Who’s Who Legal brings together Chris Engels at Claeys & Engels, Juan Bonilla at Cuatrecasas and Marianne Granhøj at Kromann Reumert to discuss issues facing labour and employment lawyers and their clients in the industry today.
Chris Engels: Companies often restructured their businesses and engaged in collective redundancies by introducing schemes of early retirement, allowing workers to stop working from a very early age: at one point, upwards from the age of 50. The workers then claimed unemployment benefits without having to look for a job, and were paid a supplement by their ex-employer on top of the benefits they received, until they reached retirement age. As the population is ageing and retirement age is rising, the government now wants to focus on getting more and more Belgians back to work. It is trying to gradually eradicate the system of early retirement by raising early retirement age, and by imposing extremely high levels of social security contributions on top of the employer payments. The government is also trying to get the long-term ill back into the labour market.
The GDPR, which came into effect on 25 May 2018, has a significant impact on HR departments across Europe.
Juan Bonilla: On the legislative angle, there have not been many recent developments on labour and employment laws in Spain, due in large part to the current political environment.
In contrast, there have been significant developments on case law from the Spanish employment courts. The most relevant trend is the increased use of case law from the European Court of Justice (ECJ) to deal with internal employment law issues, based on some significant decisions from the ECJ dealing with Spanish referred cases (ie, fixed-term workers, dismissal and sickness leave).
There have also been significant developments on the interpretation of the formal requirements to carry out a collective redundancy case, which has been a highly contentious issue in Spain over the past couple of years. With this new case law, the formal documentation and information to be delivered to works councils on a collective redundancy case have been largely clarified.
Marianne Granhøj: The most remarkable change in our labour laws is a new Holiday Act, adopted early this year. It is a massive change, and the new Act will enter into force in 2020 with certain transitional measures applied before the actual date of entry. The Danish Holiday Act needed modernisation, but the direct reason for the change was a ECJ ruling that our holiday system was not compliant. The new regime will institute a transition from staggered holiday to concurrent holiday. Within the past 12 months, we have also seen lots of new case law that confirms the stability of certain fundamental employment law principles, but also illustrates the vast developments faced by employers and employees in today’s market – eg, within social media, transfer of undertakings and complex redundancies. Discrimination claims are being litigated and standards are refined on a continued basis, given the additional fact that general protection against unfair dismissal is fairly low in Denmark. Regulatory regimes for corporate investigations, and the influx of the GDPR, are also showing their impact on the HR arena.
Chris Engels: Our clients are increasingly involved in projects to digitalise the workplace. We notice that the Belgian and European legislators are not up to speed with this trend. There is still a number of documents that need to be kept on file as a hard copy, and for which wet signatures are required. Home-work and telework seems to be on the rise. Working-time flexibility needs to increase. Some traditional players (for example in the retail industry) are trying to expand their services to their customers by launching new online platforms, for which they want to rely even more on a flexible workforce.
Belgian courts are trying to work more digitally by accepting briefs filed by email. However, there is still a long way to go. Not all court decisions are publicly available and published, though this would seem to be a democratic necessity. In order to have all the important case law at our fingertips, the firm requires an extensive knowledge management team.
Juan Bonilla: Digitalisation has had an impact in the workplace, on three different elements in particular.
First, redundancies. My view is that even if digitalisation has led to companies deciding to make certain positions redundant, the practical impact so far has been lower than was initially anticipated, at least in terms of mass redundancies or mass dismissals.
Second, flexible working arrangements. In my opinion, the most significant challenge to, and implication of, digitalisation in the workplace has been the increased use of flexible working arrangements, such as zero-hour contracts, intermediate schemes between a pure employment relationship and an independent contractor, crowdsourcing schemes and work-from-home arrangements.
Finally, digitalisation has led to an increased globalisation of the workforce, where an employee can work in one place but be responsible for business in a completely different region of the world.
Marianne Granhøj: Digitalisation is obviously impacting working patterns and the entire concept of the workplace in multiple ways. Most labour laws are not really fit to cover all the changes emerging in a more digitalised work environment. Digitalisation allows many employees to work in much more flexible structures, in an increasingly globalised world. This leads to different working structures and new challenges for employers, but also gives a larger and more diverse proportion of employees better access to the labour market. It also has a new impact on the interaction between management and employees; new approaches need to be taken by top management and HR to build a strong corporate culture, as the day-to-day cooperation between colleagues becomes more fragmented and performance assessments become, to some extent, harder to carry out. This goes for both ongoing business and disciplinary action. Digitalisation obviously also results in downsizing and redundancies, but we also see interesting new players and businesses entering the market. It is also a dynamic development in the context of the eternal battle to source talent.
Chris Engels: Claeys & Engels has been one of the trendsetters in this sense, since its very beginning in 2001. We intentionally spun off from full-service magic circle firms so as to be able to really and fully cover all areas related to HR law. We have since then focused on everything an HR department may need. This does not just include labour and employment law in the traditional sense, but also social security law, tax law, supplementary pension law, data protection law and even corporate law in support of the HR practice. We have been market leaders ever since. Several smaller boutique law firms have been established, but none of these delivers the full range of services we do.
When we established our boutique firm we did the same at an international level, by creating our alliance Ius Laboris (iuslaboris.com) within which we work together transnationally with other like-minded boutique firms on a global scale. We cover more than 50 countries with over 1,400 lawyers, making us the foremost authority in our field.
Juan Bonilla: There is definitely a trend towards specialisation in Spain, not only in all aspects of labour and employment – including contentious and non-contentious work – but also in benefits and pensions. In addition, there is a clear trend towards cross-practice specialisation, including employee investigations, taxation on HR matters, and privacy or HR data protection. The increased complexity on the issues affecting HR internal teams has undoubtedly led to a trend towards specialisation.
In terms of L&E law firms, the trend is either to focus on full-service firms, which in addition to more traditional employment work may also assist more on cross-practice areas of specialisation, or to employment boutiques, particularly focused more on litigation and restructuring matters.
Marianne Granhøj: Surely all lawyers are required to specialise in today’s market, and labour lawyers are no exception. We need to mirror the needs of our clients, who are themselves becoming more and more skilled – adding the complexity of the regulatory framework we need to adapt to when providing comprehensive legal advice that is in the best interests of the company. We are expected to provide solutions that are, from a business perspective, not only compliant but also sustainable, which requires broad awareness and deep specialist knowledge. More and more we need to join forces across practice areas, and to understand when a different specialist’s perspective is needed to optimise the service to our clients. In Denmark we see both full-service firms and boutique firms providing advice within labour and employment law, and this is not likely to change in the foreseeable future. I think the most important part is knowing your competences, and obviously a full-service firm will always have the advantage in larger projects and transactions. Certain industries also carry an inherent need for cross-practice specialisation, eg, the financial and pharmaceutical sectors.
Chris Engels: Labour laws have become more and more technical, and are changing very rapidly. This clearly requires a high degree of specialisation and a well-equipped, knowledgeable department to keep track of all relevant changes. Clients need to be informed of these changes very quickly, so we remain in constant contact with them.
We have seen the introduction of a rule by which the party that introduces a court case and is not victorious must pay a lump sum indemnity (instead of the amount claimed), as well as specific legislation that now spells out the terms of notice or severance in lieu (as opposed to the old rule referring to a reasonable notice period). Together, these seem to have reduced the number of lawsuits brought by dismissed employees. Also, a rule has recently been introduced requiring an employer to spell out the concrete reasons for the termination of individual employees. Since we only act on behalf of employers, we quite often have to argue that the terminations were not manifestly unreasonable. We are now in the process of developing a tool that will predict whether a termination is manifestly unreasonable and if so, what kind of damages the court will award.
Juan Bonilla: I would say the nature of labour regulation has developed towards a more flexible approach, in an attempt to align employment regulation with business needs.
This has proven successful when, for example, labour regulations adopted certain measures to minimise the potential impact on redundancies, such as negotiating new collective agreements, or allowing certain modifications of terms and conditions of employment.
In terms of our practice, these developments have allowed L&E lawyers in Spain to be a bit more creative. We have been able to provide more flexible and business-oriented approaches to highly complex L&E matters.
Marianne Granhøj: We haven’t seen a dramatic change in our labour regulations, but we see the courts trying to apply a dynamic interpretation of the law to generate meaningful results in today’s environment. There has also been a certain focus on facilitating access to the Danish labour market for global talent; and, within restrictive covenants, certain measures have been taken to further increase mobility for ordinary employees. Certainly, there should be a continued focus on making sure labour regulation actually meets the requirements for flexible structures in the labour market. If this is not done carefully, also by the predominant labour organisations, I think everyone is aware that we are putting our entire labour market model (in Denmark, the Flexicurity Model) at risk. Furthermore, the ECJ carries a significant responsibility to seek practical results within the law.
Chris Engels: In the area of labour and employment law and HR law in general, the need for specialist boutique firms will further increase given the complexity and the ever-changing nature of the applicable regulations. At the same time it seems that clients want us to be able to deliver our services beyond the Belgian legal market alone. We are convinced that our already-close collaboration with boutique law firms within our ius laboris alliance needs to be intensified. We need to start operating as one global firm in order to even better serve our global clients.
Challenging ourselves has always been part of our firm’s DNA, as we strive to improve our client service even further. This year, therefore, we launched an internal two-pillar innovation project challenging our lawyers and staff to develop new products and services, and to rethink their current way of working, with the ultimate goal of enhancing the customer experience.
Juan Bonilla: The increased need for specialisation, in both traditional matters and new, niche, cross-practice areas of law, will lead the market to evolve through full-service firms as well as boutique/niche firms having a significant L&E practice. Certain issues, such as employee investigations, may possibly fit the remit of a full-service firm better, while other matters, such as litigation, may be more suited to certain boutique or niche firms. My view is that there will still be room for both.
Finally, it will also be interesting to see if international global firms – who have been in the Spanish market for quite a while but were more focused on other areas such as M&A, finance or litigation – will be able to compete on L&E issues with domestic full-service firms or large boutiques.
Marianne Granhøj: I believe we will see various changes driven by technology, and a very conscious focus, from clients, on getting the lawyer who adds genuine value, and offers solutions, to their business. In some businesses HR departments are losing strength or taking a different, more strategic role; either way it is important to understand the powers and influence of management and in-house counsel in the years to come. As labour and employment lawyers we need to be very much aware of these internal dynamics and support our clients in the best possible way. I think we will see a continued level of competition, including from other players such as consultants and the Big Four. We must be very conscious about our unique competences and consider how to position ourselves in the most suitable way.
There is obviously a genuine pleasure in working side by side with true specialists from other jurisdictions, and we all know when we have truly made a difference to the benefit of our client.