DCSIMG
Mercer
International Headlines, global HR

Contact: Mercer Feedback


International Headlines - 11 January 2012


Written by: Patrick Sweeney

 

         

Continent index

Africa
Asia/Pacific
Europe
North America
South America
Country index
Algeria
Antigua and Barbuda
Benin
Brazil
Canada
China
Czech Republic
Denmark
Estonia
Eurasian Union
EU
France
Greece
Iceland
India
Ireland
Japan
Korea
Malaysia
Myanmar
Netherlands
Norway
Papua New Guinea
Singapore
Slovakia
Spain
UK
Ukraine
US
Vietnam
Yemen

This weekly compilation of stories from wire services, newspapers and other sources is intended to keep Mercer employees and registered visitors to mercer.com informed of benefits, compensation and HR developments around the world. Facts have not been independently verified, and opinions expressed are those of the editor. Readers are invited to clarify, correct or expand on these items.

 

Top stories in this issue:

Brazil: New rules on post-employment health coverage
China: Occupational health law revised
EU: Pension perils
India: PLIF for expats
Japan: Social security reform plan; Points-based immigration system
Netherlands: Benefit cuts mandated in underfunded pensions

   
Africa

 

Algeria

 

Labour code update
ALGPS, La Tribune

 

The labour minister noted in a radio interview that the new labour code (IH 02/09/11) is undergoing stakeholder consultation and will be delivered to the next session of Parliament. The latest accounts describe provisions that would:

 

  • Ban sexual harassment in the workplace

 

  • Prohibit smoking in enclosed work spaces

 

  • Extend unemployment benefits to fixed-term workers

 


 

Benin

 

Universal health plan
CRI, Xinhua, Cheap Insurance News

 

The Universal Health Insurance Plan (RAMU) (French only) that the Council of Ministers first committed to in 2008 had its official launch this month. The implementing regulations are now in place and the infrastructure for health care delivery is reportedly well along. The system will undergo tests in March and citizens are expected to be able to start selecting service providers in April.

 


 

Yemen

 

Weekend shifted
SABA, Yemen Observer

 

The Cabinet’s first weekly meeting of this year approved a measure amending the working hours rules to shift the weekend from Thursday-Friday to Friday-Saturday. This will take effect at the start of next month.

 

 

Asia/Pacific

 

China

 

Occupational health law revised
Xinhua, China Daily, China Labour Bulletin

 

The National People’s Congress has passed a package of amendments to Law on the Prevention and Treatment of Occupational Diseases. Among the key changes:

 

  • Employers must now consult with the workers' union when preparing major changes to their occupational safety policies.

 

  • The burden on proof on workers for attributing an illness to the workplace is eased.

 

  • The penalty for employers that fail to adequately warn employees of occupational hazards is tripled to 150,000 yuan (US$23,774).

 

  • The local governments will arrange compensation for workers with long-gestating illnesses who file claims after the employer has gone out of business.

 


 

India

 

PLIF for expats; Qualified Foreign Investors scheme
Mint, Financial Express, Asian Age

 

The Cabinet has reportedly endorsed a proposal to establish a pension and life insurance fund (PLIF) for overseas Indian workers. The Overseas Indian Affairs Ministry is fleshing out a program that would offer both a voluntary retirement savings scheme and a low-cost life insurance policy. The government would contribute up to R1,000 (US$19) per year for those who deposit up to R12,000 per year in their accounts. Members contributing R4,000 per year to a return and resettlement scheme would receive a R1,000 co-contribution.

 

Also, the government has approved a plan to allow qualifying foreign pension funds and other Qualified Foreign Investors (QFIs) to invest directly in the Indian equity market. The press release sets out the investment processes and QFI caps for Indian investments. The Securities and Exchange Board of India (SEBI) and the Reserve Bank of India (RBI) will detail the arrangements in circulars before the new scheme's 15 January launch date.

 


 

Japan

 

Social security reform plan posted
Nikkei Report, Kyodo News, Xinhua

 

The prime minister has posted (Japanese only) a draft social security reform proposal (IH 01/05/12) and formally secured support for it from the ruling coalition. The two-stage increase in the 5% consumption tax (8% in April 2014, 10% in October 2015) is confirmed and its sole purpose will be to fund the government’s contribution to the basic state pension. There would be some tax relief to ease the impact on low-income workers and there is an escape hatch for postponing the tax hike if the economy seems too fragile to handle it. There are also provisions for lowering the threshold for part-time worker participation in the scheme from 30 hours per week to 20 hours.

 

Meanwhile, the Justice Ministry plans to hold a public consultation on a point-based immigration system some time this year. A graduate degree and high-level work experience would count for up to 55 points while salary alone could earn 50 and there would be bonus points based on performance in a Japanese language test. Expats scoring 70 or above would bypass administrative hurdles for a five-year stay and would have access to a fast-track for permanent residence. Their spouses would be allowed full-time jobs and there would be more flexibility on allowing parents and domestic servants to come along.

 


 

Korea

 

Work permit system liberalization proposed
KBS, Korea Times, Korea Herald

 

The National Human Rights Commission is submitting a formal proposal to the Labor Ministry and the National Assembly for employment permit system reforms to curb the exploitation of foreign workers and ease their administrative burden. The requirement to leave the country for at least six months after conclusion of a three-year work permit leaves many instead opting to become undocumented workers with no rights. The labour minister recently spoke of the need for some unspecified “advantages” for workers in this revolving door.

 


 

Malaysia

 

Retirement age hike bill update
Malaysian Insider, The Star

 

The minister of human resources has divulged that the Malaysian Trades Union Congress (MTUC) and the Malaysian Employers Federation (MEF) are winding up discussions on the Private Sector Retirement Age Bill (IH 10/05/11) and that the legislation will be delivered to the March session of Parliament. At present, there is no legal retirement age, just an entitlement to take Employees Provident Fund (EPF) withdrawals at age 55. There appears to be little resistance to setting a retirement age of 60 – already introduced for the public sector in the 2012 Budget – but the MTUC has requested a gradual phase-out of the age 55 option and the MEF has voiced concerns about being required to keep on company payrolls workers past age 55 who are “unable to contribute.”

 


 

Myanmar

 

Tax exemption for overseas workers
Reuters, Monsters and Critics

 

Effective 1 Jan 2012, the salaries of Myanmar workers posted overseas are no longer subject to income tax. The expats in several countries had become victims of double taxation and many of them had been driven into the underground economies of their host countries. Granting the tax concession and allowing Myanmar banks to open branches in countries that employ many Myanmar workers should net a huge increase in the remittances sent to families in Myanmar.

 


 

Papua New Guinea

 

2012 Budget passed
IBFD

 

The 2012 budget legislation cleared the unicameral parliament in the closing days of 2011 with the new severance pay redundancy scheme intact. From 1 Jul 2012, payments under qualified redundancy schemes will be taxed at a reduced rate of 15% on the lower of PGK50,000 (US$23,320) or PGK5,000 plus PGK2,000 for each continuous year of employment.

 


 

Singapore

 

CPFIS wrap fee capped
Today, Straits Times

 

The Central Provident Fund Board announced that the next stage in the evolution of the Central Provident Fund Investment Scheme (CPFIS) will be a reduction in the maximum wrap fee. Financial advisers may now charge a wrap fee of up to 1.5% for bundled investment services, including advisory, brokerage and administrative services. From 1 Jul 2012, that ceiling will drop to 1%.

 


 

Vietnam

 

Social insurance contribution hike, life insurance premium relief; Maternity leave update
VNA, VietNamNet, Thanh Nien News

 

One prominent measure in the flurry of tax decrees issued at the close of 2011 (and effective on 1 Jan 2012) raised the social insurance fee from 22% to 24%. Employers now pay 17% and workers 7%. The allocation is 20% to retirement and death benefits, 3% to the sickness and maternity fund and 1% to the workers' compensation and occupational disease fund. Another notable change grants a corporate income tax deduction for payment of employee life insurance premiums.

 

Incidentally, the National Assembly Standing Committee reviewing the draft Labor Code revision has increased its standard maternity leave expansion to six months (IH 10/19/11) but has introduced some flexibility to the scheme. The worker and the employer would be able to negotiate terms for returning to work after just four months. The draft now includes stiffer penalties for employers that try to deny a worker maternity leave.

 

Europe

 

Czech Republic

 

Website, court challenges for recent reforms
CTK

 

The Czech Government Office has created a new website (Czech only) to showcase recent major pension (IH 11/16/11), labour (IH 12/07/11) and health reforms. This coincides with the opposition Social Democrats' broad constitutional challenge to these and 11 other late 2011 reforms. The basis of the challenge is that all of these bills bypassed a mandatory stage in the Chamber of Deputies during passage.

 


 

Denmark

 

Tax on pension fund yields raised
Tax Analysts

 

Further press coverage of the 2012 Budget (IH 01/05/12) brought up another interesting measure. A proposal to end the tax deduction for expenses attributed to the management of pension fund assets eventually morphed into a small increase in the tax on pension fund yields. Effective 1 Jan 2012, the 15% levy has risen to 15.3%.

 


 

Estonia

 

Second-pillar contributions restored
IBFD

 

Just a note as these things don’t often proceed like clockwork. The full restoration of mandatory second-pillar pension contributions following a June 2009 suspension (IH 04/22/09) has now been completed. Effective 1 Jan 2012, participants are back to contributing 2% and the state 4%.

 


 

Eurasian Union

 

Free movement of workers
Novinite, Interfax, AP

 

The Eurasian Economic Union , a fledgling alliance of Russia with selected neighbors and allies (IH 12/01/11, Russia), has had its first concrete accomplishment in the human resources sphere at the start of this year. Charter members Russia, Kazakhstan and Belarus have now ended quotas, work permits and any other quantitative restrictions for workers crossing their mutual borders.

 


 

EU

 

Pension perils; Resources on transnational agreements and active ageing
AMBest, IPE; Euractiv

 

The approaching deal on a financial transaction tax (FTT) (IH 11/16/11) and the close of the European Insurance and Occupational Pensions Authority’s (EIOPA) call for advice on revisions to the Institutions for Occupational Retirement provision (IORP) Directive (IH 11/02/11) have occasioned an early-2012 spike in articles predicting the imminent downfall of the pensions sector. It is not yet determined whether pensions would enjoy an exemption from FTT. The big concern with the IORP consultation is its evident openness to subjecting occupational pensions to the Solvency II Directive funding rules. Stakeholders are insisting that EIOPA conduct an impact assessment before committing to this approach.

 

In the closing weeks of 2011, the European Commission launched a pair of useful databases. The Directorate-General for Employment, Social Affairs and Inclusion introduced a database on transnational company agreements. The resource, which aims to promote transparency and best practices in worker relations at global companies, contains hundreds of agreements from scores of companies covering employment policy, occupational safety, working conditions, restructuring and more. Another database launch marks the European Year for Active Ageing with a compilation of related initiatives in EU and European Economic Area nations.

 


 

France

 

Administration’s 2012 priorities; New taxes on pension funds
Les Echos, Dow Jones, AFP

 

The administration has flagged several major initiatives for the new year:

 

  • The president’s year-end address broached the issue of shifting part of the social benefit funding burden away from payroll tax. A supplementary “social” value-added tax is a top contender.

 

  • The president will preside over an 18 January tripartite summit on job market reform. Goals include getting the unemployed back into the workforce.

 

  • Another theme likely to appear at the summit is keeping people off unemployment in the first place with reduced-hour and partial unemployment schemes. A "competitiveness pact" would let working hours and wages fluctuate in response to demand.

 

Also, the Fourth Finance amendment Law for 2011 includes a measure that will subject French pension funds and mutual funds to corporation tax and business tax. The law ends a long-standing dispute with the European Commission, which viewed the tax exemption as illegitimate state aid. The exemptions will gradually phase out over the next few years, with the transition ending in 2015.

 


 

Greece

 

Stand-off over new austerity measures
Kathimerini, ANA, EU Observer

 

The prime minister must negotiate a new round of austerity measures (Greek only) with social partners before a 16 January meeting with the EU, the European Central Bank and the International Monetary Fund (IMF) on the next tranche of bailout funds. Sticking points include:

 

  • Eliminating the minimum wage

 

  • Ending the 13th and 14th month salary entitlements

 

  • Reducing social security contributions

 

The prime minister has warned that Greece could default on its debt as early as this March without urgent action.

 


 

Iceland

 

Parliament approves Financial Activities Tax
IBFD

 

Last month, Parliament approved legislation introducing a Financial Activities Tax. Although an earlier draft had counted pension funds among those “financial institutions” subject to the new tax, the final draft does not. Entities that fall under the definition – including banks, insurers and securities firms – are now taxed at a rate of 10.5% on all remuneration including benefits in kind, but not including pension payments.

 


 

Ireland

 

Health insurance levy rise, senior relief measures
BFDN, Irish Times, Irish Examiner

 

Last week, the minister for health raised the health insurance levy by 40%. This supplemental charge on a young person’s health insurance premium is complemented by a new range of tax credits to offset health insurance premiums for people age 60 and up. These measures are part of the 2012 Interim Scheme of Risk Equalisation. The minister will soon outline a permanent risk equalization scheme tentatively set for a 1 Jan 2013 launch.

 


 

Netherlands

 

Benefit cuts mandated in underfunded pensions; M&A clawback measure; Collective dismissal directive transposed
AP, Reuters, IPE

 

The Dutch Central Bank has determined (Dutch only) that despite recent improvements in funding ratios and an adjustment to the formula for calculating the yield curve, a number of pension plans will have to cut benefits. The benefit reduction is capped at 7%. By one account, these cuts affect 40% of the population, but most benefit reductions would be in the 1 to 3% range.

 

Also, a bill now before Parliament would tax an executive’s stock gains in change in control arrangements. Subject to certain limits, the increase between the value of employer-provided shares, depositary receipts or options four weeks before the public offer and four weeks after completion of the offer would be deducted from the executive's pay.

 

In addition, the disclosure requirements from the EU directive on collective dismissals will be transposed (Dutch only)  in amendments to the Act on Collective Redundancies (WMCO), effective 1 Mar 2012.

 


 

Norway

 

Consultation on ending tax break for pension equity holdings
WSJ, Esmerk, Business Week

 

The Finance Ministry has opened a consultation (Norwegian only) on its proposal to curb the tax exemption on shares held by defined benefit pension plans and some life insurance companies. Under the proposal, equity gains would be taxed at the corporate tax rate of 28%, but there would be a deduction allowed on losses from these shares. The industry has already signaled that customers would absorb the expense. The consultation closes on 2 Apr 2012, and the measure, if approved by Parliament, would apply retroactively to 1 Jan 2012.

 


 

Slovakia

 

Hospital transformation law shelved; Constitutional challenge to Labour Code provisions
TASR

 

Last November, the law on the transformation of hospitals into joint stock companies appeared set for suspension (IH 11/16/11) until after the March 2012 parliamentary elections. Also, the Constitutional Court is reviewing a legal challenge mounted by the opposition Smer-SD party to two key provisions of the new Labor Code (IH 08/03/11). One provision limits the compensation for inadequate dismissal notice to nine months’ pay while the other allows employment contracts to include non-compete clauses that would delay by one year the right of a worker who has left employment to take the same job with another employer provided (s)he is paid at least 50% of final salary.

 


 

Spain

 

Job market reform negotiations progress
El Pais, BBC, Financial Times

 

Social partners are racing to meet a 15 January deadline (extended from 6 January) for negotiating (Spanish only) a labour market reform package (IH 12/07/11). They have already made significant progress:

 

  • They agree that bank holidays will be moved to Mondays.

 

  • There is accord on greater self-reliance in conflict resolution.

 

  • There is tripartite rejection of the European Central Bank proposal for promoting €400 per month “mini-jobs.”

 

  • Temporarily converting full-time jobs to part-time in small and medium enterprises is acceptable to all, provided there is a trigger for reversing the move when finances improve.

 

  • Hiring, firing and wage moderation issues have yet to be resolved.

 

In a related matter – though not reported as part of this negotiation – the Cabinet agreed on 30 Dec 2011 to freeze the minimum wage for 2012.

 


 

Ukraine

 

New data protection rules
Fedee, USUBC

 

An important deadline passed with little notice on 1 January. On Protection of Personal Data, legislation passed in April 2011, requires any databases housing personal information that is controlled by Ukraine-based entities to register with State Service of Ukraine on Personal Data Protection by 1 Jan 2012. This specifically includes personal data on employees and there are penalties for noncompliance, so affected employers should apply for registration immediately and then review the website for additional data privacy guidance, including the need for written consent before a person’s data may be shared.

 


 

UK

 

Disguised remuneration FAQs; Various
Tax Analysts, Professional Pensions, The Times

 

HM Revenue & Customs has complemented earlier guidance on the income tax regime for disguised remuneration (IH 11/09/11) with National Insurance contributions on disguised remuneration: Frequently Asked Questions. The FAQ explains that while the NIC rules are closely modeled on the income tax rules, there are some key differences. The NIC rules came into effect on 6 Dec 2011 and are not retroactive.

 

In other news:

 

  • The Association of British Insurers (ABI) recently opened the consultation Consumers in the Retirement Income Market, a draft Code of Conduct for vendors in the annuity marketplace. Compliance with the code would be required for ABI members. The consultation runs through 3 Feb 2012.

 

  • It’s worth noting, particularly in light of the lead EU item in this issue, that the closure of the last final salary defined benefit plan on the FTSE 100 index – Shell’s – was announced last week.

 

  • The job market debate was enlivened by a new statistic last week. Trades Union Congress reported that the 2 billion hours of unpaid overtime logged last year in the UK could have created over a million full-time jobs.

 

 

North America

 

Antigua and Barbuda

 

2012 Budget; Draft guidance on employee taxation
Antigua Observer, Caribarena

 

The finance minister presented the 2012 Budget Statement last month. One highlight is a draft Social Security Act due in the House next month. It will propose:

 

  • Raising the pension age from 60 to 65

 

  • Significantly lifting the level of insurable income

 

  • Creating an independently funded unemployment benefit scheme

 

  • Consolidating public-sector pensions into a single sustainable system

 

Other budget topics include Labour Code, Occupational Health and Safety Act and Workmen’s Compensation Act revisions, all due before Parliament in 2012. An HIV Workplace Policy is also in the pipeline for this year.

 

Meanwhile, the Inland Revenue Department is consulting with stakeholders on the draft Personal Income Tax: PAYE, Employee and Shareholder Benefits and Allowances (2012) Guide, employer guidance on withholding employee income tax. It advises on how to determine a worker’s employment status and on the tax treatment of scores of different benefits and allowances. One key change reported in this text is that effective 1 Jan 2012, all taxable emoluments are included in gross earnings for income tax purposes.

 


 

Canada

 

Expansion of parental leave eligibility; TFSA reminder
Toronto Star, Canada.com

 

The Minister of Human Resources and Skills Development has announced that the government will support “foster-to-adopt” programs by extending eligibility to receive Employment Insurance (EI) parental benefits to foster parents who have made a “demonstrable commitment” to adopt a child in their care. Up to 35 weeks of EI parental benefits are provided to eligible parents who take time off from work to care for a newborn or adopted child; benefits may be shared by both parents.

 

Also, the Department of Finance has issued a press release advising taxpayers of the sweeter regime for tax-free savings accounts (TFSA) that came into effect on 1 Jan 2012. There are now three factors to combine in setting the maximum annual contribution limit:

 

  • An annual dollar limit of $5,000

 

  • Any amount the person withdrew from the TFSA in the previous year

 

  • The amount by which the previous year’s contribution fell short of the maximum

 


 

US

 

401(k) fee disclosure rumor squelched
Reuters, RIAbiz, AdvisorOne

 

The Department of Labor (DOL) has come under pressure from the pensions sector for a reprieve on the 1 April deadline for compliance with 401(k) fee disclosure rules, so a newswire report that announcement of a delay was forthcoming received much traction. The subsequent DOL denial didn’t get quite as much press.

 

South America

 

Brazil

 

New rules on post-employment health coverage
MFV

 

The 1998 law 9.656/98 established a requirement for employers to continue employee health plan coverage for retirees and laid off workers under certain circumstances. Employers have found compliance difficult and subsequent measures have done little to simplify the matter, so the National Supplementary Health Agency (ANS) has issued Normative Resolution No.279 (Portuguese only) to clarify the employer obligation. Workers who have contributed to the company health plan are entitled to identical post-employment coverage (not necessarily the same plan but must be the same insurer) for a period based on the length of coverage during employment. Dismissed workers would continue coverage for a third of the time they spent in the employer plan, with a six-month minimum and a two-year maximum. Retirees have earned one year of coverage per year of contributions and those who contributed at least 10 years may stay in the plan indefinitely. Coverage is extended to dependents. The resolution comes into effect on 23 Feb 2012. Analysts have welcomed the resolution but noted that a number of issues still need clarification.



Mercer International Headlines is published by the US international consulting practice library of Mercer. Comments or queries may be directed to Patrick Sweeney at +1 212 345 2462. Click here to find your local Mercer office.

 


International Headlines:

Developments in benefits, compensation and HR around the world


Sign up now to receive the International Headlines, a weekly compilation of stories from wire services, newspapers and other sources.

View the International Headlines archives from 2003 to current.