Market Updates |
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Australia
Labor Environment
The Australian government has
introduced the Fair Work Bill 2008
which would replace Work Choices (WC).
The bill would create Fair Work
Australia (FWA), an independent,
statutory body that would facilitate
collective bargaining; approve
enterprise agreements; review minimum
wage levels and award conditions;
address unfair dismissal claims; deal
with industrial action; and settle
workplace disputes. FWA would replace
the Australian Industrial Relations
Commission (AIRC), the Workplace
Authority, Workplace Ombudsman, Fair
Pay Commission, and the Australian
Building and Construction Commission.
The bill also would provide
employees with the right to good faith
enterprise bargaining. Employers would
be required to inform employees of their
right to representation in bargaining,
which may or may not be through a
union, and respect a majority vote
by employees to do so. A collective
agreement would have to be approved
by a majority of employees to whom it
would apply, regardless of whether the
agreement was negotiated by a labor
union. Agreements would be required
to contain provisions for individual
flexibility, a dispute settlement process,
and a requirement to consult on major
workplace changes. The bill would
permit FWA to facilitate multi-employer
bargaining for low-paid employees and
for employees who historically have not
had access to collective bargaining. In
reviewing collective agreements, FWA
would apply the "better off overall test"
to ensure that employees were not left in
worse condition.
While collective bargaining would
be the primary means of forging
agreements, existing Australian
Workplace Agreements would be
permitted to continue indefinitely if
employers and employees agree and
they meet minimum legal standards.
The bill would extend protection
from unfair dismissal to workplaces
of any size, but it would introduce a
qualifying period. Employees must have
six months' service before they could
claim unfair dismissal (12 months for
employees in workplaces with fewer than
15 employees). Casual workers would
be covered by unfair dismissal rules,
but they would be required to meet the
same service requirements as regular
employees and have regular employment.
Operational reasons would no longer be
an acceptable reason for dismissal.
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The bill would establish ten National
Employment Standards (NES). In
addition, it would restore minimum
employment standards for low-wage
employees, including minimum
wages; arrangements for when work
is performed; overtime and penalty
rates; allowances; leave and leave
loadings; superannuation; procedures
for consultation; dispute resolution;
and the representation of employees.
An enterprise flexibility clause
would allow high-income employees
(currently, employees earning more
than AUD 100,000 per year) to make
arrangements not based on an award.
If enacted, the changes would be
effective January 1, 2010.
Employment Terms and
Conditions
Employers in Australia should review
their benefit plans following the passage
of legislation banning discrimination
against same-sex couples.
Effective July 1, 2009, the Same-
Sex Relationships (Equal Treatment
in Commonwealth Laws - General
Law Reform) Act 2008 eliminates
discrimination against same-sex couples
and their children and gives them equal
rights with heterosexual couples. The
changes affect approximately 100 laws,
including taxation, superannuation, and
health insurance.
Retirement and Social
Security
Employers in Australia should review
how they calculate superannuation
contributions following a new ruling
on the definition of "ordinary time
earnings" (OTE).
The Australian Tax Office has ruled
that the definition of OTE, which is
the basis for determining employers'
superannuation contributions,
includes overtime compensation, paid
parental leave, and employer-provided
supplements to jury duty or military
reserve pay. |
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New Zealand
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 Employment Terms and Conditions
Some employers in New Zealand may soon be able to hire new employees on a
90-day probationary period.
The new National Party-led government has introduced legislation that would
permit employers with fewer than 20 employees to dismiss new employees within
90 days of hire without being subject to claims of unfair dismissal. Approximately
one-third of all businesses in New Zealand employ fewer than 20 employees. If
passed, the law would become effective April 1, 2009.
Retirement and Social Security
Employers in New Zealand should review their Kiwisaver policies following the passage
of legislation that reduces mandatory contribution rates, among other changes.
Some provisions of the Taxation (Urgent Measures and Annual Rates) Act are
designed to make Kiwisaver more affordable for employees and employers. Under
the law, the compulsory employer contribution will be capped at 2% (it had been
scheduled to increase 1% annually to reach 4% in 2011). The employer tax credit
for contributions made to employees' Kiwisaver accounts will be discontinued.
The employer superannuation contribution tax exemption will be capped at the
compulsory employer contribution of 2%. The minimum employee contribution
rate will be reduced from 4% to 2%, and the default rate for new employees will
be 2% (employees will be able to elect to contribute more). The law also forbids
employers from adjusting employees' normal pay to fund the employer's compulsory
contribution. The NZD 40 member fee subsidy will be discontinued. These changes
will be effective April 1, 2009.
Taxation of Compensation and Benefits
Some individual taxpayers in New Zealand will see additional income tax reductions
effective April 1, 2009.
The Taxation (Urgent Measures and Annual Rates) Act will adjust tax brackets
and provide some additional tax reductions. Tax brackets and rates will be: NZD
0-14,000, 12.5%; NZD 14,001-48,000, 21.0%; NZD 48,001-70,000, 33.0%; and
NZD 70,001 and above, 38.0%.
The Act provides for further tax reform effective April 1, 2010 and April 1, 2011:
| Tax Bracket |
Tax Rate Effective
April 1, 2010 |
Tax Rate Effective
April 1, 2011 |
| NZD 0-14,000 |
12.5% |
12.5% |
| NZD 14,001-50,000 |
21.0 |
20.0 |
| NZD 50,001-70,000 |
33.0 |
33.0 |
| NZD 70,001 and above |
37.0 |
37.0 |
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The Act also will introduce the independent earner tax credit (IETC). Effective April
1, 2009, New Zealand residents earning between NZD 24,000 and NZD 44,000 who
do not receive income-tested benefits, New Zealand superannuation, or Working
for Families assistance will receive a tax credit of NZD 520 per year (effective
April 1, 2010, the tax credit will increase to NZD 780 per year). The tax credit will
be phased out for higher earning individuals at a rate of NZD 0.13 per dollar of
income above NZD 44,000. Employees will receive the tax credit via reduced PAYE
deductions from salary or wages, while others will be able to claim the credit on
their tax returns
Employers in New
Zealand should review
their Kiwisaver policies
following the passage
of legislation that
reduces mandatory
contribution rates,
among other changes.
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Japan
Employment Terms and Conditions
Effective April 1, 2010, many employers in
Japan will be required to pay higher overtime
premiums.
Under the new law, overtime for the first
five hours worked beyond the normal 40-hour
work week will continue to be paid at 125%
of normal pay. The next 15 hours of overtime
per week are to be paid at a rate set through
negotiation between the employer and labor
unions, but the amount must be greater than
125% of normal pay. Work exceeding 60 hours
per week will be paid at 150% of normal pay.
Singapore
Employment Terms and Conditions
Employers in Singapore should review their leave policies to ensure
they are in compliance with recently passed legislation that widens the
coverage of the Employment Act and expands leave provisions.
Effective January 1, 2009, the Employment (Amendment) Act 2008
expands the Employment Act to cover "non-workmen" employees earning
up to SGD 2,000 per month. "Workmen" with a basic monthly salary
above SGD 4,500 are excluded from the Employment Act.
The government has expanded paid maternity leave to 16 weeks for
employees with at least 90 calendar days' service prior to giving birth.
Mothers of children born on or after October 31, 2008 are eligible for the
expanded leave. Employees with children under age seven on or after
October 31, 2008 who have at least three months' continuous service
are entitled to six days of paid extended childcare leave per year (under
transitional arrangements, the government will fund extended childcare
leave granted by employers from August 17, 2008 to October 31, 2008).
Employees with children under age two on or after October 31, 2008 and
who have at least three months' continuous employment also are entitled
to six days' unpaid infant care leave.
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Taiwan
Retirement and Social Security
Under amendments to Taiwan's Labor
Insurance system, new members will receive a
monthly pension upon retirement.
Insured individuals with coverage prior to
July 17, 2008 may choose a monthly pension or a
lump-sum payment upon retirement. Individuals
with fewer than 15 years of contributions also
may continue to claim a lump sum.
Taxation of Compensation and
Benefits
In Taiwan, the Legislative Yuan has approved
amendments to the Income Tax Act that increase
a number of deductions for individual income tax.
The legislation contains increases that exceed
the original proposal. The standard deduction
will increase to TWD 73,000 for single taxpayers
and to TWD 146,000 for married couples. The
salary earner's special deduction (personal
exemption) will increase to TWD 100,000. The
deduction for educational expenses will rise to
TWD 25,000 per student. The new deductions
will apply to 2008 tax returns.
In Taiwan, the Legislative yuan has
approved amendments to the Income
Tax Act that increase a number of
deductions for individual income tax.
Thailand
Taxation of Compensation and
Benefits
The Finance Ministry has announced that
temporary tax deductions for certain
investments will be made permanent.
Contributions made to retirement mutual
funds and long-term equity funds will be
deductible up to the lesser of 15% of total
income or THB 700,000.
The government also approved a oneyear
reduction in the total social security
contribution (covering pension, child welfare,
death, accident and sickness, disability,
maternity, and unemployment programs).
Employers and employees will each contribute
3.5% of covered pay (currently 5% each).
However, the fall of the government leaves the
outcome of this policy in doubt. |
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Hewitt Quarterly Asia Pacific
is made possible through the combined skills and experience of Hewitt consultants from across the Asia-Pacific region.
For further information please contact:
Hewitt Associates
2601-05 Shell Tower
Times Square
Causeway Bay
Hong Kong
Tel: (852) 2877-8600
Fax: (852) 2877-2701
editor-hqap@hewitt.com |
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