Perspectives: Clare Murray

When you began your legal career, why did you choose employment law?

The 1990s felt like the Golden Age of employment law – employment protections were expanding rapidly (thanks to Europe), opportunities for pushing the boundaries and progressing in employment law seemed limitless; even the Prime Minister and his wife were employment lawyers. All of life was in employment law – power imbalances, relationship struggles, societal prejudices and biases, human ambition, vulnerability and frailties, and so much more. It was the most exciting area of law to go into at that time (and probably still is now), and everyone wanted to be an employment lawyer. I was lucky enough to have great mentors and sponsors who supported my progress and gave me international work that I loved, fantastic opportunities to learn, and, in time, the potential to travel. Employment law opened doors for me that I never expected and which, to this day, I genuinely appreciate.

Looking back on when you set up CM Murray in 2006, what were your key motivations for founding the firm?

I set up the firm in 2006, not long after recovering from aggressive breast cancer and undergoing a year of treatment. My perspective on life and what I wanted to do with it, changed as a result of that experience. I did not feel constrained by my previous firm, but I had always had an entrepreneurial side, and I felt that if I did not set up my own business after going through that, when was I ever going to do it? I wanted to create a law firm that specialised in employment and partnership law, which was flexible, internationally focused and gave us the opportunity to be creative. It was built around the values of trust, integrity and transparency. Clients especially liked the fact that our advice was always based in the real world, and that we helped them to make realistic and informed choices. Technical excellence, rigour and client empathy were very important to us. Those values and principles remain at the core of our firm and our ethos today.

What are your reflections on the firm’s growth and development since then?

At the time I set up the firm, there were only one or two City employment boutiques, and we wanted to be extra-special by being the first ‘Employment & Partnership’ boutique and set out our stall accordingly. Over the last 17 years we have focused on deepening our bench strength and reputation in those areas, and also expanding into specialist related areas, such as equity issues, corporate governance, professional regulation, and partnership structuring.

You specialise in corporate sexual harassment matters; how do you navigate what must be a sensitive, stressful and traumatic situation for your clients?

I got involved in my first sexual harassment investigation as a junior lawyer and it was clear even then that these were complex, challenging and frequently traumatic situations where the truth was not always obvious, but the outcome could feel like a forgone conclusion. Historically, there was a risk that if allegations were raised they would be swept under the carpet, and the harasser would get to stay, largely unaffected, while the complainant would be exited with an NDA and terms. Thankfully much has changed since those days, particularly over the last five or so years – especially with regulatory intervention. The awareness of law firms, who are themselves under strong regulatory expectation to investigate conduct matters properly, is having a cascading effect in terms of the way they advise their clients. Employers and firms are taking it more seriously but there is still much more to do.

As a team we have so much experience in sexual harassment matters, from such different perspectives – whether advising the complainant, the employer, the accusee or witnesses, or acting as the independent investigator in the process. It is important to understand that whatever the rights and wrongs of the situation, sexual harassment allegations can have a profoundly stressful and traumatic impact on the complainant and the accusee (and often the witnesses around them too). It can affect their mental and physical well-being, their reputation and career prospects, their family lives, and in the case of the accusee, potentially their liberty.

Although many clients in the senior executives space are male, it tends to be an area with a large number of female lawyers. Why do you think this is and what is your personal experience working in the practice?

I think there are a number of reasons for the high level of female lawyers in senior executive work. Employment law generally has always attracted more women lawyers than other areas; it feels more inclusive and accessible and perhaps less macho than some other areas of law in City firms. There were always many high-profile women lawyers in this space, so you could see that there was a route through for women. Senior executives specifically need not only technical rigour, a strong business focus, and a high level of accessibility – but also strong professional empathy – and there are many brilliant women – and men – lawyers in the senior executive space who are able to deliver that for them. When it comes to potential wrongdoing, accusees are entitled to advice, and for them to have a specialist adviser with a huge amount of expertise in the area can help them to understand where they may have gone wrong. These matters are always factually very complex, and rarely black and white. Your client may be someone who had four thousand people reporting to them and, because of what’s happened, they might now only have you. It is extremely interesting and tactical work, so why wouldn’t women want to do it?

What was your experience as a special adviser to a House of Commons committee?

It was the most extraordinary experience and possibly the best and most enjoyable one of my career. I had been asked to give expert evidence at the opening hearing of the Women & Equalities Select Committee’s Inquiry into Sexual Harassment at Work, and after being grilled by MPs on the committee, I was later invited to apply, alongside others, for the role of Special Adviser to the Committee in their Inquiry.

For around four months I worked intensively with the Committee and its internal team as their Specialist Adviser on the issues in their sexual harassment Inquiry and the recommendations of the Committee following it. These included support for the EHRC proposed introduction of a mandatory duty on employers to take steps to prevent sexual harassment, and the reinstatement of employer liability for third party harassment (both of which featured in the recent Worker Protection (Amendment of Equality Act 2010) Bill), and also requiring the regulators to take a more active role in holding regulated employers and individuals accountable for acts of sexual harassment (which encouraged the SRA and FCA to significantly step up their existing efforts in this area).

Attending the House of Commons every fortnight, sitting in the Select Committee hearings with MPs and witnesses debating sexual harassment at work and how the law and policy could be improved to prevent it, and doing so at a time when #MeToo was at the forefront of the news and of people’s daily conversations, was an incredible privilege and an experience I will remember for the rest of my life.

What advice would you give to someone who would like to get to where you have in the legal profession?

With any luck, a career of 40+ years in law may lie ahead of you. It’s a career that can be incredibly rewarding, intellectually stimulating, and allow you to be creative and innovative. It will also give you lifelong friends.

So to anyone starting out, I’d say find an aspect of employment law that you genuinely love, and where you find yourself happily immersed in your clients’ knotty problems and potential solutions. Law is a demanding profession, even with flexibility, and you really have to want to do it. So helping yourself by finding that corner of employment law that you love, and in which you can build a profile and practice, will carry you a long way. If you can, also have a second string to your bow – whether it’s employment plus regulation, immigration, pension or tax – so that you have a wider offering and perspective, and other areas to develop into in future.

Also, get yourself a mentor, or even a direct sponsor, who will champion your career, give you opportunities and open professional doors for you. Be open to the helpful nudges that they may from time to time give you to help you stay on track in your career.

What do you plan to do in the future?

I plan to get as much balance as possible between work and life with my family, and to enjoy both much as much as I can; you simply never know what lies around the corner for you. Running a firm can be a joyful experience and can also at times be intensely and relentlessly stressful in a way which can be hard to understand until you do it yourself. So I want to take time to enjoy this fabulous firm that we have built and to support and encourage my colleagues on their journey, opening doors for them, giving them chances to be creative, and empowering them to succeed, as others did for me.

What changes do you feel need to be made in City law?

Some positive progress has been made in City law firms, particularly around diversity, inclusion and social mobility initiatives. But there is still so much to be done to ensure meaningful and lasting change to the profession, rather than tokenistic and “one and done” approaches to appointments, pay and promotions.

As long as PEP and short-term profitability remain the key metric of City law firm success, and financial contribution is (explicitly or covertly) the main factor in assessing individual performance, underrepresented groups of society will continue to be marginalised and struggle to progress to the most senior and executive levels of law firms.

It requires senior members of firms to work together to remove unfair obstacles that lawyers from under-represented groups face, as well as encouraging their participation and ensuring they aren’t prevented from achieving their full potential. The objectives, performance metrics, remuneration and progression of senior members should reflect and drive that imperative, to help drive genuine and effective change in our profession.

Comprehensive guide on an employer’s obligations for preventing sexual harassment in the workplace in Israel

The ‘Prevention of Sexual Harassment Law (5758-1998)’ was enacted in 1998 with the primary goal of safeguarding the individual’s freedom, dignity, and privacy, and furthering gender equality. This statute proscribes a range of actions which constitute Sexual Harassment, encompassing:

  • Blackmailing someone into performing a sexual act;
  • An indecent act (one act is sufficient);
  • Repeated overtures of sexual nature;
  • Repeated references to a person’s sexuality;
  • Making disparaging references to a person’s sex, gender, or sexuality, including their sexual orientation;
  • Exploiting a hierarchical or authoritative role for sexual purposes;
  • Executing acts with the intent of sexual gratification or debasement without consent;
  • Disseminating photographs, recordings, or videos that focus on a person’s sexuality in situations that may lead to humiliation or degradation, without their consent.

The statute confers upon the employer the following duties: (a) to ensure a workplace devoid of sexual harassment, (b) to apprise employees of the prohibition of sexual harassment, and (c) to effectively address instances of harassment.

In pursuance of these responsibilities, the statute mandates employers to undertake the following actions:

  • Employers with a staff of over 25 employees are required to adopt a prevention of sexual harassment policy. This policy must be aligned with the model rules stipulated in the law.
  • Employers are obligated to disseminate their policy to employees and display it publicly, along with all regulations related to the prevention of sexual harassment.
  • Employers must appoint a designated individual to oversee the enforcement of sexual harassment prevention within the workplace. This designated supervisor is vested with the authority to investigate sexual harassment complaints within the workplace. The statute expresses a preference for women to occupy this role.
  • Employers are required to formulate effective mechanisms for receiving sexual harassment complaints and conducting investigations of such complaints.
  • While the statute does not explicitly mandate employers to conduct training for employees in the prevention of sexual harassment, case law suggests that the absence of training could signify a failure to fulfill the employer’s legal obligation to provide a harassment-free workplace. Consequently, conducting regular training sessions across all workplaces is strongly advisable.

An employer who fulfils all the stipulated legal obligations is absolved of legal liability for the occurrence of a sexual harassment perpetrated by an employee. This approach is designed to motivate employers to promptly address complaints of sexual harassment, thus potentially protecting them from legal repercussions.

Employers must clearly demonstrate that they have taken all requisite measures to prevent sexual harassment within the workplace. Non-compliance with the aforementioned requirements exposes employers to potential civil lawsuits brought by aggrieved employees, in addition to the risk of fines and criminal charges brought by labour law enforcement agencies.

The actions and investigations carried out by the designated supervisor are subject to meticulous scrutiny by the courts. Inadequate handling of investigations of sexual harassment may expose the employer to litigation and legal proceedings and allegations of violating the law and promoting such inappropriate conduct of sexual harassment.

The handling of investigations into sexual harassment claims by the supervisor must be undertaken with sensitivity, efficiency, and due respect for the dignity and privacy of all parties involved. Comprehensive documentation, including investigation protocols and witness testimonies must be generated by the supervisor. Should supporting (or refuting) evidence be available, such as recordings, messages, security camera footage, or employee statements, swift collection and preservation are imperative to avert evidence loss. In certain instances, entrusting the investigation to an external expert, such as a former judge, may be advisable to ensure impartiality.

Given that sexual harassment claims may prompt police investigations as criminal proceedings, and owing to the sensitive nature of such cases, the labour court will scrutinise investigations and evidence, demanding irrefutable proof prior to adjudicating claims of sexual harassment.

In the preceding year, our employment department handled a sensitive case (Case No. 26461-05-18), involving a former senior employee dismissed due to sustained sexual harassment directed towards colleagues, encompassing intrusive inquiries, physical contact, and disparaging references with respect to sexuality and sexual orientation.

Following his termination, the former employee initiated legal proceedings alleging wrongful termination based on age and physical disability, while denying any involvement in harassment.

The sexual harassment investigation in this instance was conducted by an internal employee without legal accompaniment.

As part of his legal proceedings, the former employee contested the supervisor’s investigation, alleging an unfair investigative process. Specific contentions included: (a) a conflict of interest on the part of the supervisor due to a business association with the spouse, (b) insufficiently detailed protocols, (c) failure to interview all pertinent witnesses and discrepancies in testimonies, (d) the supervisor’s failure to apprise witnesses of the investigation’s nature and the posing of irrelevant questions, (e) the investigation’s continuance despite the absence of a complaint from the directly affected party.

However, since the court was presented with security camera footage depicting the former employee engaging in the harassment activities attributed to him, it determined as a factual matter that the former employee’s dismissal was directly precipitated by his sexual harassment, as opposed to age or disability discrimination as claimed.

The Regional Labour Court’s judgment criticised the employer for the manner in which the investigation was conducted. It is evident that if a clear evidence did not emerge due to the security camera footage confirming the alleged sexual harassment, the former employee might have succeeded in his claim of wrongful termination, and our client’s claim of termination due to sexual harassment behaviour could have been dismissed, due to unprofessional investigation without legal guidance during the performance of the sensitive investigation of sexual harassment

In conclusion, this case underscores the critical importance for employers to meticulously adhere to proper procedures when investigating and addressing complaints of sexual harassment within the workplace. This necessitates conducting well-structured investigations, implementing suitable protocols, exhaustively examining pertinent evidence, and ensuring the preservation of material documentation. This case also exemplifies the significance of seeking professional legal consultation pertaining to investigative procedures in such sensitive cases, and the formulation of comprehensive termination agreements to safeguard employers against potential future claims.

Q&A: Tortoro, Madureira & Ragazzi

1. What are the key labour laws and regulations that govern the employer-employee relationship in Brazil?

In addition to the Federal Constitution, which provides an exemplary list of social rights in article 7, the main and most important regulation governing the employment relationship is the Consolidation of Labour Laws (CLT). In such law it is possible to find the consolidation of all the norms that regulate the relationship between capital and work.

2. Can you explain the rights and obligations of employers and employees under Brazilian labour law?

The rights and duties of employees and employers are numerous. As an example, the part of the CLT that governs the employment relationship has more than 625 articles, many of them with paragraphs and subparagraphs containing autonomous provisions. However, in general terms, employees and employers have reciprocal rights and obligations. The employee has the duty of obedience, assiduity, punctuality, collabouration, and respect for the internal norms created by the employer, loyalty, confidentiality and non-competition. They must obey the direct orders of the employer, as long as they do not constitute a crime or violate the legal system. On the other hand, the employer has the right to freely direct the provision of services, give direct orders to the employee, demand punctuality and attendance, as well as demand productivity from the employee in exchange for the monthly wage consideration. Both the employer and the employee must respect the labour law and always base their conduct on contractual good faith.

3. What are the common types of employment contracts used in Brazil, and what are their key features?

The most common employment contracts are the employment contracts for an indeterminate period and the probationary contract. They have similar characteristics, the only difference is that the contract for an indefinite period is the one that is carried out without a prior fixed duration and its termination depends on the need for a declaration by either party upon prior notice of at least 30 days. The experience contract has a fixed period of a maximum of 90 days and subject to resolute conditions. The purpose of the experience contract is to understand whether the hired employee has personal conditions to occupy a certain position in the company. At the end of the trial period, if the employer understands that the employee has not passed the probationary period, the contract may be terminated without the need for prior notice and payment of rights such as prior notice and land fine.

4. What are the legal requirements for termination of employment in Brazil, including grounds for dismissal and severance pay?

There is no legal requirement for termination of employment, for either the employer or the employee. It is not necessary to give reasons for termination, it is sufficient for either party to notify the other of its desire to terminate the contract. If the dismissal is without reason and comes from the employer, the following rights are due: 13th salary and proportional vacation, salary balance, indemnified prior notice and a fine of 40% on the Service Time Guarantee Fund (FGTS) balance. If the termination comes from the employee, the employer does not need to pay the indemnified prior notice or the 40% fine on the FGTS.

5. Are there any specific laws or regulations in Brazil that govern working hours, overtime, and rest periods?

Both the Federal Constitution and the CLT provide for a working day of eight hours a day and 44 hours a week, with a paid day off a week, preferably on Sundays. The CLT provides for the need to grant a daily break of one hour for meals and rest and the possibility for the worker to work up to two hours of overtime daily. It is necessary to grant a rest of at least 11 consecutive hours between workdays.

6. How does Brazilian labour law address issues related to vacation, holidays, and other leaves of absence?

Vacations is annual and 30 consecutive days, and may be divided into up to three periods at the employee’s request. The vacation time is the one that best suits the interests of the employer. Employees must rest on holidays, but there are economic activities that have special authorisation to work on holidays, and the employer must grant another day off or pay the workday with an increase of 100% on the hourly rate. There is a legal provision for numerous dismissals, worth mentioning maternity leave and leave due to illness or work accident. These licenses count as a service provision period and are remunerated.

7. Can you explain the process and requirements for hiring foreign employees in Brazil, including work permits and visas?

Every foreigner who decides to enter Brazil needs a valid visa in its passport, but after authorisation granted to the company, the law obliges the professional to request a temporary visa from the Ministry of Foreign Affairs. The company must request a work permit from the General Coordination of Immigration (CGI), an agency of the Ministry of Labour created to regulate the entry of workers from abroad. The foreigner must obtain a work and social security card and apply for registration in the Individual Taxpayers’ Registry (CPF) with the Federal Revenue Service within 90 days. Without these documents it is not possible to proceed with the contract.

8. What are the legal obligations for employers regarding workplace health and safety in Brazil?

Employers are required to follow a series of regulatory guidelines on occupational medicine, health and safety. Under article 200 of the CLT the Ministry of Labour may establish additional provisions on occupational safety and medicine, and in the exercise of this prerogative, there are currently 38 Regulatory Norms (NR) that are autonomous and mandatory for employers to discipline the subject.

9. Are there any specific laws or regulations in Brazil that address discrimination, harassment, or equal employment opportunities?

Yes, there are countless legal diplomas that deal with the subject. The Constitution and the CLT generally provide for legal mechanisms to combat discrimination. In addition to these norms, Law no. 9.029/1995 prohibits discriminatory practices for the purposes of admission or permanence of the legal employment relationship. Also Law no. 14.611/23 deals with the promotion of inclusion and the encouragement of female empowerment.

10. Can you provide guidance on resolving labour disputes or negotiating employment contracts in Brazil?

Labour disputes can be resolved extra or judicially through mediation, conciliation or arbitration techniques, both at the individual level (employee and employer) and collectively (dispute between companies and unions or between unions). With the exception of senior executives, employment contracts commonly signed in Brazil are by adhesion, that is, employers establish contractual obligations and wage consideration, and it is up to the employee to accept or refuse the job.

Under the lens: the rise of senior investigations

Driven by the coalescing forces of greater employee willingness to raise grievances, heightened interest from regulators and the desire of employers and shareholders to maintain company reputations and safe working environments, conduct investigations into senior employees are more common than ever before. Against this backdrop, it is crucial that in-house legal teams are aware of both when and how to run an investigation process, as well as the likely ramifications. Continue reading “Under the lens: the rise of senior investigations”

Redundancies, restrictive covenants and unions – why employment work is surging in the UK right now

A dynamic and highly active space, employment law is on the cusp of a changing world. The economic climate, new technology, government policy and recent case law precedents have ensured that employment is one of the busier practice areas in 2023. Across litigation and non-contentious work, change is in motion, and the spotlight on this area will continue to grow as the 2020s progress. Continue reading “Redundancies, restrictive covenants and unions – why employment work is surging in the UK right now”

Q&A: Dentons

1. What are the key labour laws and regulations that employers in Taiwan need to be aware of?

Employers should be aware of several key labour laws and regulations. These include the Labour Standards Act (LSA), Enforcement Rules of the Labour Standards Act (Enforcement Rules of the LSA), Labour Pension Act, Regulations of Leave-Taking of Workers, Occupational Safety and Health Act, Employment Services Act, Act of Gender Equality in Employment, Labour Incident Act, and the Labour Union Act, among others.

The LSA stands out as the primary employment-related law. It dictates the basic terms and conditions of employment. The LSA is applicable to almost all industries and occupations, with only a few exceptions, and encompasses the vast majority of workers. Additionally, aside from a few managers who are explicitly governed by mandate agreements, employment laws and regulations also extend to foreign nationals working in Taiwan. This applies even if there are clauses in an employment contract that specify a different choice of law.

2. Can you explain the process for hiring and terminating employees in Taiwan, including any legal requirements or obligations?

For the hiring process, employers are allowed to conduct background checks on job applicants. However, the collected data should be limited to information essential for the job or required in the public’s interest, especially given the specific nature of the job position. In most scenarios, job applicants must also explicitly give their consent for such data collection. According to the Employment Service Act, employers are prohibited from discriminating against job applicants based on race, language, religion, gender, sexual orientation, age, marital status, and other similar reasons.

In Taiwan, employers cannot terminate employment contracts at will. Any termination must follow one of the specific conditions for unilateral termination as outlined in the LSA. A notice period or payment in lieu of notice is required. Legitimate reasons for termination include: (1) a halt in business or change in ownership; (2) business losses leading to a downsizing in operations; (3) operations paused for over a month due to unforeseen events (force majeure); (4) a shift in the business focus that results in fewer needed employees, with affected employees unable to be reassigned to other roles; and (5) the employee’s inability to fulfill their assigned tasks.

3. What are the rights and protections afforded to employees under Taiwanese labour laws?

According to Taiwanese labour laws, employees are entitled to participate in the Labour Pension Plan. Employers are responsible for contributing an amount equal to 6% of the employee’s monthly salary to the employee’s personal retirement account during their period of employment.

Additionally, employers are generally required to provide employees with statutory insurance coverage, which includes health insurance, labour insurance, labour occupational accident insurance, and employment insurance. Moreover, based on Taiwanese labour regulations, if an employee is terminated, they can legally claim severance pay. The amount is calculated based on the employee’s years of service.

4. How can employers ensure compliance with minimum wage and working hour regulations in Taiwan?

Based on Taiwanese labour practices, the labour regulatory authority periodically conducts random labour inspections on employers. According to the LSA, unless for employees in certain specific industries, a regular employee is allowed to work a maximum of eight hours a day (excluding overtime) and no more than 40 hours per week. They must also have at least two rest days in every seven-day period, consisting of one mandatory day off and one flexible rest day. Employers are obligated to maintain daily attendance records of their employees, documenting the exact minutes of their work attendance.

Starting from 1 January 2023, the statutory minimum wage is set at TWD26,400 per month and TWD176 per hour. However, the Minimum Wage Act is still being reviewed by the Executive Yuan and has not been submitted to the legislature for approval.

5. Are there any specific regulations or considerations for employers regarding workplace safety and health in Taiwan?

Yes, the Occupational Safety and Health Act mandates several responsibilities for employers to ensure the wellbeing of their workforce:

  1. prevention measures: employers must implement appropriate equipment and strategies to reduce the risk of occupational incidents;
  2. medical support: there are circumstances where employers are required to offer medical services and examinations to their employees;
  3. equipment inspection: any equipment that poses potential risks must be thoroughly inspected and must adhere to specific safety standards; and
  4. safety committees and medical personnel requirements: companies of specific sizes or those engaging in high-risk operations must establish a health and safety committee.

Furthermore, companies that meet these criteria are also required to employ medical professionals on their staff.

6. What are the legal requirements for drafting employment contracts in Taiwan, and what key elements should be included?

The enforcement rules of LSA dictate that employment agreements should encompass the following essential aspects:

  1. workplace and assigned roles;
  2. working schedule, such as the start and end times, break, regular holidays, rest days, annual leave, and shift rotation details;
  3. payment terms;
  4. termination cause and retirement conditions;
  5. details on severance and pension benefits;
  6. employee-borne expenses;
  7. occupation health and safety;
  8. education and training opportunities;
  9. employee welfare;
  10. healthcare support;
  11. work rules, guidelines on discipline and rewards; and
  12. any other relevant details pertaining to the rights and responsibilities of both the employer and the employee.

7. What steps should employers take to prevent and handle disputes or conflicts with employees, such as grievances or disciplinary actions?

According to Taiwan’s judicial precedents, all disciplinary measures must adhere to principles of clarity, consistency, and fairness, ensuring there is no misuse of power. When contemplating termination, the ‘last resort’ principle should be prioritised. For instance, an employee’s termination due to performance issues should first be preceded by a performance improvement plan. If not, such termination may be legally challenged.

In accordance with prevailing judicial precedents, direct deductions from an employee’s salary are typically deemed illegal. However, reductions applied to ancillary compensation components, such as bonuses, are permissible when executed with a clear and reasonable rationale.

8. Are there any specific regulations or considerations for employers regarding employee benefits, such as leave entitlements or insurance coverage?

According to the LSA, employees are entitled to annual leave based on the length of their continuous service:

(1) six months up to one year of service: three days of annual leave; (2) one year up to two years of service: seven days of annual leave; (3) two years up to three years of service: ten days of annual leave; (4) three years up to five years of service: 14 days of annual leave; (5) five years up to ten years of service: 15 days of annual leave; (6) more than ten years: an additional day of annual leave is added for each year, up to a maximum of 30 days.

Furthermore, it is customary for employers to provide their employees with mandatory insurance coverages. These coverages typically include health insurance, labour insurance, labour occupational accident insurance, and employment insurance.

9. Can you provide guidance on the legal requirements for employee privacy and data protection in Taiwan?

Taiwan’s Personal Data Protection Act (PDPA) governs personal data, categorising it into general personal information (GPI) and sensitive personal information (SPI), with SPI encompassing medical, genetic, and criminal records. While collecting GPI requires informed consent from employees, SPI demands explicit written affirmation, which can be digitally provided.

For multinational companies, it is imperative to exercise diligence when dealing with employees’ personal data, such as medical evaluations or mental health assessments. They must also ensure that cross-border data transfers comply with both the PDPA and any associated international regulations.

10. What are the potential legal risks and liabilities for employers in Taiwan, and how can they be mitigated or managed effectively?

When employers contemplate alterations to an employee’s working conditions or intend to reassign roles through mobility clauses, they must adhere to the following ‘Five Principles of Mobility’ set forth in the LSA: (1) changes should be based on the genuine operational needs of the business; (2) the employee’s compensation or other terms of employment should not suffer any disadvantageous changes; (3) adjustments must be tailored to match the particular skills and capabilities of the affected employee; (4) if these modifications result in the employee relocating to a less accessible workplace, the employer has a duty to offer assistance; and (5) employers must weigh decisions against the broader context, taking into account the employee’s family commitments and overall quality of life.

Thought leadership: Tax complexities abound for taxpayers and states alike in navigating a fast-evolving international tax landscape

Introduction

In recent years, international tax developments have taken centre stage. Singapore has certainly not been spared from having to adapt to the plethora of changes which have arisen from the Organisation for Economic Co-operation and Development (OECD) Base Erosion and Profit Shifting (BEPS) 2.0 project, announcements on the implementation of the BEPS Global Anti-Base Erosion Rules (GloBE Rules) by countries across the globe and updates to the EU’s Code of Conduct Guidance to promote fair tax competition. As tax authorities worldwide react to these developments, businesses face increasing complexities in navigating their tax affairs amidst new regulatory landscapes.

In this article, we hope to offer some insight into the potential areas of complexity and uncertainty for businesses, and comment on what may lie ahead for the Singapore and regional tax landscape. In particular, the importance of tax dispute resolution mechanisms in this new tax world order simply cannot be understated.

Staying nimble and adaptable in the face of international developments and the inevitable uncertainties

Singapore is no stranger to the ebbs and flows of international developments, having made changes and refreshed its tax framework in the past to accommodate international standards, and will have to continue to do so in light of ongoing and prospective developments.

A notable example is the proposed introduction of a new section 10L in the Singapore Income Tax Act 1947 (ITA) to tax gains from the sale of foreign assets on or after 1 January 2024 which are received in Singapore by businesses without economic substance. This new provision seeks to align with the EU’s Code of Conduct Group Guidance, an intergovernmental instrument which aims to promote fair tax competition. The EU updated its guidance in December 2022 on foreign sourced income exemption regimes to include capital gains as a category of income which should be subject to the economic substance requirement.

More changes lie on the horizon, with greater overhauls which will significantly affect the way taxpayers conduct their affairs: the upcoming implementation of the two-pillar solution to address the tax challenges arising from the digitalisation of the economy. The global minimum tax under Pillar Two is designed to end the ‘race to the bottom’ on tax rates by ensuring that in-scope multinational enterprises pay a minimum effective corporate tax rate of 15%. While model GloBE Rules have been released by the OECD, the legal implementation of the rules will ultimately be left to each country for enactment under domestic law – this is done without any binding multilateral instrument. The invisible hand of game theory appears to be the ultimate driver in ensuring that countries will toe the line.

Singapore has already announced its plans to introduce the GloBE Rules (ie the Income Inclusion Rule and the Undertaxed Profits Rule) and the Domestic Top-up Tax (DTT) from businesses’ financial year starting on or after 1 January 2025. The ‘when’ may be known, but the ‘how’ remains a huge question mark, for instance, whether and how existing legislation will be modified, or whether a separate Act will be enacted. The devil is in the details, and whatever the means of implementation, consideration will have to be given to how the new laws interact with Singapore’s existing tax schemes which are governed not only by the ITA, but also by a separate legislation – the Economic Expansion Incentives (Relief from Income Tax) Act 1967, leaving room for potential interpretational issues.

Pillar Two poses other significant challenges for businesses within scope as they would certainly have to re-think how they do business. For one, compliance presents a huge practical issue as current systems that are used by businesses may not be equipped to capture all the data points required for basic compliance functions such as filing the GloBE information return required under Pillar Two.

Another woe that plagues businesses concerns the significant investments that have been sunk into countries pursuant to the terms of existing tax incentives which require substantial economic commitments to be met. Businesses will now have to map out the potential economic impact that Pillar Two may have on the benefits enjoyed under existing tax incentives, carefully navigate their engagements with the relevant countries’ economic agencies and, perhaps for some, take this opportunity to re-evaluate their global footprint, supply chain and commercial presence.

A caution in respect of anti-avoidance is also worth raising amidst prospective Pillar Two planning that taxpayers may be seeking to undertake. Although OECD guidance has been released on potential targeted anti-avoidance provisions, taxpayers have little visibility into what will be eventually legislated by individual countries or whether a broader
catch-all general anti-avoidance provision will also be enacted. Singapore has recently strengthened its domestic general
anti-avoidance provisions and introduced a substantial surcharge on income tax avoidance arrangements computed based on 50% of the tax or additional tax arising from the adjustment made, reflecting its robust position against tax avoidance. If we were to take a leaf out of the tax legislator’s book, this is a consideration that is deserving of more attention as businesses get caught up in trying to mitigate the impact of Pillar Two.

Existing tax frameworks will experience profound shifts

Singapore’s attempt to modify its ITA to comply with international developments on foreign-sourced income regimes also illustrates the friction that may arise from integration into domestic law provisions.

While section 10L (as discussed above) is still in its draft form, it is unclear that such a tax would sit well within Singapore’s income tax framework. Firstly, deeming the relevant gains as income under section 10(1)(g) of the ITA (which is a catch-all provision that covers residual gains or profits of an income nature not covered by the specific classes of income) causes one to question if this could lead to a further extension of the tax base in the future, such as capital gains from the sale of Singapore assets or investments. This does not appear to be currently contemplated nor is it the intent behind the proposed section 10L. However, such concerns might not be unfounded given that section 10L goes against the very grain of the capital-income divide that has been regarded as indefeasible truth under Singapore’s income tax framework.

Secondly, other domestic interpretation issues also rear their head. The section 10L tax is triggered upon receipt and in this regard, the draft provision’s rules for determining receipt mirrors the existing rules on deemed receipt. Hence, difficulties surrounding what amounts to receipt for the purposes of the section may arise – where the consideration for the sale or disposal of the foreign assets are payments in-kind (eg, shares, receivables etc.) and whether such payments can, in fact, be received, have already historically not been straightforward issues.

Further, from an international law perspective, the characterisation of such gains for tax treaty purposes remains uncertain, and raises questions of how double tax relief may be granted in Singapore if the relevant gains from the disposal of foreign assets are already subject to taxation in the country where such assets are located. Hence, it is clear that even international tax frameworks that taxpayers have long relied on also stand susceptible to material uncertainty and change.

New problems require new strategies – the role of alternative tax dispute resolution mechanisms

In light of the complexities faced, we think that this lends towards a significantly increased risk of tax disputes, in particular cross-border disputes. Taxpayers may have to adopt different strategies tailored to the domestic environments in which they operate, as well as factor in the overarching international tax considerations brought by the various upcoming changes. For instance, taxpayers may have to revisit their audit defence strategies and potentially seek more certainty by adopting an approach focused on dispute prevention (eg by pre-emptively engaging with the relevant tax authorities). A consultation document on Tax Certainty for the GloBE Rules issued by the OECD in December 2022 attempts to explore both the dispute prevention and dispute resolution mechanisms.

As cross-border disputes take centre stage, alternative dispute resolution mechanisms become increasingly important tools for taxpayers and states alike. While much academic ink has been spilt on the issue of whether the tax dispute resolution mechanisms under existing treaty frameworks can be used to resolve, say, a double taxation issue arising in respect of the Pillar Two changes, we are hopeful that taxpayers will be able to get more clarity on their options of redress under these frameworks. In particular, we see a potential for a greater role to be played by treaty-based arbitration in regulating the international tax ecosystem. Some initial progress has been made in respect of the mandatory binding arbitration mechanism in the Multilateral Convention to implement tax treaty-related measures to prevent base erosion and profit shifting (MLI) which jurisdictions can apply to their Covered Tax Agreements (CTAs). From a certainty perspective, there are material advantages to this process as compared to existing mutual agreement procedure (MAP) provisions under tax treaties, given that taxpayers will be able to obtain finality on the issue under dispute where the MAP dispute remains unsolved for a prescribed time period. Singapore is no exception, as we have adopted and strengthened arbitration provisions in many of our tax treaties, notably in Canada, Japan, UK, France and Australia.

Nonetheless, further steps will have to be taken to ensure the applicability of existing treaty-based/MLI dispute resolution mechanisms to a broadened scope of disputes. Modifications to the existing MLI to clearly expand beyond the ambit of tax treaties, or implementation of common provisions in respective countries’ legislation on a reciprocal basis are just some of the possibilities that are under review.

In any case, while the MLI sounds promising, a jurisdiction and its treaty partner must expressly choose to adopt the mandatory binding arbitration provisions for them to apply. Jurisdictions may also reserve the right not to apply the mandatory binding arbitration provisions of the MLI to some or all of its CTAs that already have an arbitration process. All in all, while the concept is theoretically attractive, it remains to be seen how prolific or effective the use of treaty-based arbitration is or will be.

Conclusion

Waves of change are coming and taxpayers and states alike may have to take steps to ensure they stay afloat. There are numerous challenges that can arise, from having to navigate new domestic and international tax frameworks, the increased risk of domestic and cross-border disputes as a result, not to mention inherent practical difficulties arising from the complexities in compliance in the absence of a multilateral instrument, to name a few.

In undertaking reviews of their global footprint in light of Pillar Two, taxpayers may favour jurisdictions with greater tax transparency and seek opportunities to foster cooperative relationships with tax authorities. In this regard, the Singapore government’s efforts towards transparency is apparent from their proactive public consultations and announcements of proposed tax changes in advance to provide taxpayers with sufficient lead time to prepare. While it is true that Singapore’s tax landscape becomes increasingly complex, the same can be said for every other compliant country as the world grapples with these new international standards. Ultimately, with its robust administration and the jurisdiction’s strong rule of law, Singapore remains a destination of choice for businesses despite these ‘taxing’ developments.

In closing, timely knowledge pays off in these unchartered waters – keeping abreast with recent international trends in taxation and understanding the macro trends driving political or tax authority agendas will be helpful in navigating both local risks and also wider international concerns. Importantly, dispute resolution strategies may well have to evolve as tax disputes become foreseeably more cross-border and complex, and alternative dispute resolution mechanisms such as treaty-based arbitration present potential opportunities for unique solutions.

The team

The team is recognised as the leading full-service tax practice in Singapore, and have been consistently recognised by The Legal 500 for consecutively 13 years in a row. The team accounts for more than 20 fee earners, which includes tax lawyers, economists, accountants and consultants. They continue to provide high quality service to multinationals and major Singaporean enterprise clients from various industries. Given the team’s multi-disciplinary capabilities cutting across legal, accounting and transfer pricing, they continue to engage in a broad spectrum of contentious and non-contentious tax work on top of the comprehensive range of tax expertise offered.

Thought leadership: Hot topics of tax controversy in Latin America

Argentina

Like Anne Brontë said ‘… but he that dares not grasp the thorn should never crave the rose… ’. Argentina happens to be an attractive alternative to develop business in South America despite it showing some uncertainty when it comes to its economic situation. Taxes and its tax policy are not an exception and companies as well as individuals might find themselves involved in tax controversy processes. Since 2017 taxpayers faced a tax growing situation without precedents. The most important tax changes at a federal level since then that can be mentioned are: Continue reading “Thought leadership: Hot topics of tax controversy in Latin America”

Q&A: Dentons (Morocco)

1. What are the key tax laws and regulations in Morocco that individuals and businesses should be aware of?

The General Tax Code consolidates all the tax laws related to corporate tax, personal income tax, value added tax (VAT), and registration duties.

With regard to the municipal taxes to which companies are subject, these are governed by Law 47-06, in particular with regard to business tax and tax on communal services.

2. Can you explain the tax obligations for residents and non-residents in Morocco?

Morocco operates a territorial tax system. Companies (both resident and non-resident) are generally subject to corporate tax only on income generated from activities carried on in Morocco. Foreign corporations are subject to taxation on income arising in Morocco if they have, or are deemed to have, a permanent establishment in Morocco. Morocco has signed several tax treaties to avoid double taxation.

Morocco applies a special company income tax for all the non-residents who provide services to Moroccan resident companies. The tax rate is 10%. This tax is collected as withholding tax paid by the Moroccan beneficiary of the service.

3. What are the different types of taxes imposed in Morocco, such as income tax, VAT, and corporate tax?

Corporate income tax

The definition of ‘corporate’ covers limited liability companies, limited partnerships by shares, general and limited partnerships in which at least one partner is a corporate entity, civil companies, branches of foreign corporations, public sector companies having profit-oriented activity and joint ventures having business-oriented activity.

The normal rate is:

  • 20% from 1 MAD to 100,000,000 MAD
  • 35% above 100,000,000 MAD

A higher CIT rate of 40% applies to leasing companies and credit institutions.

Foreign contractors carrying out engineering, construction or assembly projects relating to industrial or technical installations may opt to be taxed at a rate of 8% calculated on the total contract price net of VAT and similar taxes.

Companies are always subjected to a legal minimum tax (cotisation minimale(CM)) of MAD 3,000 or 0.25% of the annual turnover. The CM is not payable by companies during their first 36 months of operation.

A social solidarity contribution on profits and income is hereby introduced and payable by companies and individuals.

A 15% branch remittance tax is imposed on profits remitted to the head office. The Moroccan-sourced income of Moroccan branches of foreign companies is subject to income tax at the ordinary corporate rate of tax. The taxable income is calculated as if the branch was a separate entity from the foreign company.

Value added tax

Suppliers of goods and services must add VAT to their net prices. Where the purchaser is also liable for VAT, input VAT may be offset against output VAT. The standard VAT rate is 20% and applies to all suppliers of goods and services, except those taxed at other rates or those who are exempt. A reduced rate of 10% applies to specific items such as banking and credit services, leasing, gas, water and electricity.

Personal tax

Individuals, regardless of nationality or activity, who have their habitual residence in Morocco are subject to a personal income tax (impôt sur le revenu or IR) on their worldwide income on a progressive scale between 10% and 38%.

Capital gains derived from the disposal of immovable property are generally subject to tax as part of the personal income of the individual, ie, 20%.

4. Are there any tax incentives or exemptions available for businesses or individuals in Morocco?

There are specific areas which provides tax incentives :

  • Areas for industrial acceleration: incentives on corporate tax and withholding tax on dividends
  • Casablanca Finance City: incentives on corporate income tax and income tax on salaries and withholding tax on dividends
  • Offshoring services areas: incentives on corporate income tax and income tax on salaries

5. What are the requirements for tax registration and filing in Morocco? Are there any specific deadlines that need to be followed?

The calendar year is normally the fiscal year although a company may opt for a different fiscal year. Accounts for income tax purposes must be filed within three months after the end of the relevant accounting period. Corporate tax is payable in four equal instalments, based on the prior year’s assessment. Foreign companies that have elected for the 8% default taxation must submit a declaration of their turnover before 1 April following each calendar year.

6. Can you provide guidance on the taxation of international transactions and cross-border investments in Morocco?

Article 214-III of the General Tax Code provides a framework for analysing international transactions between affiliated companies:

  • Obligation to provide the tax authorities, by electronic means, with the documentation needed to justify the transfer pricing policy, the list and procedures for which are set by regulation, including :
    • a master file
    • a local file
  • Documentation must be produced when the turnover achieved and declared, excluding VAT, is greater than or equal to 50 million DH; or the gross assets shown on the balance sheet at the end of the financial year concerned are greater than or equal to DH50 million.
  • Obligation to make a country-by-country declaration in accordance with OECD guidelines.
  • Possibility of making prior agreements with the tax authorities valid for four years.

7. How does Morocco address tax evasion and tax avoidance? What are the penalties for non-compliance?

A fine equal to 100% of the amount of tax evaded is applicable to any person who has taken part in manoeuvres designed to evade payment of tax payment, or assisted or advised the taxpayer in carrying out the said manoeuvres, independently of any disciplinary action if he holds a public office.

8. Are there any specific tax considerations for specific industries or sectors in Morocco?

Newly incorporated companies whose activity (22 activities available) is industrial and provided in a specific act are exempted from corporate income tax for five years. Example of activities:

  • Food industry
  • Textile industry
  • Clothing industry
  • Leather industry
  • Wood and cork products industry
  • Paper and cardboard industry
  • Printing and reproduction of recordings
  • Chemical industry
  • Pharmaceutical industry

9. Can you explain the tax implications for expatriates working in Morocco, such as residency status, tax treaties, and foreign income reporting?

Since a Moroccan resident is taxed on worldwide income, the Moroccan tax system provides relief from foreign taxes paid on such worldwide income by means of a foreign tax credit. This foreign tax credit cannot exceed the Moroccan tax otherwise payable in respect of the foreign-source income.

Individuals who do not have their habitual residence in Morocco are subject to tax only on Moroccan-source income.

10. What are the options for resolving tax disputes in Morocco, such as administrative appeals or legal proceedings?

In case of tax disputes, taxpayers can present their claim in front of :

  • Local tax commission
  • Regional tax commission
  • National tax commission
  • Administrative court

Q&A: Deloitte Legal

1. What are the main tax laws and regulations that businesses and individuals need to comply with in Uruguay?

Main Uruguayan tax laws are comprised within the Tax Law Code and the Tax Office Compilation, where are defined and regulated the main applicable taxes for businesses and individuals. In this sense, such compilation comprehends the corporate income tax, resident income tax, non-resident income tax, value added tax (VAT) and the net worth tax.

Additionally, the referred taxes have specific regulations under Law No. 18.083 and Executive Branches Decrees 148/007, 149/007, 150/007 corresponding to income taxes, Decree 220/998 for VAT, and Decree 30/015 for the net worth tax.

Moreover, an excise tax is in force under the Tax Compilation and Decree 96/990 which applies to the first sale of manufacturers and/or importers of certain specific goods. Lastly, wages taxes – which in Uruguay are not strictly taxes but ‘special contributions’ – are regulated under Social Security and Provisional Act No. 16.713.

2. Are there any recent or upcoming changes in the tax legislation of Uruguay that could impact businesses or individuals?

Traditionally, Uruguayan laws only tax businesses and individuals for their Uruguayan source income portion. However, since 2011, there are some exemptions to such territorial source income system mostly related to the resident income tax (‘IRPF’).

In 2022, and to meet certain requirements from the European Union, Uruguay has changed its regulations of the corporate income tax, as of the fiscal period starting in January 2023.

Regarding corporate income tax, foreign passive income derived from dividends, interest, bank deposits and similar, shall be considered as Uruguayan source income (and subject to income tax in Uruguay), if the entity is: (i) part of a multinational group and (ii) is considered as ‘non-qualified’ because it does not meet with certain substance requirements. Notwithstanding, income derived from the transfer of trademarks (or other income produced by such assets) shall be considered as Uruguayan source income if the entity is part of a multinational group regardless of if such entity meets substance requirements.

3. How does the tax system in Uruguay handle international taxation and cross-border transactions?

Uruguay aims to incentive cross border transactions and therefore reducing double taxation issues. There are 24 double tax treaties as well as 14 exchange of information treaties (DTT with Brazil is recently standing). All DTTs in force are based in OECD model – with some aggregates from UN model – and also with MLI provisions since the convention is in force as of June 2020.

4. What are the common tax obligations and requirements for businesses operating in Uruguay?

Corporate income taxpayers are subject to certain formal obligations regarding corporate income tax, net worth tax and VAT.

An entity must make corporate income tax monthly advance payments which are calculated considering the tax liability of the previous year and the monthly income. Monthly net worth tax advance payments also need to be made. A self-assessment annual tax return must be submitted within four months of the end of the accounting period, and final tax is payable by that date. Corporate VAT taxpayers must file monthly VAT returns and make the corresponding payment, if applicable. For small companies, annual VAT return applies.

Moreover, most companies operate as withholding agents when doing business with non-corporate income tax contributors (ie individuals, non-residents, among others).

5. Are there any specific tax incentives or exemptions available to businesses or individuals in Uruguay?

Uruguay offers tax incentives to encourage innovation and investment within the country.

In this sense, the executive branch is entitled to grant tax reliefs to entities regarding corporate income tax, VAT, and net worth tax upon filling the requirements set forth by the Investment Act 16.906.

Moreover, entities operating under the Free Trade Zone Act are full exempted from all national and local taxes if they comply with specific requirements. Following, there are several corporate income tax exemptions both to entities developing software and for those rendering services related to IT.

Lastly, there is a beneficial trading regime under Tax Office Resolution No. 51/97. Under this scope, Uruguayan entities trading goods or services outside the territory are entitled to be considered as Uruguayan income source only a small portion of their income (3%) and therefore applying the 25% rate only for such portion.

6. How does the tax dispute resolution process work in Uruguay, and what are the options available for taxpayers?

The Uruguayan tax dispute resolution system is a complex one. Controversies against the tax office shall be preceded with a long administrative instance before such same tax office, following an also long and written-oriented procedure before the High Administrative Court (‘TCA’).

If the ruling of the court is favourable to the taxpayers and such has a credit against the authority, another administrative and jurisdictional procedure must be met to have full reimbursement of the amounts paid.

7. What strategies or best practices can businesses employ to optimise their tax planning and minimise tax liabilities in Uruguay?

Binding and non-binding consultations are efficient tools that bring certainty to both new and existing ventures.

Non-binding consultation does not oblige the tax office to follow the adopted criterion. However, if presented by an entity or individual with a personal and direct interest – the criterion adopted by the tax office under a binding consultation shall be mandatory for both parties. Moreover, the resolution of such consultation of the tax office could be subject to the same tax controversy procedure mentioned in Q6.

8. Are there any particular compliance issues or challenges that businesses often face when dealing with tax matters in Uruguay?

Although the Uruguayan jurisdiction has several benefits, some improvements shall be made with respect to efficiency. Despite the efforts that Uruguay had made to modernise the tax administration, there are some improvement opportunities in matters of bureaucracy procedures to be made.

9. Can you provide guidance on the tax implications of investments or business transactions in Uruguay?

Broadly speaking, foreign equity investment is not taxed from the buyer perspective, but sellers depending their tax residence, shall be taxed by the income tax on individuals at an effective rate of 2.4%, income tax on residents at the same effective rate or the corporate income tax at a rate of 25% (with some exceptions under internal law or DTT Uruguayan network).

Considering debt investment from foreign entities, loans given to Uruguayan entities shall be considered as Uruguayan source income for the foreign creditor. Hence, interests shall be taxed with non-resident income tax at a rate of 12% (with some exceptions under internal Law or DTT Uruguayan network).

10. Have you handled any notable tax cases or projects in Uruguay that you can share as examples of your expertise?

In 2022, the Uruguayan Supreme Court ruled in favour of our client (one of the biggest yerba mate brands) regarding certain local taxes. The court understood that the legal effects of the court’s decision shall apply from the time that the right had been violated. In the past, the court had traditionally understood that such effects shall be applicable from the time that the complaint was presented.

Moreover, we recently advised in an M&A deal that involved a complex case regarding VAT application over the transfer of participations, which implied a leading case in the Uruguayan market. That case among others, worked to have the recognition of Deloitte by ITR as the ‘Indirect Tax Firm of the Year 2022’ and the nomination of Juan Bonet as ‘Latin America Indirect Tax Practice Leader of the Year’.