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:
Australia: Guidance on means test for health insurance rebate
Belgium: Older worker support measures passed
France: Frontrunner’s agenda for year one
India: Increased maternity leave proposed
Japan: Diet enacts temp worker protections
UK: New QROPS eligibility restrictions
Job experience requirements may be curbed
Tanzania Daily News
The Labour Ministry is negotiating with private sector employers over its plans to fundamentally “abolish” experience requirements for job postings. Opponents of the requirement maintain the experience requirement is used far too widely, essentially closing the job market to youth. The ministry aims to ban it for all but the most senior and highly skilled occupations.
Guidance on means test for private health insurance rebate
The three bills on means-testing the private health insurance rebate received Royal Assent 4 April and the Australian Tax Office marked the occasion by publishing guidance for affected consumers. Income testing for the private health insurance rebate and the Medicare levy surcharge will take effect on 1 Jul 2012.
Draft ruling on taxation of legal cost awards for dismissal
The Australian Taxation Office (ATO) has opened a public consultation on the tax treatment of compensation for legal costs incurred in wrongful dismissal disputes. Draft ruling TR 2012/D2 sets out scenarios under which the costs would and would not be deductible. Fringe benefits tax and goods and services tax consequences are outside the scope of this ruling. Comments are welcome through 16 May 2012.
NPS improvements pushed
PTI, Business Line, The Statesman
The Pension Fund Regulatory and Development Authority (PFRDA) continues to campaign for improvements to the National Pension System (NPS), seeking to rebound from its dismal launch (IH 3/21/12). The regulator is "struggling and fighting" with the government to lift the 0.0009% ceiling on payments to pension fund managers. Analysts are more concerned about lowering the front-loaded 0.25% transaction charge for participants and expediting the legislation on the tax regime for NPS by removing it from the stalled Direct Taxes Code.
Increased maternity leave proposed
Hindustan Times, Times of India, The Telegraph
The Planning Commission’s Ministry of Women and Child Development is finalizing a review of the Maternity Benefit Act as part of its follow-up to last year’s five-year plan on women’s issues. The ministry will recommend increasing the 12-week paid maternity leave by an undisclosed amount and amending the act with the phrase, “No woman should be discharged from service during the period of pregnancy on any pretext.”
Health insurance disclosure standards considered
First Post, Business Line, Financial Express
The Insurance Regulatory and Development Authority (IRDA) is consulting with industry bodies on ways to standardize and simplify health insurance policy documents. An IRDA working group has already drafted a set of common definitions and standardized forms for claims, discharge and billing. A Health Insurance Forum will be established to review this material and will ultimately serve as a consultative body to the IRDA on health insurance issues.
Diet enacts temp worker protections
Temporary workers in Japan will receive new job protections under changes to the Worker Dispatch Law enacted by the Diet in March. The approved bill reportedly prohibits temporary employment of 30 days or less and requires temp agencies to disclose their share of worker dispatch fees paid by employers. Proposals to ban temporary workers in manufacturing and limit contracts for registered workers if jobs are unavailable (IH 1/27/10) were dropped from the bill to ensure passage.
Public holiday purged
AKI Press, Turkish Weekly
Parliament has approved an amendment to the Labor Code that removes 24 March, Tulip Day, from the roster of public holidays. The observance of the "Tulip Revolution" of 2005 had been contested from the start, with Parliament initially rejecting a proposal for the holiday in 2006 because an "objective assessment" of the date's historical value wouldn't be possible for some time.
Veto threat for paid parental leave bill
NBR, Dominion Post, RNZ
The acting prime minister has told the press that he would exercise a rare financial veto if Parliament approves the Parental Leave and Employment Protection (Six Months Paid Leave) Amendment Bill (IH 4/11/12), the private member bill that would double the paid parental leave entitlement to six months. The bill reportedly has the votes to at least get into select committee, and its backers want to advance the legislation and call the administration’s bluff on resorting to what would be a very unpopular veto.
SECP proposes tax break on transferred provident fund assets
Budget proposals delivered by the Securities and Exchange Commission of Pakistan (SECP) to the Federal Board of Revenue reportedly include a measure that would exempt funds withdrawn from an approved pension fund up to the amount that had been transferred into the pension from an approved provident fund. The existing tax regime amounts to double taxation because provident fund contributions are after tax. The measure is part of recent SECP efforts to improve the tax regime for private pensions (IH 1/25/12).
Revised Code of Corporate Governance
Law and Tax, Business Recorder, Daily Times
The SECP (Securities and Exchange Commission of Pakistan) announced revisions to its Code of Corporate Governance. The minimum benchmark for governance standards now includes a “formal and transparent procedure” for determining the remuneration of directors. The annual report will have to disclose board remuneration in aggregate and the board – not the CEO – will set the remuneration and employment conditions for certain sensitive posts such as Chief Financial Officer and Head of Internal Audit. Also, directors will have to be certified by an SECP-authorized director training program.
Philhealth premium, coverage increases detailed
Sun Star, Manila Bulletin
New benefits under the Philippines’ Universal Health Care (UHC) system (IH 3/07/12) and the premium hikes that will fund it are fleshed out in two new circulars from Philhealth. Circular 2012-10 advises health care providers on the implementation of new primary care benefits, including a range of diagnostic and preventive procedures. Circular 2012-11 sets out the schedule of premium increases that will be split equally by workers and employers from 1 Jan 2013.
Singapore extends CPF ‘top-up’ scheme
Central Provident Fund (CPF) members may contribute to the retirement security of their parents- and grandparents-in-law starting 1 Jan 2013, under a new expansion of Singapore’s “top-up” scheme. The current Minimum Sum Topping-Up Scheme (MSTU) allows CPF members to contribute Ordinary Account savings or cash to “top up” Special or Retirement Accounts for themselves or their spouses, siblings, parents and grandparents. CPF members can receive up to $7,000 tax relief for cash top-ups to family members' accounts.
Staffing firms attack revised employment act
A draft revision of the Temporary Employment Act of 1988 aimed at bringing Austria into compliance with the EU Agency Worker Directive reportedly is drawing flak from the major staffing firms. A lawsuit has been threatened over the provision that would charge an employment agency a €110 fee for dismissing a temporary worker. The agencies are also concerned that complying with the equal pay for equal work mandate -- which would apply to workers assigned to all corporate customers -- would be an unreasonable administrative burden. The bill, which is expected to pass, would take effect 1 Jul 2012.
Solidarity charge on salary supplements
Tax rates on non-recurrent salary supplements will rise under the Austrian Stability Act 2012 (German), published earlier this month. Previously all salary supplements (including 13th and 14th month salaries) were taxed at 6%. Under the Act, the first €620 earned in two months (before tax, but after social security payments) will be tax-free. The next €24,380 will be taxed at 6%. Thereafter, additional charges apply to higher salary supplements:
- 27% for the next €25,000
- 35.75% for the next €33,333
- 50% (subject to monthly rate) for payments above €83,333
The new tax rates are effective from 1 Jan 2013 to 31 Dec 2016.
Older worker support measures passed
A pair of bills passed on 29 Mar 2012 then gazetted on 30 March (French) and 6 April (French) feature significant support for the employment status of older workers. One requires companies with over 20 workers to submit an annual plan for the employment of older workers to their works councils. This would cover training, recruitment and career development efforts to improve the work longevity of seniors. It takes effect on 1 July 2012. The other major development introduces an age-based “pyramid” formula for collective dismissals. It would require employers to divide collective dismissal demographics equally among three age bands: under 30, 30-50, and over 50. The social partners in the National Labour Council have until the end of June to come up with an alternative approach. If they do not, a royal decree will set the effective date.
See also: UK, paragraph 1
Guernsey pension tax guidance issued
The Income Tax Office has posted a new overview and resource page on the tax treatment of private pensions. The resource was issued to reflect several significant practice notes and ordinances (appended) released over the past year, including the recent ordinance revising the tax regime for international pensions (IH 4/04/12).
Job market support measures
HINA, Sharenet, Croatian Times
A package of legislation designed to boost an anemic job market with a temporary waiver of employer social security contributions for new hires from vulnerable populations, including youth, the chronically unemployed and workers over age 50, was outlined by the labour minister. Youths registered with the Employment Service would also have opportunities for one-year apprenticeships in marketable skills. A long-term goal is to have a more employment-oriented educational system and a lifelong learning culture for the workforce.
Cabinet approves austerity package
PDM, CTK, CIA, Financial Times
The government barely averted collapse before ruling coalition leaders and then the cabinet endorsed a controversial set of austerity measures. Pensions will not be frozen, but a temporary change to the automatic increase formula would combine one-third of the CPI and one-third of wage inflation. In addition, people earning more than the salary threshold for health insurance contributions would pay a still-undetermined supplemental “solidarity contribution.”
Gay marriage bill
Copenhagen Post, Herald Sun, GLM
The administration has sent Parliament a bill that would fully legalize gay marriage. Civil unions have been legal since 1989 and the Lutheran Church has offered civil union blessing ceremonies since 1997. This measure, which has solid majority support, would confer full marriage rights on gay couples and is expected to take effect on 15 Jun 2012.
Stricter limits proposed for banker bonuses
The Telegraph, Financial Times, Euractiv
Legislation that would limit banking sector bonuses to 100% of base salary reportedly is under review by the EU Parliament's Economic and Monetary Affairs Committee. These draft amendments to the Capital Requirements Directive are in response to a European Banking Authority report stating that banks have been slow to modify incentive compensation schemes or de-link them from excess risk. Parliament is expected to vote on these measures in June.
EIOPA’s good practices for variable annuities
Insurance News, FT Adviser
The European Insurance and Occupational Pensions Authority (EIOPA) has issued a Report on Good Practices for Disclosure and Selling of Variable Annuities. The report offers good practices for the basic information that should be supplied to consumers, including how the product would be affected by market fluctuation and the “legal and supervisory regime it operates under to take account of the cross-border nature of this business.” Good practices for selling include ensuring that the annuities are sold by a qualified adviser who should consider both the customer’s needs and the regulatory environment.
Frontrunners' agenda for year one
Law and Tax, Reuters, Bloomberg
François Hollande, the Socialist Party’s candidate in France’s presidential elections, has posted a work program (French) for his first year in office. Hollande currently holds a commanding lead in the presidential campaign (IH 3/14/12), with the election to be held 22 April. Among the work program’s highlights:
- A new tax bracket would set a 45% levy on annual personal income above €150,000 while those earning over €1 million would be taxed at 75%. Harmonizing tax on employment income (which now ranges up to 40% and the “absurd” 21% tax on income from assets) is also mentioned.
- A right to early retirement at 60 would be maintained for those who attain the minimum contribution threshold.
- There would be tripartite negotiations on “comprehensive” pension reform for sustainable funding of the state pension.
- Social partners would be charged with negotiating new job market policies, including better work prospects for vulnerable populations, curbing precarious employment and advancing pay equity.
- Labor union rights would be enshrined in the constitution and a new emphasis would be given to social dialogue. Union rights would include worker representation on large companies’ remuneration committees.
Isle of Man
See also: UK, paragraph 1
Law and Tax, IFA, Money Marketing
The Isle of Man, which has been busy establishing itself as a host for international pensions in general and the UK’s Qualifying Recognised Overseas Pension Schemes (QROPS), has ruled out a “knee-jerk” response to the new UK rules tightening eligibility for QROPS status (IH 3/28/12, UK). The Association of Pension Scheme Providers (APSP) and the relevant ministries are drafting modest amendments to the 50C tax rules for international pensions but are carefully studying all implications of the QROPS rules before committing to a final draft. Meanwhile, one prominent local provider has de-registered its QROPS offering until the 50C amendments are implemented.
Statutory holiday shifted
Vostok, Moscow Times, Moscow News, Itar-Tass
The Duma reportedly has approved a measure subtracting two days from the statutory winter holiday and offsetting that with a longer spring leave. The new labor code amendment will shrink the 10-day New Year leave, making it 1-8 January then add two days to the 1 May or 9 May holiday each year, depending on which arrangement would best bridge to a weekend.
Health financing options
El Pais, Reuters, The Herald
The economy minister, flagging health reform as an essential part of fiscal discipline, recently announced that the government is considering the introduction of health premiums and/or co-payments for people earning over €100,000 per year. Medical cost containment is complicated by the limited federal control of health spending in the 17 autonomous regions. The administration aims to get a health reform bill through Parliament next month.
Revised rules on noncompetition agreements
Turkey’s new Code of Obligations, Law 6098, (Turkish) reportedly resolves ambiguities in the law on noncompetition agreements. A written statement, which is signed by the employee and includes certain minimum criteria, should be sufficient to protect an employer from breaches by a former employee for up to two years following the employee’s departure. However, noncompetition agreements based on a person’s talent and expertise would be non-binding as would any other agreement so broad as to severely limit a person’s future employability. The code comes into effect on 1 Jul 2012.
Ban on job placement fees proposed
The minister of social policy has proposed barring recruitment agencies from charging service fees to job hunters. The minister wants Ukraine to conform to International Labor Organization conventions and allow agencies to receive payments only from the employers who hire the workers.
New QROPS eligibility restrictions
Isle News, Law and Tax, Money Marketing
HM Revenue & Customs (HMRC) has given affected jurisdictions very abrupt (and unclear) notice that its 12 April list of approved Qualifying Recognised Overseas Pension Schemes (QROPS) has removed all schemes that are not offered to residents only. HMRC says that the relief had resulted in transfers being made primarily for tax, and not pension savings purposes. Thriving markets for international benefit schemes that qualified as QROPS, such as the Channel Islands (IH 4/04/12, Channel Islands) and the Isle of Man (see above), have been intent on interpreting and complying with the QROPS eligibility restrictions that went into effect this month (IH 3/28/12), but this extreme scenario had not been anticipated (Guernsey was particularly hard hit, going from 300 approved QROPS to three in the space of a month). Past transfers to then-qualified QROPS will not be affected.
Defined aspiration model touted
Citywire, IFA, Professional Pensions
The pensions minister fleshed out his vision of a "defined aspiration" hybrid pension scheme (IH 3/21/12) in a recent radio interview, explaining that employers would not be compelled to offer these plans but that doing so would allow the defined benefit model to remain viable while sharing some risk with employees. A few existing plans illustrate how this would work. One variation guarantees a minimal return and has an established mechanism for topping it off if investments perform well. The minister has already consulted with stakeholders on defined aspiration and will soon launch a public consultation.
Canadian employers warned against older worker layoffs
HR Reporter, Aging Workforce, Vancouver Sun
The Canadian Human Rights Commission responded to a spate of media commentary alleging older worker layoffs in advance of the entry into force of a ban on mandatory retirement (IH 1/05/12) with a warning to federally regulated employers that this law is simply codification of a Federal Court ruling. The rights of older workers must be respected during the transition period, says the commission. The ban formally takes effect on 15 Dec 2012.
Skilled trades program announced
Reuters, VTC, Vancouver Sun
Canada's Citizenship and Immigration Minister has announced plans for a new skilled trades program, streamlining job access for skilled foreign tradespersons. Worker immigration programs have traditionally targeted professional and managerial staff, but there is a growing and critical need for tradespeople, particularly in construction, manufacturing and natural resources. A new point-based grid will be developed for evaluating candidates in this program, which will be a part of the revised Federal Skilled Worker Program (FSWP) expected later this year.
EEOC guidance on ADEA
The Equal Employment Opportunity Commission has issued a final rule amending its Age Discrimination in Employment Act regulations, effective 30 Apr 2012, and Q&As explaining the amendments. The amendments conform the regulations to US Supreme Court decisions allowing claims for disparate impact -- when a seemingly age-neutral employment practice disproportionately harms older workers -- and requiring employers to prove disparate impact was the result of a "reasonable factor other than age" in order to avoid liability. They provide guidance and suggest best practices for employers relying on this defense.
Key US senator offers major pension reforms
To address the nation's "retirement crisis," a sweeping new bill from Sen. Tom Harkin, D-IA, calls for many reforms. While the broad goal of the Rebuild America Act is to create jobs and bolster middle-class financial prospects, retirement-related provisions would stabilize pension discount rates, raise PBGC premiums, create a national retirement security commission and enhance Social Security benefits. The bill's next steps are unclear, though its proposals will factor into the retirement policy debate.
Congressional hearing on minimum wage violations
The lower house of Congress will hold unprecedented public hearings 10 May on accusations that a global company routinely pays less than the minimum wage. The case has highlighted the friction between the nation’s protective labor laws and foreign investors keen on tapping Brazil’s consumer market.