Do me a favour – internships and the Bribery Act

Take a business, X Limited. It offers a range of “work experiences” from formal assessed fortnights for likely future employment candidates to a casual few days for the offspring of “friends and family”.  A good showing in the second category can get an interested individual into the first, so those slots are reasonably sought after.

One of the last intake to the second category performed miserably. X Limited would normally have let the placement run its course, offered some gently constructive feedback at its end (“Please don’t ever come back”) and thought no more about it.  The complicating factor is that the individual in question is the child of someone senior at one of X Limited’s bigger customers.

Cue crisis of conscience – does it now do the Right Thing, reject the individual for any chance of future employment and front it out with the parent at obvious possible risk to the business relationship or does it advance the candidate beyond the point which its capabilities would normally have dictated just to keep the parent sweet and hence (hopefully) retain or expand the business? [We are presuming here that it has already discarded the possibility of selling its rejection of the child as a positive virtue – if we regarded your offspring as bright enough to work here notwithstanding very considerable evidence to the contrary, you wouldn’t want to use us – admirable in its sheer cojones, maybe, but unlikely to appeal to any parent with the slightest pride in its progeny].  Specifically, would offering that individual a prospect of further progression towards a permanent job potentially constitute a breach of the Bribery Act 2010?

Section 1 of the Act makes it an offence for a person to give a financial or “other advantage” to another person, intending to induce that other person to perform “improperly” an activity carried out in the course of their employment.  Under Section 2, the person who requests or accepts such an advantage may also commit an offence.  There is no express reference to this situation in the statute, any decided case authority or the Ministry of Justice’s 2011 Guidance to the Act, but superficially this would seem a clear example of the sort of reciprocal back-scratching which the Act was partly enacted to prevent.

Lessons for employers

The closest the Guidance gets is probably in relation to corporate hospitality. It is accepted that the entertainment of clients or targets by a business will generally be legitimate if it does no more than “reflect a desire to cement good relations and show appreciation … [and/or] to improve the image of [the business] as a commercial organisation, to better present its products or services or to establish cordial relations”, all perfectly sensible steps to procuring favourable consideration of the business by that client or target.  However, in the very next paragraph in the Guidance we find this: “The recipient should not be given the impression that [it is] under an obligation to confer any business advantage or that the recipient’s independence will be affected”.  Therefore seeking a business advantage is fine, but expecting it is not.  Generating evidence of any express link between progressing the undeserving intern and receipt of more or any work from the client would therefore be most unwise.

There is the additional hurdle to liability under the Bribery Act that the “other advantage” (i.e. not excluding the intern from further consideration) must be intended to induce the client to act “improperly” – this would be very hard to prove beyond reasonable doubt in any circumstances where X Limited’s pure business proposition to its client is objectively little different from any of its competitors, such that there were equally valid (though perhaps differing) reasons for picking any of them.

So the Bribery Act does not put an end to the “grace and favour” intern, nor to helping a client’s sullen and unwilling offspring add a line or two to an otherwise barren CV. Just be careful that no one makes any express or implied suggestion to the client that you expect your concession to be reflected in work coming the other way.

While you can try to impose an internship policy governing who gets in and the admin around them, be awake to the likelihood that some of your client-facing employees may regard themselves as above such things and may make promises to clients regardless. A periodic written reminder from the top of the business will go a long way to allowing your company to show that it has taken reasonable precautions to prevent this and so escape the risk of a Bribery Act allegation.

Directors Beware – Australian Fair Work Ombudsman unafraid to pierce the corporate veil

Ignorance may not be bliss for company directors who seek to hide behind the corporate veil. A recent decision in the Federal Circuit Court has notably held that a company director can be found personally liable for breaches committed by a company by virtue of section 550 of the Fair Work Act 2009 (Cth) (FWA).

In Fair Work Ombudsman v Step Ahead Security Services Pty Ltd & Anor [2016] FCCA 1482, Step Ahead was held to have underpaid eight causal employees almost $23,000 by paying flat hourly rates and disregarding nine provisions of the Security Services Industry Award 2010 (Award). The breaches included a failure to pay the minimum rate of pay, casual loading, penalty rates, over time and shift allowances.

Notably, the court applied section 550 of the FWA to hold that the company’s director was also personally liable through his involvement in the company’s contraventions. Section 550 provides that a person involved in the contravention of a provision in a modern award will be taken to have contravened the provision in a personal capacity.

In one of the few cases to consider this section, the court found:

  • the director was the “controlling mind” of the company and aware of the Award requirements;
  • the contravention was deliberate and involved disregard for minimum standards in the payment of wages and entitlements;
  • neither the director nor Step Ahead had taken any steps to repay the underpayments to the employees, or showed any contrition; and
  • there had been a financial impact on the affected employees.

Taking these factors into account, and considering the need for general deterrence, the court imposed record penalties on Step Ahead and its director totalling over $308,000.  Step Ahead was ordered to pay just over $257,000 in penalties for its contraventions of the Award and the FWA and the director personally paid $51,408 in penalties for his involvement. These penalties were inclusive of a 20% reduction for the admission of breaches by both Step Ahead and the director.

In addition, Step Ahead and the director were jointly and severally liable to pay the underpayment amount of $22,779.72. To put it in perspective, the company’s failure to pay a mere $201.88 of overtime work attracted a hefty fine of $34,272.

The court also imposed an injunction restraining the director from underpaying security industry workers in the future. It will be interesting to see if he behaves himself considering his history with the Fair Work Ombudsman. The director had previously been the sole director of two security companies placed into liquidation, one of which had outstanding remuneration complaints.

Lesson for employers

  • The court also imposed an injunction restraining the director from underpaying security industry workers in the future. It will be interesting to see if he behaves himself considering his history with the Fair Work Ombudsman. The director had previously been the sole director of two security companies placed into liquidation, one of which had outstanding remuneration complaints.
  • Taking these factors into account, and considering the need for general deterrence, the court imposed record penalties on Step Ahead and its director totalling over $308,000. Step Ahead was ordered to pay just over $257,000 in penalties for its contraventions of the Award and the FWA and the director personally paid $51,408 in penalties for his involvement. These penalties were inclusive of a 20% reduction for the admission of breaches by both Step Ahead and the director.
  • Company directors and executives should be aware that they can be found personally liable for breaches of a company by virtue of section 550 of the FWA. Sole directors are at particular risk of exposure as it would be hard to argue they were not involved in the company’s contravention.

Response to BIS Call for Evidence on Restrictive Covenants

The deadline for responses to the BIS call for evidence in relation to the use of restrictive covenants expires on 19 July.

The Call contains no hard evidence at all to support any suggestion that covenants stifle start-ups. It admits that this is only an assumption, though even those are normally based on something.  It also pays no obvious heed to logical inevitability that if one business benefits from limitations on the use of restrictive covenants, another must suffer, itself potentially a start-up knocked sideways by the departure of a key employee to the competition.

Spoiler alert – neither we nor our survey respondents could come up with any convincing reason to change the law relating to covenants, let alone any actual practical means of doing so, without creating colossal peripheral damage to industry and enough satellite litigation to fill the Courts for years.

There might possibly be a case for some ACAS code-like guidance on the use of covenants. This could be some principle-based pointers which could focus employers’ minds on what they needed and where non-compliance would not necessarily be fatal to enforceability but would at least require a good explanation.

Instead or in addition, BIS’ repeated references to a lack of transparency in covenants (again sadly unburdened by any actual, y’know, evidence) might also suggest a push to require contracts containing restrictive covenants to be formally – perhaps independently – explained to the employee pre-signing. Is it just me, or would you expect the sort of employee likely to generate protectable interests for covenant purposes not to read their contract first or, having read it and miserably failed to understand it, to sign up anyway?

We shall see what comes of it all, if anything. In the meantime, here is our Response containing some fuller commentary on the questions in the Call.

EEOC Gives Employers Extra Time to File EEO-1 Pay Data Reports

The Obama Administration, together with the Equal Employment Opportunity Commission (EEOC) kicked the year off with a bang on the equal pay frontier, announcing a proposed rule that will revise the EEOC’s longstanding Form EEO-1.  The proposed rule was published on the Federal Register website on February 1, 2016 and a public comment period was opened until April 1, 2016.  The public spoke and the EEOC listened.

Data currently collected from EEO-1 reports provides the federal government with workforce profiles that are sorted by race, ethnicity and gender. The original proposal, announced on January 29, 2016, would have required federal contractors and employers with 100 or more employees to provide pay data to be included in EEO-1s beginning with the September 2017 report. According to EEOC Chair Jenny R. Yang, the additional data collected would be a “significant step forward in addressing discriminatory pay practices. The proposed rule sought to employ an updated and improved online data collection mechanism to ease the compliance burden on employers.

The revisions announced on 13 July 2016, appear to be a direct response to commentary by employers about the burdens imposed by the EEOC’s initial proposals. It gives employers additional time to prepare for the additional EEO-1 reporting requirements and also move the EEO-1 filing deadline to align with W-2 reporting. Under the revised proposal, for the upcoming 2016 EEO-1 report, the filing deadline will remain September 30, 2016. However, beginning with the 2017 report, the reporting deadline for all EEO-1 filers will be March 31st of the year following the EEO-1 report year. Thus, the 2017 EEO-1 report will be due on March 31, 2018. Changing the filing deadline will give employers six more months to prepare their recordkeeping systems for the 2017 report, and it will give them 1.5 years without filing an EEO-1 report (September 30, 2016 to March 31, 2018). At the same time, this change will align the EEO-1 with federal obligations to calculate and report W-2 earnings as of December 31st; the EEOC will not require a special W-2 calculation for the EEO-1.

The Notice was published in the Federal Register on July 14.  There is a 30-day public comment period on the revised proposal until August 15, 2016.

For the moment, the bigger story is not the rule change itself, but the ability of the public sector and private sector to work together to make a meaningful push to address the gender pay gap in an efficient way.  According to Ms. Yang, the revisions to the proposed rule came about as part of the EEOC’s effort to “think about how [it] minimize[s] the burden on employers.”  Addressing the gender pay gap remains an important item for the EEOC.

NLRB says employer doesn’t have to consent to temp workers unionizing

The National Labor Relations Board decided this week that employers and staffing agencies no longer have to consent before a union can combine solely and jointly employed workers into one unit. The NLRB’s decision overrules a 2004 decision from the Board.

The 3-1 decision in Miller & Anderson, Inc. and Tradesmen International and Sheet Metal Workers International Association, Local Union No. 19, AFL–CIO held that a union does not need consent from user and supplier employers in order to create a unit that combines employees of the user employer with employees who work for the user and supplier.

Practically speaking, this means that employers who use temporary employees from staffing agencies could see their temp employees combined into a union with permanent employees without the employer’s consent. The permanent and temporary employees must still share a “community of interest” in order for the Board to consider a single unit to be appropriate.

The majority of the NLRB in the Miller & Anderson decision reiterated the Board’s view that the primary purpose behind the National Labor Relations Act was to encourage and facilitate collective bargaining, and that “self-organization” includes the right to determine who is included and who excluded from any bargaining unit.

“Limiting the contingent employees to [a separate union or seeking employer consent] deprives them of the full ability to associate for collective bargaining purposes with their coworkers who are solely employed by the user employer,” the majority wrote. “It also deprives the solely employed employees of their full ability to associate with their contingent coworkers . . . It dilutes the bargaining power of both groups.”

The Miller & Anderson decision represents a complete 180 from the Board’s 2004 holding in Oakwood Care Center, which held that solely and jointly employed workers need consent from both employers in order to join the same bargaining unit.

Oakwood denies employees in an otherwise appropriate unit full freedom of association,” the Board found this week. “Requiring employees to obtain employer permission to organize is surely not what Congress envisioned when it instructed the Board . . . ‘to ensure to employees the fullest freedom in exercising the rights guaranteed by the [NLRA].’”

The decision overturned a regional director’s ruling that the union could not represent construction workers employed by both Miller & Anderson Inc., an electrical and mechanical contractor, and Tradesmen International. Employer groups filed briefs asking the Board to stick to Oakwood, but national unions argued in favor of rejecting Oakwood.

This week’s decision follows the Board’s trend in recent years of chipping away at pro-employer precedents, particularly in the area of joint employees. Employers who contract with staffing agencies or otherwise use temporary employees should make sure they’re prepared for potential joint unionization activities.

“Time is an illusion. Lunchtime doubly so” – who is responsible for overtime working?

Way back in, ooh, last month we reported on Carreras –v- UFPS, a case on the extent to which an employer’s expectation of overtime working could be the basis of a disability discrimination claim even where it was the employee’s conduct which had generated it

As if to shed some further light on that question, global professional services recruiter Morgan McKinley has kindly surveyed 2,600 professionals in the banking and finance sector on their overtime working, with these results:

  • 81% of respondents regularly work beyond their contracted hours, with the longest extra hours by the most senior staff. As to why, 75% felt “obligated” or “very obligated” to do so.  That is a strong word – my online thesaurus suggests as alternatives compelled, duty-bound, contracted, forced, required and the faintly concerning enslaved.
  • But the survey does not deal with the key question of how that sense of obligation arises and so we cannot say that it is necessarily anything said or done by the employer. It could equally well be personal ambitions for advancement or remuneration, anxiety about job security or peer pressure, so the question raised in last month’s case can still be asked – how far should the employer be responsible for this?
  • The issue is not a small one, either legally or from the employment relations perspective. Nearly 86% of the respondents said that their overtime working had an impact on their work/life balance, a “heavy impact” in over half of those cases.  6% of respondents said that they did not know, meaning either that their home life is fairly wretched even at its best and/or or that their idea of work/life balance has not progressed beyond being at work while still alive.
  • And what is it all for? 87% do it for love alone, it would appear, claiming not to receive any separate compensation for the additional hours.  This strikes me as potentially rather disingenuous given salary and bonus levels among financial professionals relative to many others, but perhaps the best way of determining if you are paid extra for those additional hours may be to stop doing them and see what happens?
  • Never mind, at least there is the lunch break, surely? However, the survey indicates that the days of the long City lunch are clearly well behind us – 76% of respondents generally eat at their desk and scarcely a fifth even get to leave the building at all.  So the late great Douglas Adams’ opening lines above were right after all.
  • Not a pretty picture in terms of overall hours, therefore, so what could really be done by way of reasonable adjustment for a disabled employee like Mr Carreras or for broader retention/engagement purposes? Two-thirds of employers allowed working from home (though with varying degrees of proactivity and willingness) and 60% offered flexible start or finish times.  Just over half of respondents said that flexible working would make their lives easier, while a despairing 35% aimed simply for fewer meetings.

The Morgan McKinley commentary refers to “a widening gap between modern business philosophy around smart working and the reality of old-fashioned noses to the grindstone”, perhaps evidence of a continuing Monty Python Four Yorkshiremen approach to working as a professional.  But this survey raises a separate question – since most employers are willing to offer flexible working and most employees seem to want it, is the blockage here really the employers’ attitude or the employees’?  Morgan McKinley say that “Businesses are facing an alarming burnout and need to evolve work practices”, but really?  Returning to last month’s case, UFPS could well have offered Mr Carreras more overtly than they did the ability to work flexibly and/or remotely, but would he have taken them up on it if they had?  And if he had not, fearing for his bonus or prospects or status among his peers, would UFPS still have been liable?  Surely there must be a point where an expectation based on the employer’s requests or demands can be distinguished from one driven by the employee’s own concerns, when that liability ought to cease.

Restrictive covenant survey responses – the case for change?

On 16 June, following a Government Call for Evidence, we sent out a survey to over 4,000 of our clients and contacts in HR and Legal teams to ascertain attitudes to the use of restrictive covenants in contracts of employment and their inhibiting impact, if any, on competitiveness in the UK market. Our respondents ranged in size from fewer than 10 employees to over 2,000 and from only a year or two in existence to over a quarter of a century.

Since our survey went out, we have of course had the Brexit vote. This will have one of two consequences for the Government’s covenant review – either it will become a matter of no real consequence relative to the other issues which Parliament must now struggle with, or it will become a key weapon in the UK’s fight to maintain an independent business economy outside the EU.

The Government’s Call acknowledged that there remains a place for restrictive covenants that are reasonable in their extent, coherent in their drafting and appropriate to achieve their purpose. Sceptics will say (indeed, I already have: that our existing Court system effectively provides this already by striking out covenants which fail any of those tests, and therefore that no reform is necessary. But is that a common view?   In addition, do employers take the “care and maintenance” steps necessary to keep their covenants focused and so enforceable, or are they left to go to seed as notional deterrents to start-ups and/or unfair competition, but ultimately without teeth?

When our formal submission is lodged we will post a copy on this blog. In the meantime, though the deadline for submission of responses to the Call is not until 19 July, here is a sneak preview of the feedback we received:

  • The size of the task of reforming the law relating to covenants, if that is the Government’s direction, is evident from the extent of their use – of our respondents, over 93% had covenants in their standard terms of employment.
  • However, it does not appear that these covenants are always given the thought which would allow the employer to say with conviction that they were focused on the risks posed by each employee – only 61% of respondents consider whether those standard covenants are appropriate to each new hire, and an even thinner 54% look at that question again when an employee is promoted or changes role.
  • Our own experience is that departures from standard template covenants are relatively rare, indicating that even if such considerations do take place, they seldom lead to much tailoring of the restrictions. However, whether employers go through those hoops or not, they may be let down by their inability to prove it – less than 12% of our respondents retained any notes or other records of that consideration process.
  • There are some mildly contradictory responses in relation to the impact of covenants on employers considering new hires. Over 35% do not insist on finding out whether a candidate is bound by covenants at all, and a similar proportion have taken a deliberate decision to disregard them in any case. Put differently, however, that means that about two-thirds of employers do have regard to covenants in a candidate’s contract and do seek to respect them.  Over 35% of respondents take external legal advice on the covenants in a new hire’s previous contract.  Against that, in answer to the question of whether such covenants had blocked the hire of someone they would have otherwise have taken on, nearly 84% of our respondents said not.  That does tend to suggest that the deterrent effect hinted at by the Government is relatively limited in practice.
  • 37% of respondents say that restrictive covenants in a potential hire’s contract had damaged or delayed their achievement of corporate objectives to develop or deliver a new product or service. Clearly the Government’s concerns about an inhibition on start-ups and entrepreneurialism are not wholly without foundation. However, that statistic by itself reveals nothing about whether that new product or service would have damaged the previous employer had it been allowed to proceed unmolested, i.e. whether those covenants in fact protected a legitimate business interest.
  • That takes us to the question of what our respondents seek to achieve for themselves through the use of restrictive covenants. More or less 100% see them as measures to protect confidential information. That supports the view in the Call for Evidence that an action for a breach of confidence might be a viable alternative.  That said, the same number use covenants to protect client relationships, about 75% to protect the stability of the workforce and 60% to combat unfair competition – these not being objectives achievable by actions for either breach of confidence or passing off/IP infringements.
  • One of the Government’s concerns in the Call was the extent to which employees necessarily understand the covenants when they sign up to them. A surprisingly high 40% of our respondents say that they explain this specifically to their new appointments on arrival.
  • In terms of actual enforcement, less than one respondent in five has taken court proceedings for breach of covenant or of IP rights. About half have sued or threatened to sue for breach of confidence. On the other hand, only 12% have faced action from their employee’s previous employer.  That suggests that the deterrent effect, such as it is, is aimed mostly at the departing employee rather than the prospective employer.  The common thread across our questions concerning enforcement was the very high proportion of claims, up to 80%, that were resolved by settlement.  That suggests to us that employers in covenant disputes often get to a point they are happy with, implying that the covenants have had (to a greater or lesser extent) their desired effect.


We take two main conclusions from these survey results at this stage:

  • That there is no pressing case for the reform of the law relating to restrictive covenants. There seems evidence in our results that employers do generally pay some heed to them, both in their own appointments and when on the receiving end of someone else’s. There is no real evidence to suggest that covenants could effectively be replaced by provisions relating to confidentiality or intellectual property, and the 93% take-up for them suggests covenants to be an accepted part of the contractual landscape.  Only one employer in 6 has been put off a prospective hire by his/her covenants.
  • That some employers are still not taking obvious steps by which they could give their covenants more muscle. While a healthy proportion say they consider their covenants per individual, only a minority seek professional advice and even fewer retain the evidence necessary to demonstrate their thinking, so creating an immediate hole below the waterline for any attempt to enforce them. Whatever the outcome of the Government’s review, good practice will remain that employers keep records of why they think their covenants are necessary.

Beware the possible costs of rejecting a good offer in Australian Fair Work cases

The Fair Work jurisdiction in Australia is generally considered a ‘no costs’ jurisdiction, meaning that even if a party is successful in an action, it is usually unable to obtain a costs order against the loser.

However in 2012 the Fair Work Amendment Act 2012 (Cth) widened the exceptions to the ‘no costs’ rule by enacting section 570(2)(b) of the Fair Work Act 2009 (Cth). This section allows costs orders to be made where a party has committed an ‘unreasonable act or omission’ in the bringing or continuing of a claim that causes legal costs to be incurred by the opposing party.

  • So what classifies as an unreasonable act or omission for these purposes? Notably, recent case law has shown that one party’s failure to accept the other’s reasonable settlement offer may be considered an unreasonable act resulting in a costs order being made against it.
  • In Ferry v GHS Regional Pty Ltd (May 2016) a yard manager was dismissed after taking property without authorisation. He brought an unfair dismissal claim and represented himself in proceedings. Following a series of conciliation meetings, his employer offered him $3000 to settle the claim, which he rejected.

Mr Ferry’s claim was rejected by the Fair Work Commission (FWC) and a costs order was made against him to the tune of AU$13,875.50 to cover the legal costs incurred by his employer.

He argued that due to his lack of legal representation and experience he was not able to evaluate the prospects of his claim to determine if the offer was reasonable.

The FWC noted that, while self-represented litigants were indeed at a disadvantage, this would not be taken into account in determining if the rejection of an offer was unreasonable. Of significance here is that the employer had provided the employee with all the documents to be relied upon in proceedings and this information would and should have been sufficient for the employee to realise his claim had little support, even without legal input.

The FWC also placed weight on the fact that the letter of offer had expressly stated that the employer would seek costs if the claim failed.

Going the other way was Cugura v Frankston City Council (No 2).  In this appeal decision, the employee claimed that his dismissal was an adverse action taken against him on the basis of his disability. The employer, in early September, offered that both parties bear their own costs and walk away from the matter. By early October, the employer had submitted affidavit evidence which more or less irrefutably contradicted the employee’s unsubstantiated claims. Despite this, Mr Cugura still did not accept the walk-away settlement offer.

The Federal Magistrates Court (FMCA) dismissed the appeal and made a cost order against him. It noted that whilst the refusal of the offer at the time it was made may not have been unreasonable, given the employee did not challenge the employer’s evidential case as to the reason for the termination and the way the trial was later conducted on behalf of the employee, the subsequent refusal was unreasonable and hence the costs order justified.

Lessons for Employers

  • Where applicable, draw to the attention of an employee (particularly a self-represented litigant) in as much detail as possible why their case has little or no prospect of success. If you have substantial evidence that contradicts an employee’s claim, this should also be brought to their attention at or before the point of the offer.
  • Ensure any settlement offer made to an employee is both clear in its terms and reasonable in all the circumstances – the harder-nosed the offer and the more onerous the conditions attached to it, the easier it will be for an employee to show their refusal was not unreasonable.
  • Include in all settlement offers a statement that, if the employee rejects the offer, the employer reserves the right to pursue costs under s 570(2)(b) of the Fair Work Act 2009.
  • When rejecting a settlement offer made by an employee, do so clearly and state in detail the reasons for rejecting the offer so that these can later be relied upon to show that the grounds for rejection were reasonable.
  • Because a costs award is dependent on the costs having been incurred as a direct result of the other party’s unreasonable conduct, ensure that you are able to identify what costs stem from what act or omission by the other side, e.g. by noting what time is spent post-offer on what part of the claim.
  • Remember that the costs threat can apply also to part only of a claim, e.g. where a proposal is made to dispose of a particularly weak or minor part of the proceedings leaving the main case extant.

New legislation on the posting of workers to Poland

New legislation to protect employees sent from outside the country to work for a limited time in Poland came into effect on 18 June. The legislation implements just in time the EU Posted Workers Directive, which Member States were required to bring into force within two years of June 2014.

The new legislation is intended to ensure that an employee posted to work in Poland enjoys conditions of employment in line with (or at least not worse than) those available to “local” employees under the Polish Labour Code and other relevant employment legislation. The relevant “protected terms” include working time and holiday/rest periods; pay (including overtime); health and safety; non-discrimination; and protections for minors and women who are pregnant or on maternity leave.

Employers with posted employees in Poland as at 18 June, or who intend to post workers in the future, should take particular notice of the following risks:

  • A fine of between EUR 250 (PLN 1,000) and EUR 7500 (PLN 30,000) will be payable if the Polish Labour Inspectorate finds that the employment status of the posted employee does not meet the criteria for a temporary posting as set out in the new legislation.

Action point: posting employers should consider whether the posting is a genuine posting within the framework of the provision of cross-border services.

  • The new rules on the joint and several liability for posted employees of contractors and subcontractors will potentially impact heavily on the construction sector where contractors often subcontract construction-related work to a foreign employer which then posts employees to Poland.

Action point: contractors and subcontractors need to take this new legislation into account when negotiating commercial agreements.

  • Employers (whether from inside or outside the EU) who had posted employees to Poland before 18 June have only 3 months to comply with the new regulations for those people.

Action point: all employers with posted employees in Poland need to ensure that they comply with the Polish Labour Inspectorate’s requirements and employment-related document storage requirements set out in the new legislation. These include that contracts and documents relating to pay and working hours be stored (whether on paper or in electronic form) in Poland, and that the posting employer is able to produce those documents to the Labour Inspectorate for up to two years after the posting ends.  To facilitate this, the employer must designate a person residing in Poland to liaise with the Inspectorate, as required.  In addition, it must notify the Inspectorate immediately the worker starts in Poland of the number of posted employees, start and end dates, certain personal data and of the employer’s justification for using a posted worker rather than a local hire.

On a less serious note, the new legislation – somewhat bizarrely – also appears to amend the Polish Museums Act. It refers to the restriction of “access to information regarding measures applied to ensure the safety of objects against fire, theft and other dangers threatening the loss or destruction of such objects”. Hopefully, this is not implementing a recent Governmental announcement of an intention to change the current rules obliging employers to keep employee-related data for as long as 50 years after the end of employment. In Poland we were expecting a shortening of this period rather than moving these papers directly into museums as historical objects.

Texas Judge Issues Nationwide Injunction Against New Persuader Rule

Less than a week after a federal judge in Minnesota refused to enjoin the Department of Labor’s new Persuader Rule, and three days before the rule is set to take effect, a federal district judge in Texas has issued a sweeping order prohibiting the DOL from implementing its new rule.

We discussed last week how the DOL released new rules in March expanding the circumstances in which employers and their consultants may be bound by reporting requirements under the Labor-Management Reporting and Disclosure Act (“LMRDA”). These “persuader” rules require that employers, lawyers and consultants report to the DOL the fee arrangement and expenditures associated with it for any activity that was aimed directly at persuading employees regarding unionization.

In June, the Department announced that the rule would not apply to any agreements in effect before July 1, 2016, but business groups and legal associations around the country filed several suits in an attempt to block the rule from taking effect at all.

On June 22, a federal judge in Minnesota refused to issue a temporary restraining order blocking implementation of the rule in response to a lawsuit filed by an association of law firms and groups representing management in labor and employment matters, but noted that the plaintiffs were likely to succeed on the merits.

The case decided today in the U.S. District Court for the Northern District of Texas was brought by five business groups and 10 states against the DOL. In finding that the plaintiffs are likely to prove the new rule is arbitrary, capricious and an abuse of discretion, Judge Sam R. Cummings found, “DOL, despite a very lengthy Final Rule, never adequately explains why it is abandoning the prior, longstanding Advice Exemption now. DOL’s alleged interest in fostering ‘transparency’ would have existed ruing the entire lifetime of the LMRDA.” Judge Cummings also faulted the DOL for not conducting any studies or independent analysis to support its rule change.

Judge Cummings also indicated the plaintiffs are likely to succeed on their First Amendment claims, which stem from employers’ rights to express opinions regarding union organizing, and to hire and consult with an attorney; and their Fifth Amendment claims, which allege that the new rule is too vague to provide due process. (The new rule carries criminal penalties for violations.)

The ruling today, though good for employers and labor attorneys, throws the persuader rule into an even greater state of confusion. While it is likely the DOL will appeal Judge Cummings’ ruling, it’s not at all clear whether we will actually be operating under the new rule come July 1.