The Evolving Asian Workplace
Law Landscape – New
Developments and HR Survival
Strategies
October 1, 2008
Mark S. Askanas
Partner – San Francisco, California
Heath A. Havey
Associate -- Sacramento, California
1
Asia’s Global Impact
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Two countries in the BRIC economies
In 2007, BRIC countries account 14% of global GDP
In 2008, 62 of Fortune 500 companies are from
emerging market countries, many BRICs (doubled
from 31 in 2003!) and other Asian countries.
 Lenovo (China) regarded a model of an integrated
global enterprise
 Tata (India) an innovative global industrial giant
Bulk of growing global middle class (US$6,000 –
30,000) is in Asia.
22
Road Map To Avoiding Common
Pitfalls
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Update on recent employment law
developments, primarily in China, India and
Japan
Give guidance on some strategic HR decisions
from hiring to firing, bearing in mind that as
cultures differ, different legal considerations
apply
Goal today: provide business solutions
The Japanese Workplace
THE STEREOTYPE
•The Japanese are non-litigious.
•The Japanese work whatever hours are
needed to complete the job.
THE REALITY
•The Japanese know and enforce their
employment rights. Why?
•Labor related disputes are on the rise
•Ministry enforcement is rising.
•Stigmas follow Japanese who work for
foreign companies.
THE CHANGING LANDSCAPE
•Westernization
•Rising generation of discontent
44
The Art of Hiring in Japan
•Hiring is the most important step in an employment
relationship in Japan…and the one most neglected.
•The prescreening process and freedom to hire (and
whom not to hire) is generally more broad than in the U.S.
•The terms of the Probationary Period are key
considerations in the hiring process.
• Carefully analyze the risks and benefits of using Fixed
Term Contracts.
• The 2008 Labor Contract Act limits contractual freedoms
for employment contracts.
55
The Hierarchy of
Employment Law in Japan
CONSIDERATIONS:
Employers cannot rely on
freedom of contract standards.
Employers cannot expect to
mirror global policies.
“At will” employment violates
Japanese statute and
public policy.
 A standard of “fairness”
will always apply.
Employment
Contract
Registered Work
Rules (shugyou
kisoku)
Union Contracts
Statutes and Laws
66
2008 Part-Time Workers Act
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Traditionally, part-time workers hedged against layoffs
and economic dismissals.
Part-time workers were not equals to “regular workers”
(seishain).
Now, part-time workers have more rights.
And employers have more duties, such as:
 Taking measures to promote part-timers to seishain.
 Giving equal treatment to part-time workers.
The Act will affect wages, training, welfare services, and
other areas where there has been a disparity of
treatment.
Strategies of Managing Employees in
Japan
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Do not overdraft the work rules.
Do not inadvertently add benefits.
Overtime, Annual Leave and Article 36
Agreements. (The McDonald’s decision.)
Use of dispatch employees, transfers and
secondments.
Objective documentation of disciplinary and
performance issues in a fair manner.
Government subsidies.
88
Dismissals in Japan
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THE THREE TYPES OF DISMISSAL
Incompetency/Poor Performance Dismissals
 During the Probationary Period
 During normal employment
Disciplinary Dismissals
 The “Capital Punishment” of discipline
9
Dismissals in Japan (cont.)
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Economic Dismissal (seiri kaiko)
 Four Legal Prerequisites
1. Financial Need (2 years of distress)
2. Exhaustive Efforts to Avoid Dismissal
3. Application of Objective and Fair
Standards in Selection Process
4. Procedural Due Process
Risks and Liabilities of Dismissal
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Provisional Disposition Order (injunction)
A voided dismissal and reinstatement
Damages and costs
Investigations and audits by administrative
agencies
Union involvement
An unwanted “permanent” employee
Defamation and trade secret risks
Techniques for Terminating
Employees in Japan
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For Individual Dismissals
Solicitation of Resignation
 Conciliation Procedure
 Labor Trial System (new as of 2006)
 Always get employee releases
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For Mass Layoffs and Economic Dismissals
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Implementation of Early Retirement Program
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Kata Tataki (tapping on the shoulder)
Secondments
 Solicitation of Resignation
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12
12
China’s Fast Changing
Workplace Law Landscape
China – Manufacturing
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Home to one-fifth of
all humanity
China uses 40% of
the world's concrete
and 25% of its steel
14
China – Anti-Discrimination
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Protected categories: disabled persons (since 1991);
race, ethnicity, sex, and religion (since at least 1995);
HIV carriers, AIDS sufferers, and their family members
(since 2006); and hepatitis B carriers (2007).
Employment Promotion Law, passed August 30, 2007 and
effective January 1, 2008
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Adds protected categories (carriers of any infectious disease
& equal labor rights to migrant workers)
Grants express right to bring suit for illegal discrimination in
Peoples Court, but doesn’t state remedies
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China – Sexual Harassment
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Law on the Protection of the Rights and Interests of
Women, amended in 2005
Amendment to Shanghai Local Regulations (April
2007)
Specify what constitutes harassing conduct
 Employers must prevent harassment and investigate
complaints
 Creates right to civil suit for harassment
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China – Employment Contracts
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Employment Contract Law 2007, effective January 1, 2008
Employment contracts must be in writing
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Limits fixed-term contracts
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Two extensions/roll-overs
Severance pay if not renew
Limits probationary period
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Signed within 30 days, otherwise double wages for month
If unsigned after 12 months, indefinite term of employment
Depends on term of employment
Limits post-employment non-compete clauses
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Reduces restrictive period from 3 to 2 years
Payment of wage during restrictive period
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China – New Regulations (September
2008)
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Implementation Rules of the PRC Employment Contract Law ,
effective September 18, 2008 clarify a number of
uncertainties of the earlier Contract law.
Employers can (fairly easily) terminate employees
under the 14 conditions expressly stated in the Contract
Law. The grounds include:
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Mutually agreed between employer and employee after
consultation
Serious dereliction of duty and cause serious loss to employer
If terminated employee was under a training agreement and
resigns, employer cannot seek damages for training costs.
18
India’s Archaic Employment
Laws – Hurdle or Assest?
India
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The booming tech sector
employs no more than one
million of India's 1.1 billion
people
Only 35 million people have
formal jobs to pay taxes
Job hopping – high annual
employee turnover (25%) in
high tech industry in
Bangalore
An inept system of public
education leaves most Indians
illiterate and unskilled
20
India – employment law
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Statutory protection of “workman”.
All other employees - basic contractual
arrangement.
Longstanding affirmative action in public
employment for lower castes (dalits) and Other
Backward Classes (OBCS)
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Efforts to extend affirmative action to private
employment
Cultural and stereotypical challenges.
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India – Sexual harassment
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No express statutory provision or protection
“Legally binding guidelines” issued by India Supreme
Court
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Employers’ duty to prevent and deter sexual harassment and
provide procedure for resolution of complaints
Preventative steps include
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Publish policy
Improve working conditions to prevent harassment
Establish “complaints committee” consisting of female chair, and at least
50% female members, including an independent party such a NGO
If harassment, initiate criminal proceedings
Give victim option to transfer
Vishaka v. State of Rajasthan & Others (1997)
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India – Non-competes
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Non-competes are problematic
Section 27 of the Indian Contract Act 1872, any agreement that
restrains a party from exercising a lawful profession, trade or
business is void, except where a party sells the goodwill of a
business
In Percept D'Mark (p) Ltd v Zaheer Khan the India Supreme Court
clarified the law as follows:
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A restrictive covenant extending beyond the term of the contract is void
and unenforceable;
The doctrine of restraint of trade does not apply during the continuance
of the contract for employment and applies only when the contract ends;
and
This doctrine is not confined only to contracts of employment, but is also
applicable to all other contracts.
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Presenter
Mark S. Askanas
Partner, Jackson Lewis LLP
199 Fremont Street, 10th Floor
San Francisco, CA 94105
Tel: (415) 536-6327
Fax: (415) 394-9401
E-mail: askanasm@jacksonlewis.com
Website: www. jacksonlewis.com
Presenter
Heath A. Havey
Attorney at Law
Jackson Lewis LLP
801 K St., Suite 2300
Sacramento, CA 95814
Tel: (916) 341-0404
Fax: (916) 341-0141
E-mail: haveyh@jacksonlewis.com
Website: www. jacksonlewis.com
jackson lewis
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National labor and employment law firm – 38 offices
“from coast to coast”, including San Francisco,
Sacramento, Los Angeles and Orange County
500+ employment lawyers
Represent exclusively companies/employers
Advise U.S. corporations re cross-border and expatriate
employment issues.
Advise foreign subsidiaries in U.S. re U.S. employment
and labor law issues.