Luke Tapp explains how access to Arabic-speaking colleagues and local knowledge of the courts helps international clients. [From 07:46]

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  • Transcript

    As we know, Covid-19 has resulted in an unprecedented amount of home working and, and on the whole, the issues around that are well documented and are covered regularly in the media, both the national and HR press. However, an issue that is getting a lot less attention is working from “home” when “home” is overseas. Plenty of employees have made that sort of request to their employer, perhaps because that country happens to be their home nation or maybe their family is based there. If that situation does arise then you need to be aware that it gives rise to a variety of tax issues which shouldn't be overlooked. Chris Thomas explains:

    Chris Thomas: “So something we're seeing a few questions on at the moment is employees who are working in other countries on a temporary basis as a consequence of the COVID-19 crisis. So whilst on the one hand there's probably less of your traditional international employee mobility because there are obviously restrictions on travel and a lot of employees have perhaps not been working overseas business trips and such in the way they might typically, what we're seeing instead is employers wrestling with either employees who are temporarily based overseas because they kind of got stuck there as a consequence of the pandemic and they may now have been there for a number of months which may be starting to give rise to tax issues, or on the other hand, they're seeing more requests coming from employees asking, without any particular business need for it, but just employees asking f they can work from another location, perhaps because perhaps they're from another country and their family is there and they want to be with them at this time, particularly if, frankly, they could be working from anywhere because the offices closed. So we are seeing a number of questions around that and I think it's just important that when those conversations are being had with employees about what is and is not possible, and we appreciate a lot of employers will want to be quite accommodating around this, it is just important to think about what tax and social security considerations might flow from that, and that will partly be a question of the position in the UK. So particularly with regard to social security, the special rules within the EU, and usually, if it's just a short period of time, the UK position won't, won't change if it's just a few months, but if we're talking about periods longer than that, it potentially could do because their residence position could change, but perhaps more critically, it really is important to be thinking about coordinating advice from the other jurisdiction in which the employee is working because there could very well be local tax implications there, which is just important to be aware of, because otherwise you could be sort of bitten by that unexpectedly some months down the line.”

    Global restructuring – planning redundancies in Germany

    In recent programmes we have been looking at the impact of Covid-19 on companies around the world and seeing how many of them are responding by carrying out a restructuring, often involving mass redundancy exercises. We have already looked at Australia, Ireland, France and the UAE and the message from all of them is that the jurisdictions in each country are very different, and so are the employment laws, and that is vital to appreciate if, say, you are a multinational business based in the UK but with a presence in one of those countries. So let us turn next to Germany. So what does German employment law require of employers when it comes to making redundancies and how does that differ from UK law? With the answers, Willems who joined me by phone from the Munich office:

    Lara Willems: “In Germany if an international business with a presence in Germany is planning a restructuring measure, there are basically two important thresholds under German law which employers should keep in mind. So the first important threshold refers to individual employment law and is 10. Under German law, if an employee employs more than 10 full time equivalents, the Termination Protection Act applies under German law. This means if you have an employer who works for you more than 6 months, you need to provide a reason to terminate him. So this also means if you have less than 10 full time equivalents, you don't need a reason and you can just terminate all employees at any time as long as you respect the notice periods and formal criteria. In this context it's probably good to know, and this is something typically German, we need an original wet signature on the notice letter, so this is sometimes surprising for employers from other countries. On the other hand, if you have more than 10 full time equivalents, you need to provide a reason and such reason can, for example, be a redundancy situation. So you need to show that the position will no longer exist and there's something special, the so-called social selection. This means if you want to terminate not all employees, but only some employees of a group, you need to show, as an employer, that you choose the right people. So you need to compare the social criteria. This means the age, the seniority, the family obligations and disabilities of the employees. So this basically means if you want to terminate an employee you cannot terminate a 50 year old employee who has children and has been working for you for a long time, but if you want to keep the 25 year old colleague who has maybe no children and just recently joined, so this is the social selection which will be relevant in a redundancy situation under German law. The second important threshold under German law refers to collective law. So this will be only relevant if the business in Germany has a works council and the relevant number is 20. So this means if the company has more than 20 employees in total, and if there is a works council, any redundancy situation or restructuring measure will typically lead to a so-called change in operations and this will then lead to works council rights. So a typical situation would be a shutdown, but also relocation can trigger these rights and any other measure which may lead to disadvantages for the employees. In this situation the employer needs to inform the works council and also needs to consult with the works council. This basically means for the employer that he needs to allow for additional time and also needs to take an account additional money because under German law there is, in general, no entitlement for employees who will be made redundant to receive a severance payment, but in practice employers often pay these payments to make sure that the cases will be settled and, if a works council is involved, the employer is obliged to negotiate with the works council. This will include a social plan and this social plan will also include severance payments, typically.”

    FAQ – can you help with dispute resolution in the UAE?

    Finally to our FAQ slot which this time round relates to litigation in the UAE. International businesses are attracted to that part of world by the many business opportunities there but many tell us they concerned about the unfamiliar legal system and what seems to be an unclear path ahead in the event that a business relationship breaks down. So, in the UAE the default mechanism for resolving disputes is the local courts with proceedings conducted in Arabic. Also, although in theory court proceedings are held in public, there is very rarely any oral argument. Instead, the judge reviews the merits of the case by reading the confidential pleadings and papers filed by the parties. There are some aspects of court proceedings which are very different to what you might be used to. For example, the burden of proof is on the party advancing the argument and the decisions are generally made at the discretion of a judge, who is not bound by earlier decisions of the court, though he may be persuaded by them. Also there’s no concept of 'without prejudice' negotiations or correspondence. So it s all very different. So, a question we are often asked is how, if at all, can we help? Luke Tapp is one of our team of lawyers based in Dubai:

    Luke Tapp: “I think one of the ways in which we can assist clients with employment disputes, and we're quite unique in this regard, is that we're obviously an international law firm, one of the largest UK law firms in the world, but also we have local Arabic-speaking colleagues that are attending court every day. So as an international employment practice, when clients come to us and they're in a particular dispute, we can give them the sort of international best practice service that our clients expect, but also we have the local touch as well. So we know now how the courts and how the authorities are responding to disputes. We know how courts are trying to be more supportive and sympathetic towards companies who have had to make those tough decisions over the last two or three months. So when clients are receiving letters before actions from their former employees or when they're receiving proceedings that they're having to respond to, we're here to support clients. We're here to discuss the situation with clients and, if necessary, represent them whether it's in correspondence with the other side or whether it's representing them before the Dubai courts. We have a huge team in our Dubai office that covers all aspects of employment disputes and we're really keen to be there to support clients during these difficult times.”

    For now from me that’s the news. Good bye.