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.

Morocco

Occupational safety regulator
MENA, Morocco News

The Employment Ministry has signed an agreement to introduce the National Institute on Living Conditions at Work (INCVT) in 2012. INCVT will be responsible for both occupational health regulations and the promotion and supervision of workplace safety.

Rwanda

Workplace sex discrimination bill
New Times

The Ministry of Public Services and Labor is preparing legislation to protect women from workplace discrimination when they are pregnant or breastfeeding. It would be illegal to terminate female employees, subject them to an unsafe work environment or cut their pay during these periods.

Australia

Paid Parental Leave Bill 2010 advances; FWA enterprise agreement precedent
Mondaq, AAP

The House has passed Paid Parental Leave Bill 2010 (IH 05/19/10) and Paid Parental Leave (Consequential Amendments) Bill 2010, which would amend 11 other acts to bring this legislation into force. The opposition has indicated that it regards the bill as inadequate but " a small step in the right direction," so it will not try to block the legislation in the Senate but it aims to build on it when in power.

Analysts have flagged a recent Fair Work Australia decision as a signal that the FWA will take a hard line on both the staff pre-approval requirement and the BOOT (better off overall test) standard for enterprise agreements. A multinational that was found to have cut corners on both has had its enterprise agreement rejected. There will be an appeal.

Cambodia

Trade union law revision
Phnom Penh Post

The regulatory framework for trade unions is now a modest chapter of the Labour Law that emphasizes mandatory financial disclosures to stem union corruption. A tripartite group is near completion of a 17-chapter draft trade union law that would flesh out workers’ right to form unions and provide guidance on the collective bargaining process.

India

Ruling on EPF for temporary staff; IT exemption from visa cap; Note on new gratuity limit
Deccan Chronicle, Economic Times
The Madras High Court overturned an order from the Employees Provident Fund (EPF) Appellate Tribunal that had exempted a school from the requirement to contribute to an EPF because most of its teachers are not on permanent contracts and fewer than 20 of its staff are permanent. Earlier case law reached the opposite conclusion in trying to clarify ambiguous provisions on the status of temporary workers under the Employees Provident Fund and Miscellaneous Provisions Act. The ruling seems to hinge on differentiating professionals such as teachers from “casual workers.”

Also, the foreign-worker limit for Indian companies – the lesser of 20 workers or 1% of total staff – has been waived for the IT sector. Foreign workers brought in at a salary of at least US $25,000 per year would not be subject to this limit. Incidentally, the higher gratuity limit under legislation passed last month (IH 05/27/10), went into effect on May 24, 2010.

Japan

Pension reform proposal; Workplace smoking report
MDT, Kyodo News, Nikkei Report
A pension reform advisory panel will report to the Prime Minister early this month on a pension reform proposal that aims to fulfill Democratic Party of Japan (DPJ) campaign promises (IH 08/12/09). It still calls for the consolidation of different public pension schemes, but it does not identify a funding source or the benefit amount for a guaranteed minimum monthly pension. Pension contributions would be based on income and the benefit level would be based on contributions. The DPJ aims to hold bipartisan negotiations on this proposal soon.

Also, a government panel has submitted a report to the Health, Labor and Welfare Minister offering the option of imposing a total workplace ban on smoking or requiring some employers to provide smoking rooms. The minister will appoint another panel to draft legislation based on this report. A bill should reach the Diet next year.

Malaysia

Minimum wage update
Bernama, FMT

The Human Resources Minister’s plan to gradually introduce a minimum wage (IH 01/21/10) now faces some uncertainty. The ministry is conducting a “crucial” study on the ramifications of a minimum wage and he cannot commit to whether or how to establish a salary floor.

Nepal

Foreign Employment Tribunal Court

The General Federation of Nepalese Trade Unions (GEFONT) announced that its agitation for a tribunal to field the grievances of overseas workers has borne fruit. The Foreign Employment Tribunal Court, established under Foreign Employment Act 2064, is nearly ready to start hearing the cases of Nepalese migrant workers. There is a backlog of cases and the law requires that each new case be concluded within 90 days.

New Zealand

KiwiSaver modification; PIE tax adjustment clarification
NZH, The Independent

The recent Commerce Minister speech on financial advisors that outlined future repairs to KiwiSaver regulations (IH 05/05/10) was followed by an FAQ-style press release devoted exclusively to the KiwiSaver changes. It notes that a coming review of securities law will address the issue of whether new rules on trustees and transparency should be extended to non-retail KiwiSaver schemes and superannuation schemes. Also, Mark Nelson offered a clarification on the 2010 Budget (IH 05/27/10): Superannuation funds that are not PIEs (portfolio investment entities) will also see the tax rate drop from 30% to 28%, but not until April 1, 2011.

Pakistan

Industrial relations law vacuum update
The Nation, Daily Mail, PNP

Soon after expiration of the interim Industrial Relations Act 2008 (IH 01/07/10), a union federation advised the Lahore High Court that labour courts, labour appellate tribunals and the National Industrial Relations Commission (NIRC) had all “become nonfunctional.”  The court investigated this matter and concluded that anxiety about the default legal foundation of the labour court system (IH 05/05/10) has produced this perception but that at least in the Punjab province those courts remain busy. The chief justice noted that the constitution allows for these courts to continue operating under the Industrial Relations Act 2008 until June 30, 2011. Meanwhile, the federal government has given more assurances that it is trying to expedite a new industrial relations bill.

Papua New Guinea

Permanent resident status for highly skilled expats
PNG Post Courier

The Minister of Foreign Affairs and Trade announced that triennial visa renewal requirements would be waived for highly skilled and upper-management foreign workers. A rule according them permanent resident status went into effect immediately.

UAE

Indoor smoking ban
The National
The Health Ministry recently held a workshop to get input on proposed bylaws to the Federal National Tobacco Law that would ban smoking in all indoor public spaces. Establishments that chose to create their own designated smoking areas would have to, with few exceptions, locate them outdoors.

Belgium

Pension consultation suspended
La Libre, Vancouver Sun

The Pensions Minister has advised the Council of Ministers that the government’s political crisis has forced a delay in the consultations that were to follow the Green Paper on Pensions (IH 03/31/10). A party that advocates ultimately splitting Belgium into separate Flemish and Walloon states is now expected to win the right to form a ruling coalition in the June 13 election. Officials who believe that pension reform is an urgent priority hope to have the clout to open Green Paper consultations after the election.

Bulgaria

Pension reform outlined
BTA, Sofia Echo

The Labour and Social Policy Minister has decided against deferring pension reform (IH 02/18/10). He recently unveiled a blueprint and a timetable for reform. The retirement age would not rise, but the contribution period would climb from 37 years to 40 for men and from 34 to 37 for women. Those up to three years short of the contribution requirements at normal retirement age (63 for men, 60 for women)  would have their benefits docked 2.4% per year. The benefit would increase 2.4% per year if retirement is deferred. The National Council for Tripartite Cooperation will discuss the proposal tomorrow and the Cabinet should review it by the end of this month. The launch date is July 1, 2011.

Denmark

Austerity plan
Euclid, Copenhagen Post
The administration now has the necessary votes for passage of an economic restoration plan after a proposal to freeze welfare benefits for two years was replaced by a measure that would halve the unemployment benefit period to two years. The government has so far resisted an opposition proposal to bolster funding for the social welfare system by adding an hour to the 38-hour workweek.

EU

Hints at harmonized pension rules; Anti-discrimination directive stalled
EIS, WSJ, IPE
A Green Paper on an EU framework for pensions (IH 03/03/10) is due this month. Observers forecast a proposal for a stronger “federal” role in the regulation of occupational pensions. There are press accounts of a proposal to narrow the wide range of retirement ages in member states and to peg retirement age to longevity. The European Insurance and Occupational Pension Authority (EIOPA) that is slated to soon replace the Committee of European Insurance and Occupational Pension Supervisors (CEIOPS, IH 11/18/09) will have more power than CEIOPS and there is speculation that there would be a push for some conformity in solvency or disclosure standards. The CEIOPS 2009 Annual Report reinforces the message, calling for “a more consistent and robust European approach to the security of pensions” and noting that the Green Paper will set a “challenging agenda.”

Also, the Spanish Presidency has conceded that the anti-discrimination directive (IH 04/08/09) still faces considerable resistance in the European Council. Most member states back it in principle but many have concerns about encroaching federalization in the current draft. The presidency has concluded that “the proposal needs further review.”

Germany

30-hour workweek option
The Local

The Families Minister has launched a campaign (German only) for Vollzeitnahe Teilzeitarbeit – nearly full-time part-time work – a flexible-hours model that would give parents and other caregivers the opportunity for a 30-hour workweek. This would be a voluntary policy, but employer federations helped develop the concept and plan to promote it.

Ireland

VHI privatization under health insurance reform plan; Means testing proposal denied
Irish Times, Irish Examiner, Irish Independent

The Health Minister has detailed a new community rating strategy that entails giving government-owned health insurer VHI a funding boost, then finding a buyer for it. This would allow for a new risk-equalization scheme that doesn’t appear to favor any of the health insurers. A lifetime community rating model would set higher premiums for those who defer purchase of health insurance until later in life. The reform would guarantee lifetime coverage and it would ban premiums reflecting age or medical history. Incidentally, the Social Protection Minister has now firmly denied that the government has any plans to subject pensions to means testing (IH 05/27/10).

Italy

Deficit reduction package
LTN, IBFD

The Cabinet has approved a set of austerity measures including a 10% surtax on executive bonuses and stock option gains. There is also a provision on pegging the retirement age to life expectancy from 2015.

Netherlands

Social partners near agreement on retirement age hike
DutchNews.nl

The social partners plan to finalize an overdue counterproposal on raising the retirement age (IH 01/13/10) in advance of the June 9 national elections. The normal retirement age would rise from 65 to 66 in 2020 and there is acknowledgment that further improvements in life expectancy could force a second one-year increase in 2025. Workers would still be able to retire at 65 with a 6.5% benefit cut. The election frontrunner VVD party and its likely allies in a coalition government are poised to endorse the social partner agreement once they’ve had a chance to review the final draft.

Norway

Pension reform regulation resource
Esmerk
New pension reform regulations (IH 05/16/07) and an accompanying revision to the AFP Contractual Pension Scheme (IH 03/10/10) are both due to take effect on January 1, 2011. The Norwegian Labour and Welfare Administration (NAV) has recently posted the pamphlet New national insurance – retirement pension to help Anglophones prepare for the reforms:

• The earnings test will be eliminated.
  
  
• Retirement deferral will produce higher benefits and pensionable income earned through age 75 will be factored into benefit calculations.
  
  
• Workers  may draw a partial pension – ranging from 20% to 80% and adjustable on an annual basis – while remaining in the workforce.
  
  
• The option of retiring at age 62 is maintained under the revised AFP early retirement scheme.
  
  
• There will be life expectancy adjustments to pension benefits.
  

The Finance Ministry has recently proposed adding some tax-regime adjustments to these regulations. Pensions above NOK 281,000 (US $47,683.80) would be taxed at a higher rate to offset some tax relief for lower-income pensioners.

Poland

Workplace smoking ban
News Poland, BMJ

The Senate recently passed legislation to ban smoking in all public enclosures, only after some dilution. Restaurants, bars and hotels are among the exempted. A more diluted version passed by the Sejm would allow smoking sections in all public places, including schools and hospitals. There is now a sense in Parliament that the reconciliation of the two bills will produce a stricter anti-smoking law.

Romania

Medical copayment system due soon; Ruling coalition agrees on austerity measures
Rompres, The Diplomat, Mediafax
A medical copayment schedule that the Health Ministry initially set out to launch in September 2009 (IH 07/15/09) is now ready for introduction in the second half of 2010. The aim is to curb excess utilization, but stakeholders have warned that this arrangement is vulnerable to abuse. A patient would pay €50 for an MRI scan at a clinic, but just €2.20 for a day of hospitalization with the MRI at no extra cost. Meanwhile, the ruling coalition has approved the controversial terms of a letter of intent with the International Monetary Fund (IMF). The second-pillar pension contribution would drop from 2.5% to 0.5% until January 1, 2012. Pensions, unemployment benefits and the minimum wage would generally fall by 15%, but no one would receive less than the current minimum threshold set for each of these.

Russia

Favorable migration terms for skilled foreign workers
GIDA, RIA Novosti, LTN
The President has signed new legislation that improves work permit status and the tax regime for “key” foreign workers (IH 03/17/10) with special skills and salaries above US $67,000. There is no mention of the employer obligations reported earlier, but qualifying expats will:

• Have the same income tax rate as citizens, 13%, down from 30%
  
  
• Receive three-year extendable work permits rather than one-year permits
  
  
• Be allowed to work in any Russian cities during their postings
  
  
• Be exempted from foreign worker quotas
  

The law goes into effect on July 1, 2010.

Slovenia

Mandatory profit sharing bill “vetoed”
STA
The National Council voted its limited veto of the mandatory profit sharing bill (IH 05/27/10) by a wide margin. The upper chamber had supported the initial amendments to profit-sharing rules (IH 04/28/10). Besides objecting to the added mandate, the legislators regard it as a fundamental change that should not come without social partner consultation. The National Assembly will have to consider these concerns and stage another vote on the bill.

Spain

Austerity package passed; Labor reform deadline passes
EU Observer, El Pais, Reuters
The Council of Ministers approved a Royal Decree on budget cutbacks (IH 05/27/10) and forwarded it to Parliament where it passed by a narrow margin. Along with suspending the state pension increase and ending the childbirth benefit, it will end the temporary regime for partial retirement under Law 40/2007.

Also, there was a May 31 deadline for social partners to arrive at an agreement on labour market reform. The government had threatened to go ahead with legislation based on a recent blueprint (IH 04/21/10) if no agreement was forthcoming. Social partners reported that they are close to an accord (though the unions have made preparations for a backup general strike) and have continued negotiating. The Prime Minister said that the Cabinet will approve the legislation in a June 16 meeting if there is no deal by then.

UK

DRA, auto-enrolment approaches; Welfare reform plan
Daily Telegraph, Evening Standard, IPE
An interdepartmental team has been charged with drawing up plans for phase -out of the default retirement age. One step under consideration is  raising the retirement age to 66 in 2016 for men and 2020 for women. The Work and Pensions Secretary has suggested pegging the state pension age to life expectancy. Mercer has produced a bulletin on the implications of DRA removal for employers. Also, while the current administration has broadly committed to the 2012 pension reform, the Work and Pensions Secretary is planning on taking a “long hard look’ at the plan design. A review scheduled for this summer will consider whether the auto-enrolment approach is best delivered through the NEST scheme.

The Work and Pensions Secretary outlined his pension reform goals in a mission speech, Welfare for the 21st Century that emphasized a thorough reform of the welfare system. The reform would steer most benefit recipients back into the workforce with a single benefits scheme aimed at those between jobs. Elements of the welfare system and the tax regime for low-income workers would be tackled as part of an initiative to remove work disincentives and make a sharp distinction between employment income and welfare benefits. His plan includes a review of disability benefits.

Canada

Royal Assent for Ontario pension reform; Pension protection bill advances; Various
Financial Post, Toronto Star, LTN
Ontario’s Bill 236 Pension Benefits Amendment Act, 2010 (IH 12/16/09) cleared Parliament with its key provisions intact and received Royal Assent last month. The date of entry into force is not yet determined for most measures, but January 1, 2012, was penciled in when the Finance Minister introduced the legislation. A notable exception is the simplification of surplus withdrawal rules that replaces the requirement for an employer to both establish legal ownership and obtain member consent for the withdrawal with a choice of either one. That technically went into effect on May 18 but awaits the implementing regulations.

Also, the private member’s Bill C-501 An Act to amend the Bankruptcy and Insolvency Act and other Acts (pension protection) has passed in its second reading in Parliament. It would revise the bankruptcy law to move workers’ pensions up to the list of top-priority creditors in a company bankruptcy. The Nortel case (IH 03/03/10) has given this bill some momentum, but it would not apply retroactively.

In other news:

• Bill C-9, (IH 04/14/10) a large package of budget measures featuring significant pension reform provisions, was coming up on a third reading in the House of Commons when legislators started flagging problematic stealth clauses (unrelated to pensions). Key legislators now plan to slow its progress, and there is broad support for a campaign to break it down into smaller bills. While there are no grievances over the pension reform measures, there is a sentiment that Parliament should take the time to study their ramifications.
  
  
• The Department of Finance has released the draft Proposed Canadian Securities Act accompanied by a fact sheet. The legislation would replace provincial securities regulators with a Canadian Securities Regulatory Authority (CSRA).
  
  
• Mercer has posted a Communiqué on the funding provisions of the Finance Minister’s draft pension reform regulations (IH 05/05/10).

Jamaica

NIS contribution ceiling to rise
Jamaica Gleaner

A Labour Party synopsis of the Labour Ministry Paper 41 offers some more detail on National Insurance Scheme reforms under the 2010 Budget (IH 04/28/10). Effective May 31, 2010, the annual salary subject to NIS contribution is doubled to J $1 million (US $11,341). This is the first adjustment to the limit since 2003 and it is meant to partially offset this year’s large benefit increases.

Mexico

Solvency II update
BNamericas

Mexico embraced the EU Solvency II directive (IH 05/29/08) for the insurance sector faster than the EU did. Draft legislation on implementing Solvency II is now under review in the relevant ministries and insurance sector consultations have started. The legislation has very good prospects, but it could take years to enact.

Turks and Caicos

Immigration rules eased for short-term visits
LTN, TC News

The Ministry of Border Control has issued guidance to staff stating that the default entry period for visitors there on business or pleasure should generally (at the discretion of immigration officers) be extended from 30 days to 90, sparing many the bureaucratic odyssey of filing for an extension after just 30 days.

US

House approves pension reform measures
Dow Jones, Tax Analysts, NYT

HR 4213 American Jobs and Closing Tax Loopholes Act (IH 05/27/10) was passed in the House last Friday only after a number of measures involving new expenditures were removed. The COBRA post-employment health benefit subsidy fell victim in the purge, but the pension reform measures and the 401(k) disclosure requirements did not. The unemployment benefit extension is still in the bill, but it lapsed again this week. The Speaker of the House has committed to new legislation featuring the COBRA extension provisions. The Senate will commence debate on HR 4213 next week.

Brazil

Life insurance bill; Mandatory medical coverage expansion
BNamericas
A bill that was recently introduced in the lower house initially called for mandatory life insurance coverage for all workers in the formal sector. To improve its prospects for passage, backers have replaced the mandate with strong incentives for low-income workers to purchase life insurance.

Also, last January health insurance regulator ANS issued Normative Resolution No. 211 (Portuguese only), which added 70 new medical and diagnostic procedures to the menu for minimum basic coverage. From June 7, 2010, health insurers must cover a variety of sophisticated procedures, including bone marrow transplants and genetic testing. In addition, there may no longer be a cap on outpatient mental health coverage. Insurers may not raise their premiums until their next contract renewal.

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.