met that indicate that it is fair, just, and reasonable to impose vicarious liability on the employer. That case highlighted that the close connection criterion must involve a risk sufficiently inherent in or characteristic of the employer's business.

In the circumstances, since the second defendant had put a system of supervision and discipline in place, the plaintiff should have made enquiries when a subordinate was not performing his or her job duties. As such, there was an inherent risk that the subordinate might react in an unauthorized way, such as swearing and assault as in the first defendant's case. Since the risk could have been insured against by the second defendant, the second defendant was vicariously liable for the plaintiff's injury suffered during the course of employment.

Hong Kong: Collection of Fingerprint Data from Employee for Security Purposes Deemed Unnecessary and Excessive
Elizabeth Cole

In an investigation report dated July 21, 2015, the Office of the Privacy Commissioner for Personal Data ("PCPD") upheld a complaint by a former employee of Queenix (Asia) Limited ("Queenix") that the collection of her fingerprint data for the purposes of accessing Queenix's offices and monitoring employee attendance was unnecessary and excessive and that the manner of collection unfair.  

The key findings of the PCPD were that: 

• Fingerprint data amounts to highly sensitive personal data, given that it is not only capable of identifying an individual but is also unique to that individual. As such, collection, retention, and use of fingerprint data should be managed with extreme caution, and it should be used only if less intrusive means are unavailable.
• The use of fingerprint data by Queenix was excessive in the circumstances, taking into account the following questions:
  • Was collection of the data a necessary and effective means to meet the purposes of safeguarding office attendance and monitoring security?
  • Was the adverse impact on data privacy proportionate to the benefits arising from the collection of fingerprint data?
  • Was there any less intrusive way to achieve the same purpose?

Queenix had few employees, and there was no evidence that the use of fingerprint recognition helped to improve security. In the view of the PCPD, the same purpose could have been achieved by use of a smart access card that did not contain personal data and the implementation of other security measures, such as the use of additional locks after hours. The employee's consent to the collection of her fingerprint data was not genuine and fair, because Queenix made collection compulsory for employee access and did not provide other alternatives.

In light of the Queenix case, Hong Kong employers who use fingerprint data for security access or similar purposes should carefully review their policies and procedures. In particular, employers should consider whether the use of fingerprint data is genuinely required for the purpose for which it is collected, and whether alternative measures can be used and offered to employees.