Ireland Pension Regulation Changes
IORP II is an EU Directive that has been transposed into Irish Law. The Code makes many changes to pension responsibilities and compliance in Ireland and has key deadlines imposed.
Key deadlines include:
- Renumeration policy – 31st December 2021
- Trusteeship – 31st December 2021
- Compliance statement – 31st January 2022
- New form of benefit statement – 31st December 2022
- Full compliance for existing schemes – 1st January 2023
Employers should work with their pension partners and Trustees to ensure they remain compliant with the legislative change and that they are aware of the next steps they need to follow.
UAE Working Hours
On 7th December 2021, the UAE announced new working schedules for employees, effective 1st January 2022.
The new working schedule has been modified to four and a half days as follows:
- Monday to Thursday – from 7:30am to 3:30pm
- Friday – from 7:30am to 12pm
The weekend has also changed to Saturday and Sunday, from Friday and Saturday.
Sunday 2nd January will be considered an official holiday/weekend due to the change.
New UAE Labour Law
On 16th November 2021, Federal Decree Law No. 33 of 2021 was announced, which will come into force 2nd February 2022.
This law will replace the current UAE Federal Labour Law No. 8 of 1980, except for the Dubai International Financial Centre (DIFC) and Abu Dhabi Global Market, as these two regions have their own separate employment jurisdictions.
Some of the key changes are as follows:
Maternity leave will increase to 60 paid calendar days. The first 45 days will be paid at full pay, and the following 15 days will be paid at half pay.
The employee will not be required to have completed one year of service in order to be eligible.
In addition, if the employee gives birth to a child with special needs or a child who needs continuous support due to them being sick or born with a health condition, an additional 30 days paid leave will be provided on full pay at the end of the original 60 days. This can be extended by another 30 days if needed however the final 30 days would be unpaid.
Employees are granted up to 5 days paid leave in the event of death in their family.
A key change which employers should be aware of is the requirement for all employees to be employed on fixed term contracts which cannot exceed 3 years. The contract can be renewed for another 3 years or less at the end of the original contract. If the employer does not extend or renew the contract at its expiry, it will be assumed as renewed under the same terms and conditions.
Existing permanent contracts have 1 year to convert to fixed term contracts following the law change.
End of Service Gratuity
As all employees will be moving to fixed term contracts, the end of service gratuity is impacted by this. The new law stipulates that the end of service gratuity payment for expatriates is to be calculated based on working days, rather than a set number of days per year. Employees who resign during their fixed term contract will also be entitled to the full gratuity, so long as they have completed at least one year’s service with the employer. This is a big change compared to the current end of service payments and eligibility.
Employees can now work remotely, either within or outside of the UAE, providing that the employee has their employer’s consent. New working arrangements are also introduced for part-time, temporary, and flexible working arrangements which employers should review.
The new law allows UAE employers to be flexible in the currency used for salary payment moving forward, subject to agreement from all parties within the employment contract.
Discrimination, Harassment and Bullying
Employees are protected by anti-discrimination laws to prevent discrimination based on race, gender, religion, disability, and ethnic or national origins. Sexual harassment, bullying and any form of violence is also protected against. Fines between AED 5,000 – AED 1,000,000 may be imposed upon employers who violate the regulations around these areas.
Non-Compete Restrictive Covenants
Reasonable non-compete restricted covenants are allowed within employment contracts – this is not a change from the current law – however, a maximum period of 2 years will now apply from the employee’s termination date.
Probation Periods and Recruitment Compensation
The new law sets probation periods to a maximum of 6 months. During this period, the employer must provide employees with 14 days’ notice should they want to terminate the employee in their probation. Similarly, if an employee wants to change jobs during their probation, they must provide one month’s notice if they intend to stay within the UAE or 14 days if they intend to leave the country.
Where an employee leaves an employer within their probation and moves to a new employer, there are recruitment cost implications for the new employer. If the employee moves to a new employer within the UAE after leaving the previous employer (or if they leave the UAE but return within 3 months for a new employer), the new employer is liable to compensate the original employer for the recruitment costs they incurred, unless agreed otherwise between the parties.
German Direct Insurance Contribution Update
From 1st January 2022, employers are required to make contributions to employee’s deferred compensation schemes that existed prior to 1st January 2019.
Back in January 2019, legislation was issued requiring an employer to contribute into an employee’s deferred compensation scheme, should the employee contribute to their scheme via salary sacrifice. The employer contribution requirement only impacted employees with schemes that started on or after 1st January 2019. The employer contribution requirement was 15% of the employee’s contribution up to the monthly tax-free limit (EUR 276 per month in 2019).
From 1st January 2022, all schemes that existed prior to 1st January 2019 are now eligible for the employer contribution.
Australia Superannuation Changes
From 1st November 2021, the Australian Tax Authority released an update around an employer’s responsibility to request an employee’s ‘stapled’ super fund.
From 1st November 2021, employers can no longer enrol employees into their default superannuation fund. Instead, they may be required to find and request from the Australian Tax Authority (ATO) information around the employee’s ‘stapled’ super fund.
A ‘stapled’ super fund is an existing superannuation account that is linked/’stapled’ to an individual. This type of fund will follow the employee when they change jobs and aims to prevent employees having a new superannuation account for each new job they have.
Employers will now need to request ‘stapled’ super fund details from the ATO in the following circumstances:
- When they need to make super guarantee payments for the employee
- When the employee is eligible to choose their own superannuation fund but does not
- For temporary residents as they cannot choose their own super fund
- Where employees were covered by an enterprise agreement or workplace determination prior to 1st January 2021, as again, they cannot choose their own super fund
Once an employee notifies their employer of their chosen super fund, the employer has 2 months to start paying contributions into the chosen fund.
A step by step of how to request the stapled super fund can be found on the Australian Tax Authorities website, alongside additional guidance and support.
Bahrain VAT increase
From 1st January 2022, the Council of Minsters have increased VAT from 5% to 10%. This will impact medical insurance premiums and commission payments to brokers.
The increase in VAT will have an impact on medical insurance premiums for plans commencing on or renewing on 1st January 2022 onwards. Additionally, any member changes throughout the year will also include the new VAT amount.
Where a policy has part of their policy year within 2022, it is likely and expected that these plans will have a pro-rated additional VAT payment for the period that falls after 1st January 2022.
Where brokers in Bahrain are earning commission on these plans, the new commission calculation will be passed on the rate of 10% from January 2022. Brokers will be responsible for paying the VAT to the tax authorities.
Where a broker is appointed to a policy with part of their policy year within 2022, it is expected that no additional VAT will be added or paid on the broker commission, should the plan already be paid in full. However, where the plan is paid in instalments (quarterly or monthly, for example), any payments made after 1st January 2022 will feature the 10% VAT rate including the broker’s commission for this period.Mid-year changes such as joiners and leavers after 1st January 2022 will have the 10% VAT rate applied.
Employers should ensure they budget for the extra tax payment for their plans from 1st January 2022.