1. Can you provide an overview of the current employment law landscape in Bahrain, highlighting any recent legislative changes or notable court cases?

The current employment law landscape in Bahrain is predominantly governed by the Labour Law. It is important to note that there have been no recent legislative changes to this law as of the current date.

However, there has been a significant decision issued by the Committee of Unifying the Judicial Principles. This decision pertains to the principle of calculating interest for labour entitlements. According to the new principle, wages are subject to the interest stipulated by the Labour Law. However, other entitlements, such as indemnity, are subject to the principles of the Law of Commerce in terms of the calculation of interest. This has implications for both employers and employees in terms of financial planning and obligations.

2. What are the most common employment disputes or legal issues that employees and employers face in Bahrain today?

In Bahrain, one of the most commonly encountered employment disputes revolves around the determination of the legitimacy of an employee’s dismissal. The courts have a broad discretion to review the reasons for terminating employment contracts and to ascertain whether these reasons were justified or not. This often leads to legal disputes as employees may contest the grounds on which their employment was terminated, while employers need to ensure they have solid, legal justifications for any dismissal.

3. Are there any emerging trends or challenges in the labour market or employment law that you have observed in Bahrain recently?

As of the current date, there have not been any significant emerging trends or challenges observed in the labour market or employment law in Bahrain.

4. Can you share any case studies or examples of interesting or unique employment law cases you’ve handled or encountered in Bahrain?

One of the examples that are interesting in Bahrain is the case of the foreign workers working without work permits, in one of the cases that reached the Court of Cassation, the case centred around a dispute over unpaid wages and benefits claimed by a foreign worker against his former employer. There was disagreement between the two parties on issues such as the duration of employment, monthly salary amount, and calculation of end of service indemnity and annual leave pay owed.

The Court of Cassation examined the evidence presented, including documents like the work permit and contract, as well as witness testimonies where salaries differed. A significant finding was that the period of employment prior to February 2017, when the work permit was issued, was deemed illegal under Bahraini labour laws since work without a valid permit is prohibited. As a result, the Court ruled that any employment contract from the earlier period was void and unenforceable.

This employment case highlights the approach of Bahraini courts in invalidating any illegal work arrangements that do not comply with permit requirements.

5. How has the Covid-19 pandemic impacted employment law and workplace practices in Bahrain, and what legal changes or adaptations have been necessary?

The Covid-19 pandemic has indeed had a noticeable impact on workplace practices in Bahrain, though largely confined to the period of active viral spread. During this time, a significant shift towards ‘work-from-home’ practices were observed as employers adapted to the public health crisis. However, as the situation improved and normalcy gradually returned, most employers have reverted to traditional workplace settings.

The transition to remote work did give rise to some legal issues, particularly around the determination of actual working hours for employees working from home. Given the difficulty in monitoring and proving the exact hours worked remotely, disputes arose regarding these matters. However, these cases were relatively few and did not lead to amendments in the law or the establishment of new principles in court judgments.

6. What are some key considerations for multinational companies operating in Bahrain regarding labour and employment law compliance?

For multinational companies operating in Bahrain, one key consideration involves the use of employment contracts. It’s not uncommon for multinational companies to maintain standardised contracts for their global operations while also creating a secondary, localised contract to meet specific legal requirements in Bahrain.

However, this practice can lead to discrepancies between the two contracts and has been the source of numerous legal disputes in the past. It’s therefore strongly recommended that multinational companies avoid this dual contract approach. Instead, they should aim to develop a single, comprehensive employment contract that satisfies both their internal standards and the legal requirements of Bahrain.

By doing so, companies can minimise potential misunderstandings and disputes, ensuring smoother operations and better employee relations in the Bahraini market.

7. Are there any noteworthy differences or nuances in Bahrain’s employment law compared to neighbouring countries in the Gulf region?

Unfortunately our review is limited to the Bahraini law only. However, an important aspect of Bahraini law is that it provides several mechanisms for amicable resolution of employment disputes. This process begins at the Ministry of Labour, advances to the case management stage with the case manager that will propose the settlement of the claim, and only proceeds to court if these preliminary steps do not result in a resolution.

This structured approach helps in de-escalating potential conflicts and encourages settlements outside court.

8. Can you discuss the role of alternative dispute resolution methods, such as mediation and arbitration, in employment law cases in Bahrain?

Building on the previous point, Bahrain’s employment law does emphasise alternative dispute resolution methods prior to resorting to formal court proceedings. The law encourages parties to make use of mediation avenues, facilitated initially by the Ministry of Labour and subsequently by the labour case manager.
These preliminary stages provide ample opportunity for parties to resolve their disputes amicably without needing to escalate matters to the court.

9. How do you see the future of employment law evolving in Bahrain, especially in light of economic and social developments in the region?

Observing the current trends in Bahrain, especially the recent demographic shifts among employers and the growing influx of foreign investors, we foresee a potential evolution in the country’s employment law. As Bahrain continues to position itself as an attractive destination for international business, its employment laws may be revised to align more closely with global standards and trends.

This would ensure that the labour market remains competitive and adaptable, catering to a diverse range of businesses and employees. These prospective changes are not only anticipated to boost economic activity, but also to foster a modern work environment in line with international best practices.

10. What are some common misconceptions or myths about employment law in Bahrain that you believe are important to clarify for the public?

Currently, there are no major misconceptions or myths about Bahrain’s employment law that need addressing for the public.

1. What are the key employment laws and regulations in India that both employers and employees should be familiar with?

The most significant aspect of the Indian labour law regime pertains to the categorisation of workforce into workmen and non-workmen under the Industrial Disputes Act 1947 (IDA), with non-workmen, who are essentially senior managerial employees, not having the same statutory protections as workmen on matters relating to termination, dispute resolution, unfair labour practices, etc. Senior managerial employees are also often excluded from the scope of state-specific ‘shops and establishments’ legislations (LSEA), which are the key laws governing employees’ working conditions, such as working hours, leave, overtime, etc. The central and state governments can legislate on labour and employment matters in India often leading to complex interplay between over 50 and 200 legislations at the central and state levels respectively.

2. What are the rights and obligations of employers and employees under Indian labour laws?

The obligations of employers in India can primarily be classified into: (i) obtaining relevant registrations/licences; (ii) implementing necessary policies on anti-sexual harassment, leave, equal opportunity, etc; and (iii) providing statutory employee benefits (described below). As regards employees’ rights, employees are entitled to receive applicable statutory benefits, apart from a workplace free from harassment and discrimination as prescribed under various legislations. While employers can terminate the employment of employees for redundancy, poor performance, misconduct, etc. this would have to be done in line with statutory and judicial prescriptions.

3. What are the legal requirements for drafting employment contracts in India, and what should employers consider when creating such contracts?

A well-drafted employment agreement is of utmost importance as that explains the rights, obligations and duties of the parties involved. At a minimum, it should contain details of the roles and responsibilities of employees, compensation structure and parameters for variable compensation, termination process and consequent obligations. Working hours, leave benefits and adherence to internal policies are the other requirements that should be covered in employment agreements. Certain state laws mandate issuance of employment agreements containing prescribed particulars, and employers should ensure that their contracts tie in with such requirements.

4. What are the laws and regulations regarding minimum wages, working hours, and overtime in India?

Given that safeguarding labour rights is encapsulated in the Indian Constitution, there are multiple laws that presently govern employment and working conditions in India. Service conditions and applicable minimum wages differ between Indian states and industries. Employers are bound by working hours prescribed under applicable central and state legislations, and employers are statutorily mandated to pay overtime wages to eligible employees (though state-specific exemptions exist for certain categories of employees and sectors). The new labour codes, which await enforcement, seek to further empower employees with more advantageous and homogeneous provisions on service conditions.

5. What steps can employers take to ensure compliance with anti-discrimination and harassment laws in the workplace?

The Indian labour law regime requires employers to protect certain recognised characteristics (such as sex, gender identity, disability, HIV status, pregnancy and certain castes and tribe) against discrimination. Certain legislations mandate formulation of policies to ensure equal opportunities and non-discrimination in employment matters for persons with these protected characteristics. India also has a robust framework for prevention of sexual harassment of women in the workplace, which also requires covered employers to establish an internal committee to redress sexual harassment complaints of women. Employers should ensure implementation of robust policies in line with the law. From a practical standpoint, employers should also ensure periodic training and sensitisation programmes for employees, adequate disciplinary policies to handle violations, redress complaints in an empathetic manner and not mere mechanical application of law/policy, and embed diversity, anti-discrimination and anti-harassment as part of their core values.

6. What are the legal procedures and requirements for terminating an employee’s contract in India?

Termination of employment is of two types – termination ‘for cause’ (generally on account of misconduct), and termination without cause.

Termination without cause is primarily governed by the LSEAs and IDA. The IDA and most LSEAs require employers to give one month’s notice/notice pay and reasons for termination. For the ‘workmen’ category, under the IDA an additional severance compensation is also payable and local labour authorities must be notified of the termination. Factories employing over a certain number of workmen, will require prior approval of the labour authorities for termination of workmen. If the employment contracts provide for better terms and conditions, the same will have to be followed.

For termination for cause, while giving a notice/notice pay will not be required, additional processes such as conducting a disciplinary enquiry will have to be followed.

Depending on the circumstances, employers often opt for a mutual separation, rather than unilateral termination.

7. How can employers handle grievances and disputes raised by employees, and what are the options for dispute resolution?

A key legislation that sets out dispute resolution mechanisms is the IDA, which apart from prescribing a grievance redressal mechanism to be implemented by employers, also sets out processes for resolution of industrial disputes through conciliation, labour courts, tribunals, etc. While the option of approaching civil courts or adopting alternative dispute resolution mechanisms like arbitration and mediation are available to all employees, it would be advisable for employers to establish a robust and confidential in-house grievance redressal mechanism for workplace conflicts, which could help reduce disputes and ensure workplace harmony.

8. Can you provide guidance on the process of creating and implementing workplace policies in accordance with Indian employment laws?

Employers must formulate statutory policies as required under various labour laws including an anti-sexual harassment policy and equal opportunity policy to prevent any discrimination against persons with disabilities, transgender persons, etc. Employers also often formulate policies on maternity benefits, leave, intellectual property, confidentiality, etc. with everything usually being bundled into an employee handbook given to employees upon joining.

9. What are the legal requirements for employee benefits and entitlements, such as leave, health insurance, and retirement benefits?

Employees are entitled to various statutory employee benefits under applicable central and state-specific labour legislations. Key benefits include annual leave, paid maternity leave and other maternity benefits, profit-based statutory bonus, etc. The social security regime provides for provident fund and employees’ state insurance benefits that require both employer and eligible employees to contribute at predetermined rates to the prescribed scheme/funds. Another key benefit is gratuity, which is a statutory terminal pay-out, calculated based on salary and tenure of eligible employees. The eligibility and entitlement to these statutory benefits depends on factors like employee threshold, nature of establishment, salary bracket, tenure, job profile, etc. Employers are required to provide the applicable statutory benefits to employees as a baseline and have flexibility to offer additional contractual benefits.

10. Are there any recent updates or changes in Indian employment laws that employers and employees should be aware of?

A significant update in the social security regime is the Supreme Court’s judgment upholding the Employees’ Pension (Amendment) Scheme 2014 (with riders), following which the Employees Provident Fund Organisation (EPFO) has issued circulars for effective implementation. The key takeaway is that specified categories of members falling in prescribed salary brackets and making contributions on such higher salaries, may exercise joint options, to avail higher pension benefits from the EPFO. Another significant update is the passing of the Rajasthan Platform-Based Gig Workers (Registration and Welfare) Act 2023, which is a first-of-its-kind legislation in India guaranteeing social security protections to platform-based gig workers. Other noteworthy updates include the Supreme Court’s directions to states to ensure implementation of laws on prevention of sexual harassment at the workplace and protection of rights of persons with disabilities, potentially resulting in higher scrutiny by authorities into employers’ compliances.

In recent years, ESG (environmental, social, and governance) factors have been subject to a growing and constant evolution within the European Union and its member states, which has led sustainability to assume an increasingly important role in the economic and social context. Sustainability has become a competitive, strategic and organisational tool for creating added value, with the ambition of being able to measure organisations’ sustainability performance based on predetermined KPIs (ie standard GRI and ESRS).

This benefits the organisation itself, its stakeholders and citizens globally.

The ESGs have become of primary importance following the enactment of the UN’s 2030 Agenda for Sustainable Development signed in September 2015 by the governments of 193 states, which incorporates 17 Sustainable Development Goals – SDGs – into a grand action programme of 169 targets.

With specific reference to social, the targets are zero poverty, eradicating hunger, securing health and well-being, quality education, gender equality, decent work, economic growth and reducing inequality. In addition, reference should be made to the European Green Deal – the instrument through which Europe has committed itself to the goal of climate neutrality by 2050 – the European Pillar of Social Rights and its action plan; the European Social Charter; the EU Charter of Fundamental Rights; the European Convention on Human Rights; the UN Guiding Principles on Business and Human Rights (UNGPs); and the ILO conventions.

In terms of the ‘S’ factor and its impact on labour law consultancy, we have seen an increasing client sensitivity in this area, often affecting their business plans, governance models and set priorities. Indeed, the ‘S’ factor is now strategic, since organisations are required to identify, prevent, mitigate and eliminate (to the extent possible) negative impacts, whether potential or actual, on – inter alia – human rights, decent work, equality, anti-discrimination and to provide their workers (along with the workers in the value chains) with grievance mechanisms.

These macro-objectives can be broken down into sub-objectives that not only change the organisations’ approach to the topic, but also change the relationship between them and their employees. Among the various sub-objectives to be pursued, the following merit special mention:

• equal opportunities (gender equality and equal opportunities);
• fair working conditions (flexible and secure employment, wages, information on working conditions and protection in case of dismissal, social dialogue and employee involvement, work-life balance, healthy, safe and adequate working environment and data protection);
• social protection and inclusion (minimum income, retirement income and pension, health care, inclusion of persons with disabilities, access to essential services and products).

In the above framework, the European Union has started to implement legislation on social sustainability covering subjects that previously were either left to member states or ruled by soft law or international conventions. Among the many, we consider to be relevant for the ‘future’ employment lawyers – on top of the CSRD and the proposal of the CS3D (see below) – (i) the Whistleblowing Directive No. 2019/1937, (ii) the Gender Pay Gap Directive No. 2023/970 and (iii) the proposed Directive No. 85/2023 on greenwashing.

(i) The purpose of the Whistleblowing Directive No. 2019/1937 is to ensure adequate protection to persons working in the public or private sector, who decide to report wrongdoings they have become aware of in the context of their employment or commercial relationship. In other words, whistleblowing represents a powerful tool for stakeholders’ engagement. The directive in question envisages strengthening the protection of whistleblowers by means of effective, confidential and secure reporting channels that, above all, can guarantee protection of whistleblowers from retaliation. The directive therefore extends protection to the largest possible number of categories of persons who, as citizens of the Union or of third countries, by virtue of their professional activities or otherwise, have privileged access to relevant information and are exposed to the risk of retaliation. The directive provides that not only employees but also consultants, suppliers, subcontractors, stagers, volunteers and shareholders have the power to report. The objective of the directive is that the information is dealt with effectively by those who are in a position to resolve the issue raised by the whistleblower. The directive requires organisations with at least 50 employees to set up reporting channels and provides for effective, proportionate and dissuasive civil, administrative and criminal sanctions against those who obstruct or attempt to obstruct reporting. In Italy, the directive was transposed into domestic law by Legislative Decree No. 24 of 10 March 2023 and its provisions will become binding by year end (15 July – 17 December 2023, depending on the number of employees).

(ii) The EU directive 2023/970 sets out arrangements to strengthen the application of the principle of equal pay for equal work or work of equal value between men and women: through pay transparency and strengthening the related enforcement mechanisms. Member states must adopt legislation transposing the directive to bind employers to adopt gender-neutral job evaluation and classification systems that exclude any direct and/or indirect pay discrimination based on sex. The ‘pay’ referred to is both basic pay and pay with variable components. The directive also regulates how to determine whether a job is the same or of equal value through criteria based on eg skills, working conditions and responsibilities, as well as any other factors that may be deemed appropriate for more specific positions. In general terms, employers will not be obliged to pay employees equally for the same job or a job of equal value, but they will have to be able to prove that there is no gender bias and that any differences is due to objective and neutral criteria. Companies employing more than 100 employees will have a reporting obligation at set intervals ranging from one to three years depending on the size of the company. Employers who register a gender pay gap of at least 5% in any category of employees, who cannot justify the gap with objective and gender-neutral factors and who do not address the pay gap within six months, will have to ‘remedy the situation’, in cooperation with employees’ representatives, the labour inspectorate and/or equality bodies. Furthermore, the directive introduces the employees’ and work councils’ rights to request transparent information on salaries. For employees who suffer prejudice, the directive provides the right to obtain remedies from the competent authorities or national courts to cease the violation, and the application of measures to guarantee the right to equal pay and compensation by way of damages (including moral damages and damages for loss of chance). In Italy, the directive and its future transposition into law are part of a path already started by the Italian legislator on the ESG social factor: a first step is certainly law no. 162/2021, introducing the procedure to obtain certification on gender equality with the purpose of reducing the gap between men and women in the world of work. Certification is to be considered an increasingly strategic technical tool that is raising awareness among companies on these issues. In addition, obtaining such certification brings significant reduction in social security charges.

(iii) On the subject of greenwashing, a proposal for a directive was presented on 23 March 2023 that will strengthen consumer rights by amending two directives: Directive 2011/83/EU on consumer rights and Directive 2005/29/EC on unfair commercial practices. The proposal also refers to social factors, since organisations will have to provide, on top of climate change data, information on social sustainability practices, such as applied working conditions, in order to avoid the misleading of consumers.

The legal framework illustrated above, together with the multitude of measures the legislator is taking, will support organisations wishing to score high when it comes to sustainability reporting, including on the social factor. This obligation stems from the Corporate Suistainability Reporting Directive (CSRD) that member states must enact by July 2024. The reporting obligation will place greater responsibility on organisations: they will be obliged to regularly publish and certify their data. The CSRD, already in force, should be completed by the Corporate Sustainability Due Diligence Directive (CS3D) which, although not yet enacted and still under consideration by the European institutions, will require organisations to integrate ESG due diligence procedures in their corporate governance and management systems, in order to identify, prevent and eliminate negative impacts on human rights and social factors in their operations. In the wake of the CS3D strategy is the regulation on the European social taxonomy aimed at identifying common paradigms at European level useful for classifying economic activities as sustainable, also from a social point of view. The approach of the social taxonomy follows that of the environmental taxonomy. However, while the basis of the green taxonomy is scientific, the final report on social taxonomy proposed to ‘measure’ social impact by basing the classification on a mix of international standards, principles and objectives. The sustainability policies that the European Union is adopting as well as the reporting and due diligence obligations are not to be taken in isolation, but they are to be understood as complementary to each other, on a path of change in which organisations are increasingly called to raise awareness on the subject, in order to achieve an assessment of the social impact of their activities.

Introducing and reinforcing social best practices, like those on ‘environment’ and ‘governance’, is not only a necessity, but an opportunity to remain competitive, attractive and capable of creating value, for the organisation itself and for the world around it.

At the same time, as employment lawyers, this is a fantastic opportunity to develop and demonstrate their competence and support clients in this epochal challenge.

The team

Our lawyers have specific and wide-ranging experience in all the different areas of Italian labour and social security law, including industrial relations. They also have hands-on experience as litigators, having been involved in some of the most complex court cases in Italy in recent years.

The labour law team is led by Alessandra Ferroni and Saverio Schiavone.

Key partner of our firm’s ESG focus team, Alessandra specialises in labour law and industrial relations, in complex company restructuring and reorganisation, in the outsourcing process, top management remuneration packages and in litigation.

Saverio, a former judge, specialises in restructuring processes, human resources management, trade union law, litigation and employment contracts.

Raffaella Betti Berutto focuses her practice on business transfers, restructuring and reorganisation processes, lay-offs, compensation and benefits, employment agreements for expatriates, managers and HR management, with specialist knowledge of the aviation industry.

Cristina Capitanio assists Italian and foreign clients in both contentious and non-contentious matters and in all aspects of labour and employment law.

Matteo Fusillo specialises in employment law and industrial relations and has done so since the beginning of his career.

Emanuele Panattoni supports domestic and international clients in litigation and advisory matters related to any aspects of employment law.

The team is completed by 18 professionals, including three counsel: Stefano Biagioli, who deals with both contentious and pre-contentious labour law matters, with expertise in health and safety issues and a strong track record in representing top-level managers; Luisa Michilli, a specialist in the management of employment issues concerning the air industry sector; and Cristiana Pomes, expert in the sector of the staff leasing of personnel.

Having a long tradition of representing foreign multi-national groups in Italy, our specialists have built up a genuinely multi-cultural approach to their practice, enabling them to provide clear, comprehensive advice in cross-border contexts.

1. What are the key employment laws and regulations in Malaysia that employers and employees should be aware of?

Employment in Malaysia is governed, primarily by contract, statute and collective agreements where there is a registered trade union at the employer’s place of work.

The principal statutory provisions relating to employment may be briefly set out as follows:

1. The Employment Act 1955 (‘the EA 1955’) which prescribes minimum terms and conditions of employment in respect of employees within its scope. This includes employees who are earning a monthly wage of RM4,000 or less;
2. The Industrial Relations Act 1967 (‘the IRA 1967’), which governs the relationship between employers, employees and their respective trade unions;
3. The Trade Unions Act 1959 (‘the TU 1959’) which governs the formation, registration, membership and functioning of trade unions;
4. The Minimum Retirement Age Act 2012 (‘the MRA 2012’) which prohibits an employer from enforcing compulsory retirement prior to the age of 60 years;
5. In terms of occupational safety, there is the Occupational Safety and Health Act 1994 (‘the OSHA 1994’) which imposes an obligation on employers to ensure workplace health and safety. There is also the Factories and Machinery Act 1967 (‘the FMA 1967’) which specifically deals with the safety of employees where machinery is involved in the workplace;
6. The principal source of statutory contributions to ensure financial security to employees is the Employees Provident Fund Act 1991 (‘the EPF 1991’) where both employers and employees are required to pay to a statutory fund, a specified percentage based on the monthly salary earned;
7. The Employees Social Security Act 1969 (‘the SOCSO Act 1969’) which provides for payment/benefits for employees in relation to occupational disease/death/injury sustained in the course of employment;
8. The Employment Insurance System Act 2017 (‘the EIS 2017’ which provides for certain statutory benefits and re-employment placement programmes; and
9. The Personal Data Protection Act 2010 (‘the PDPA 2010’) which provides for processing and protection of personal data of employees. There is also in place the Whistleblower Protection Act 2010 (‘the WPA 2010’) for protection of ‘whistleblowers’ in respect of disclosure of any improper conduct at the place of employment.

2. Can you explain the process and requirements for hiring foreign workers in Malaysia?

Section 60K of the EA 1955 requires approval of the director general of labour before an employer may seek to engage foreign employees.

Foreign employees work permits may be obtained from the immigration department of Malaysia under the Ministry of Home Affairs.

3. What are the rights and obligations of employers and employees in terms of working hours, overtime, and annual leave?

The statutory normal working hours for an employee is eight hours/a day (section 60A(1)(b) of the EA 1955). This does not include rest days or public holidays.

Section 60E of the EA 1955 provides for the minimum number of days for annual leave which varies according to the tenure of service.

Employees not governed by the EA 1955 will have their terms and conditions determined either by way of a collective agreement or individual contract.

4. What is the legal framework surrounding termination of employment contracts in Malaysia?

Termination of a contract of employment may be invoked by requiring the employee to serve the notice period or payment in lieu thereof. The termination provision is normally invoked by the employee by way of resignation. Section 12 of the EA 1955 makes provision for termination for those employees whose employment is governed by the said Act and the notice period is determined based on their tenure of service.

5. What are the grounds for unfair dismissal in Malaysia, and what remedies are available to employees in such cases?

The grounds for ‘unfair dismissal’ (known as ‘dismissal without just cause or excuse’) under the IRA 1967 may arise in a variety of circumstances including misconduct, poor performance, and retrenchment. The remedies available to employees in such cases include reinstatement to the previous job position of the employee prior to dismissal or compensation in lieu of reinstatement.

Such claims are normally brought to the Industrial Court under the provisions of the IRA 1967.

In such cases, the employer is required to establish that there was a proper basis for the dismissal and that the dismissal was carried out fairly as a matter of procedure.

6. Can you provide guidance on the procedures and requirements for handling workplace disputes, such as mediation, arbitration, or litigation?

All employment disputes are generally encouraged to be resolved without going to litigation. Employers who have a large workforce generally, have in place, collective agreements which provide for detailed grievance procedures for employees to invoke.

Mediation is encouraged for all disputes and may be conducted by the labour department/industrial relations department as appropriate.

7. How does the law protect employees against discrimination, harassment, and workplace bullying?

The director general of labour has the right to determine complaints relating to any form of discrimination in the workplace pursuant to section 69F of the EA 1955 and may order remedial action to be taken and/or impose penalties as appropriate. This provision applies to all employees whether governed by the EA 1955 or not and includes complaints of sexual harassment under sections 81B and 81D of the EA 1955.

8. What are the legal obligations of employers regarding workplace health and safety in Malaysia?

Please refer to paragraph 1(b) above.

9. Can you explain the legal framework and requirements for employee benefits, such as social security, insurance, and retirement funds?

Please refer to paragraphs 1(f), 1(g) and 1(h) above.

10. What are the potential legal implications for employers who fail to comply with employment laws and regulations in Malaysia?

The potential implications would include penalties being imposed by the labour department or imposition of fines and in serious cases of repeated breach, imprisonment.

The above is intended to provide a brief overview of employment issues in Malaysia and consultation with a solicitor is recommended to obtain any specific legal advice on such issues.

Mental health in Singapore’s workplace is a growing concern, with a Straits Times article reporting that nearly seven in ten Singapore residents found 2021 to be the most stressful year at work, and more than half struggled more with their mental health at work in 2021 than 2020.¹ This article sets out the existing legal regime regarding mental health concerns at the workplace, and subsequently provides recommendations for employers to consider adopting, particularly if termination is being contemplated.

A. Existing legal regime

Workplace Safety and Health Act 2006 (WSH Act)

Under the WSH Act, employers have a duty to take, so far as is reasonably practicable, measures that are necessary to ensure the safety and health of the employees at work,² with ‘health’ encompassing both physical and mental well-being.³ Officers of the company are also responsible for ensuring their employees’ safety and health, and would have to show that they had exercised due diligence to prevent workplace incidents.⁴

Pursuant to the WSH Act, the Workplace Safety and Health Council has approved Codes of Practice (COPs)⁵ including:

1. the ‘Code of Practice on WSH Risk Management’ which was expanded in 2021 to explicitly cover mental well-being and includes examples on how employers can identify, evaluate and manage risks related to mental health at the workplace; and
2. the ‘Code of Practice on Chief Executives’ and Board of Directors’ Workplace Safety and Health Duties’, which was launched in 2022 and refers to company directors allocating sufficient resources to promoting workplace mental well-being.

Tripartite advisory on mental well-being at workplaces (Advisory)

The Advisory, which was issued in 2020, recommends that employers provide support for their employees’ mental well-being on three levels:

1. 1. Individual: to raise employees’ awareness on mental well-being, provide access to third-party counselling services, and for companies with flexible employee benefits to expand the scope of coverage to include mental well-being programmes, consultations and treatments.
   2. Team/department: to train supervisors to spot signs of mental distress, foster a psychologically safe and trusting work environment, and strengthen the workplace social support system.
   3. Organisation: to review the state of employees’ mental well-being regularly as part of the risk assessment for workplace health, review human resources polices, implement and encourage flexible work arrangements and establish work-life harmony and return-to-work policies.⁶

Upcoming workplace fairness legislation

More recently, on 4 August 2023, the Singapore Government has accepted the final set of recommendations by the Tripartite Committee on Workplace Fairness for the Workplace Fairness Legislation (WFL), which is expected to be passed in 2024. The WFL will inter alia prohibit workplace discrimination in respect of protected characteristics, including mental health conditions which is presently not a protected characteristic under the Tripartite Guidelines on Fair Employment Practices and Wrongful Dismissal.

The definition of ‘mental health conditions’ was recommended to cover more serious forms of diagnosed mental disorders usually associated with distress or impairment in important areas of functioning.⁷ Details are expected to be made available when the WFL is introduced.

B. Recommendations to address mental health concerns at the workplace

Where there are mental health concerns arising in the workplace, employers should consider inter alia the existing COPs and Advisory, as well as guidance published by the Tripartite Alliance for Fair and Progressive Employment Practices (TAFEP) on supporting employees’ mental well-being at work.

Briefly, TAFEP’s recommendations are that an employer should respond to an employee’s mental health condition by:

1. 1. 1. acknowledging the effort and courage taken by the employee to share their mental health condition and to reassure them that their health information will be kept confidential and only disclosed if necessary, and if so, with their consent;
      2. listening to the employee and exploring accommodations including allowing flexible hours, time off for medical appointments, and having quiet rooms to provide a ‘safe space’ during breaks; and
      3. organising regular sessions to check in on the employees and direct them to available support services.

If the termination of the employee is being considered, in the case of poor performance, it would be prudent to ensure that there is documented proof recording any performance improvement plan and any reasonable accommodations that had been extended to the employee to accommodate any mental health issues.

In the case of misconduct, extra care must be taken during the inquiry process. Whilst there are no local authorities on the impact of an employee’s mental health issues on an employer’s inquiry into misconduct, there have been foreign authorities, specifically in the UK and Australia, where the following principles may be gleaned:

1. 1. 1. insofar as the mental health issue has no relation to the misconduct, there would be no discrimination;
      2. where the mental health issue may be or is linked with the misconduct, the employer should investigate the employee’s condition and consider alternative measures such as demotion or suspension; and
      3. summary termination may be justified if the mental health issues do not outweigh the egregious misconduct. The context in which the conduct occurred must be considered, including whether such conduct was one-off.

Notwithstanding that unlike in Singapore, there is legislative protection in UK and Australia for those with mental health conditions which qualify as a disability,⁸ authorities from these jurisdictions may still provide guidance for a prudent and cautious approach to be adopted by employers in Singapore.

To conclude, mental health issues are difficult and sensitive to address in the workplace context, particularly in the case of dismissals. Employers would benefit from implementing measures to create the right type of support structure in the workplace to manage mental health. Added benefits include reduced absenteeism and attrition and increased productivity, as it has been reported that employees with mental health conditions missed 17.7 days of work per year and were 40% less productive while at work, which equates to S$28,720 in economic losses annually per person.⁹

With the global war for talent and ‘star’ employees being branded as assets, non-compete agreements have emerged as a contentious subject for most industries.

Non-compete agreements are employment contracts that limit the ability of an employee to join or start a competing firm after a job separation.¹ Parenthetically, these agreements limit the post-employment opportunities of employees within a set industry over a certain period of time.

Global research has suggested an increase in both interest and caution from both governments and private enterprises on non-compete agreements due to concerns over whether labour markets have become less competitive because restrictive agreements are preventing employees from engaging with employers within the same industry.² In the Philippines, however, companies are starting to consider enforcing their non-compete clauses through court action.

Instructions are sparse from the Philippine Supreme Court, through case law, on the validity, interpretation, and application of non-compete agreements. The Philippine local courts, thus, remain malleable on how they will rule on the validity of these agreements.

Article 1306 of the Philippine New Civil Code provides that parties to a contract may establish such stipulations, clauses, terms and conditions as they may deem convenient, provided they are not contrary to law, morals, good customs, public order, or public policy.

Relatively, article 1159 of the same Code also provides that obligations arising from contracts have the force of law between the contracting parties and should be complied with in good faith. Courts cannot stipulate for the parties nor amend their agreement where the same does not contravene law, morals, good customs, public order or public policy, for to do so would be to alter the real intent of the parties, and would run contrary to the function of the courts to give force and effect thereto. Not being contrary to public policy, non-compete agreements, even in relation to employment, has the force of law between them, and thus, should be complied with in good faith.

In 1994, the Philippine Supreme Court in Dai-Chi Electronics Manufacturing vs Villarama,³ has declared that non-compete agreements with a stipulation that a violation thereof makes the employee liable to his former employer for damages, refers to post-employment relations of the parties, thus falls outside the jurisdiction of labour tribunals. A claim to recover damages for the violation of a non-compete agreement is a cause of action that falls under the realm of Civil Law, and therefore rests upon regular courts.

The Philippine Supreme Court in the Dai-Chi case carves out a distinction between the contractual obligations of parties during the lifespan of an employment relationship, and after its severance. The Philippine Labour Code was initially interpreted to allow the employer or the employee to seek refuse under labour tribunals for the entire universe of money claims arising from an employment relationship, the terms of which are expounded in an employment contract. The Dai-Chi ruling, however, removes from the jurisdiction of labour tribunals the enforcement of monetary claims for the violation of the non-compete clause in employment agreement, precisely because it already covers the post-employment relations of parties.

The Philippine Supreme Court has had limited occasion to review and rule upon validity of a non-compete agreement in an employment contract. In Rivera vs Solidbank Corp.,⁴ the Supreme Court emphasised that courts are burdened ‘to carefully scrutinise all contracts limiting a man’s natural right to follow any trade or profession anywhere he pleases and in any lawful manner.’ Thus, in determining whether the contract is reasonable or not the restriction of trade, the trial court should consider the following factors: (a) whether the covenant protects a legitimate business interest of the employer; (b) whether the covenant creates an undue burden on the employee; (c) whether the covenant is injurious to the public welfare; (d) whether the time and territorial limitations contained in the covenant are reasonable; and (e) whether the restraint is reasonable from the standpoint of public policy.

In the Rivera case, it was held that the post-retirement competitive employment ban on a bank employee is unreasonable because it has no geographical limits; the employee is barred from accepting any kind of employment in any competitive bank within the proscribed period on one year. On the other hand, in Century Properties vs Babiano and Concepcion,⁵ the Supreme Court upheld the non-compete clause contained in the employment contract notwithstanding the absence of a specific geographical limitation, even finding that such clause affords a fair and reasonable protection to the employer.

The jurisprudential teaching is that the employer is burdened to establish that a restrictive covenant barring an employee from accepting a competitive employment after retirement or resignation is not an unreasonable or oppressive, or in undue or unreasonable restraint of trade, thus, unenforceable for being repugnant to public policy.

It would thus seem that although there are now considerations in the determination of the validity of an employment agreement’s non-compete clause, there remains no hard and fast rule laid down by the Supreme Court on the ‘reasonable’ criterion. The vague overarching consideration of ‘public policy’ remains the controlling factor, thus con-compete agreements must not appear repugnant thereto.

Tiu v Platinum Plans Phils. Inc.,⁶ a case promulgated a year after Rivera, succinctly ruled that a non-involvement clause is not necessarily void for being in restraint of trade as long as there are reasonable limitations as to time, trade, and place. The primary consideration by the Philippine Supreme Court in that case is that the restriction in the non-compete agreement carried a time limit of only two years and it limited the prohibition to work for another company to a specific trade.

It would appear that local courts will determine the validity of a non-compete agreement in an employment contract on a case-by-case basis. The general trend, however, appears to favor the enforcement of restrictive covenants, as long as they fit the considerations set in the Rivera and Tiu case.

A recent study by the World Law Group⁷ revealed that in most of the jurisdictions, non-compete agreements are enforceable at least in certain respects, to the extent they are necessary for the protection of the employer’s legitimate interests and comply with a certain number of requirements. In the United States, there appears to be a trend towards limiting, if not banning, the use of non-compete restrictions on workers at both the state and federal levels because they stifle ‘innovation’.⁸ In 21 July 2021, US President Biden issued an Executive Order on promoting competition in the US economy in which the Federal Trade Commission was ordered to restrict the unfair use of non-compete clauses that may unfairly restrict worker mobility.

Moving locally, the trend in the Philippines, running quite counter to other jurisdictions, seems to be the protection of business interests via litigation against former employees. Philippine case law is slowly but surely becoming more robust in shaping a legal landscape that is more favourable to employers, while having an overarching consideration of ‘public policy’ Employers should carefully monitor legal developments and also shore up their internal business protection practices to prevent issues from arising from the enforcement of non-compete agreements.

The firm, Villaraza and Angangco, provides comprehensive and strategic representation to businesses and employers who find themselves lost in navigating the Philippine legal landscape when enforcing the non-compete clauses in their employment agreements and contracting arrangements. We have an ongoing representation for one of the leading events agencies in the Philippines in a case involving the enforcement of restrictive covenants, ie., non-competition and non-disclosure clauses, stipulated in its former employees’ employment agreements. This is an intricate legal dispute involving the enforcement of non-competition and non-disclosure clauses against their former employees who transferred to an entity engaged in direct competition with their business and solicited business from a number of their key clients.