International Benefits Update ‒ Q4 2019

Before traversing into a new decade, there were notable international benefit events such as the implementation of a major EU well-being initiative, workplace risk prevention in Mexico, changes in France to supplemental medical and pension plans, statutory pension reform in Ireland, and a group of countries enhanced family leave benefits.

After reviewing the fourth quarter updates, explore the reforms and trends in benefits from around the world this past year in our 2019 International Benefits Year in Review.

EU

Directive on Work-Life Balance

On July 31, 2019, the EU rolled out the Directive on Work-Life Balance for Parents and Carers in an effort to promote work-life balance, catalyze women's workforce participation, and encourage both parents to coequally share family-related responsibilities. Affecting workers in the European Union, the 28 member states have until August 2022 to implement the changes. Under the directive, new rules will be set for paternity leave, parental leave, caregivers' leave, and flexible working arrangements for working parents and caregivers.

• Paternity leave: Fathers or equivalent second parents (irrespective of family or marital status) will be able to take at least 10 working days of paternity leave around the time of childbirth. Previously, the EU had no minimum standards for paternity leave.
• Paternal leave: Out of the entire four-month entitlement, two months will be non-transferable between parents, ensuring that either parent take two months of leave. The two months will be paid, and this leave may be taken in flexible work slots (e.g., part-time basis).
• Caregivers' leave: Workers will receive five days of unpaid leave to care for relatives with serious medical conditions. 
• Flexible working arrangements: Caregivers and working parents of children up to age eight will be able to request additional flexible working arrangements such as reduced hours, telework, and flexible schedules. 

The directive protects employees who take or apply for leave from unfair dismissal and discrimination, and allows employees to revert to their original working patterns after taking leave. 

Mexico

Occupational Psychosocial Risk Prevention

On October 23, 2019, the Mexican government implemented a law passed in 2018 called NOM-035 (Norma Oficial Mexicana) to address work-related psychosocial risks, prevent workplace violence, and promote a healthy work environment. In layperson's terms, "psychosocial" applied to the workplace means an employee's workload, schedule, setting, colleagues, or management causing them physical or psychological harm. The numerous requirements of the new law vary according to three headcount categories: up to 15, 16 to 50, and more than 50 workers. The various compulsory actions for employers include enacting a psychosocial risk prevention policy, establishing measures (complaint filing, record keeping, evaluation, training), identifying any employees currently at risk, and communicating the potential risks and effects to employees. Employees have multiple responsibilities: They must report unfavorable workplace practices, refrain from participating in violent acts, and notify the employer if they witness or suffer from a traumatic event.

Some special provisions will be implemented in phase 2 (of 2) in October 2020. For example, employers with more than 15 employees will be required to provide access to appropriate treatment for work-related issues, including medical services for employees who are suffering from or exposed to traumatic events or risks in the workplace. Employers with more than 50 employees will have to perform an organizational assessment to evaluate its work environment. By October 2020, the Ministry of Labor will carry out inspections of employers and financial penalties will be imposed for noncompliance.

France

Supplemental Health Reform

Effective January 1, 2020, the "100% Santé" reform was implemented by the French government. As per the reform, supplemental health insurance plans must provide 100% repayment for certain medical care and equipment, including prescription glasses, hearing aids, and treatment and prostheses for dental care. The reform applies to supplemental health insurance contracts known as "responsible" contracts (i.e., contracts that comply with certain obligations in return for tax and social advantages).

New Supplemental Savings Plans

France's new Action Plan for Business Growth and Transformation (Plan d'Action pour la Croissance et la Transformation des Entreprises or PACTE), promulgated May 2019, brought three new supplemental defined contribution retirement savings plans (offered by insurance companies) that will replace more traditional collective and company level plans like the PERE, PERCO, PERP, and other article 83 (defined contribution) plans. These new simplified plans have more favorable tax treatment, corporate financing, portability, and allow employee choice when it comes to payment options before and at retirement age. The new Plan d'Epargne pour la Retraite (PER) plans have three variants: a collective plan for all employees, individual plans, and a stand-alone company-sponsored plan. For payment options before retirement, PER plans allow employees to withdraw their savings to use toward the purchase of their primary home, including the exception under the old plans that allowed withdrawal for unexpected accidents (e.g., disability, spousal death, unemployment). For payment options at retirement, employees will be allowed to choose between an annuity, lump sum, or a combination of the two. On October 1, 2019, the new PER was launched in the marketplace for individuals and companies. Individuals with an old retirement savings product can transfer their savings to a new PER, and companies with an old retirement savings product can upgrade to a PER. Effective October 1, 2020, the previous retirement savings products (e.g., PERE, PERCO, PERP) will be closed to new entrants unless they are modified to conform to the same plan rules as the new PER. The tax credit to transfer to a new PER will expire January 2023.

In addition to affecting pensions, PACTE's wide-reaching provisions also affected corporate finance, management, equity, and environmental and social responsibility. You may read more about PACTE here.

Ireland

Key Auto-enrollment Provisions Announced

The Irish government has released key tentative provisions for the upcoming auto-enrollment of supplemental employer-sponsored pension plans, which will be implemented according to a to be determined phased schedule starting in 2022. As per the government's statement, auto-enrollment will apply to all employees between 23 and 60 years of age who earn EUR 20,000 or more annually. With matching employer contributions (up to a salary ceiling of EUR 75,000), employees will contribute 1.5% of qualifying earnings, increasing by 1.5% every three years, up to a maximum of 6% in year 10. Employees will be required to make compulsory contributions for the first six months of membership, with an option to opt-out of the system in a two-month window. The government will set up a Central Processing Authority to monitor the providers and facilitate the contributions. Ireland's auto-enrollment scheme will be implemented in an attempt to supplement the State pension by providing additional retirement income. The final plan design may change and the effective date may be delayed.

Global Family Benefit Enhancements

• Austria: Effective September 1, 2019, private sector employees can take one month of unpaid paternity leave following the birth of their child; previously, only federal sector employees were entitled to this leave. Employer-paid leave is not required, but fathers are provided a one-time social security payment of EUR 700.
• Puerto Rico: The Act No. 83-2019 (the Act) was recently enacted to provide a new leave entitlement for employees in Puerto Rico. Under the Act, employees can take up to 15 days of unpaid leave annually to deal with issues related to sexual harassment, sexual abuse, stalking, child abuse, and domestic violence. Employers are obliged to grant the leave, keep the information related to the incident confidential, and accommodate flexible working conditions if requested by the employee. The leave can be taken on an intermittent or fractional basis. Employees have a right to return to the same work position at the end of the leave period.
• Switzerland: In September 2019, the Swiss government passed a law to increase paid paternity leave to two weeks, which was previously only one day. The new two weeks of leave must be taken either individually or consecutively within the first six months of childbirth. This leave is paid by the government (funded through social security contributions) at the same rate as statutory maternity leave. With the start date yet to be finalized, the change may be effective as soon as July 2020.
• South Korea: In an attempt to address the country's low birthrate and promote work-life balance, the South Korean government has made some enhancements to its paternity, parental, and caregivers' leave policies. Paternity leave will be increased to 10 paid days (up from five, two of which were unpaid). For parental leave, employees may work reduced hours to care for a child, subsidized by the government, for up to 12 months. For caregivers' leave, eligibility has been expanded to include care for children, parents, grandchildren, and grandparents. Up to 10 days of the 90 days of unpaid leave can now be taken in single-day increments (previously, 30-day increments). On January 1, 2020, these changes will be applicable to employers with at least 300 employees, to employers with a headcount of 30 or more starting in January 2021, and to smaller firms starting in January 2022.