Staying on top of employment compliance across borders is a challenge. With regulations continuously evolving, companies operating globally face the complex task of monitoring updates across multiple jurisdictions.
To simplify things, at the start of every quarter, we will be posting a roundup of recent changes AND upcoming developments across the ever-expanding list of countries we serve at Boundless.
By outlining these changes in one place, we hope to help you benchmark your compliance infrastructure against the latest local standards. Consider this both an informational resource and a prompt to take action where needed. Here is everything to note from Q3 and Q4 of 2024.
Status: Expected to come into effect in 2025
Ireland is launching a new pension auto-enrolment scheme early next year. This scheme will automatically enrol individuals who meet certain criteria: they must not currently have a pension scheme, earn over €20,000 annually, and be aged between 23 and 60.
A significant advantage for employees is the contribution structure. For every €3 an employee contributes, their employer will also contribute €3, and the State will add an additional €1. This means a total of €7 will be added to the employee's pension account for every €3 they put in. (Employees have the option to opt-out after six months.)
What does this mean for employers?
This auto-enrolment scheme is mandatory for all employers in Ireland. To comply with the new legislation, employers need to take the following steps:
The Irish government has published a comprehensive employer guide that outlines the actions, costs, and terms of the auto-enrolment scheme.
Status: In effect as of January 1, 2025 (unless otherwise specified)
Ireland's Budget 2025 introduces several key measures impacting businesses, including:
This budget introduces a range of changes for businesses in Ireland, with a focus on supporting innovation, start-ups, and employee benefits, while also increasing the minimum wage and adjusting tax regulations. Employers should familiarise themselves with these changes to ensure compliance and leverage new opportunities.
Two recent Workplace Relations Commission (WRC) cases in Ireland highlight the importance of correctly determining employment status. These cases applied the new five-step test established by the Supreme Court in 2023 to determine whether individuals are employees or independent contractors.
The Supreme Court ruling in Revenue Commissioner v Karshan (Midlands) Ltd t/a Domino’s Pizza [2023] IESC 24 emphasised that the level of control exercised over the individual and the reality of the working relationship are key factors in determining employment status. This means that businesses need to carefully review their arrangements with contractors, especially where those individuals provide personal services and the business exerts significant control over their work.
Key takeaway for employers
Status: Expected to come into effect January 1, 2025 (pending Parliament approval)
The Dutch government recently released its budget proposals for 2025, with a focus on creating a stable and predictable tax environment to attract multinational companies. Several key changes are expected to impact businesses operating in the Netherlands:
Status: Expected to come into effect in 2025
New Zealand is set to introduce a new "Gateway Test" to provide clearer guidelines for businesses when determining worker classification as independent contractors or employees. This change, expected to be part of the Employment Relations Amendment Bill introduced next year, aims to reduce ambiguity and potential misclassification.
What is the "Gateway Test"?
The Gateway Test outlines four criteria that must all be met for a worker to be considered an independent contractor:
If any of these criteria are not met, the existing multi-factor tests will be used to determine the worker's status.
Practical Implications for Businesses
This new test offers clarity but also requires businesses to review their current contractor agreements. Industries heavily reliant on contractors, such as technology and the gig economy, will need to ensure their arrangements align with the new criteria. For example, businesses must ensure contractors are not restricted from working with competitors and have genuine flexibility in their work arrangements.
While the changes are still under development, businesses can proactively prepare by:
Status: In effect (with transitional period)
Portugal's popular Non-Habitual Residency (NHR) tax regime has ended for new applicants as of January 2024. However, there's a transitional period allowing some individuals to still qualify for the existing NHR program:
The NHR is being replaced by the Tax Incentive for Scientific Research and Innovation program ("NHR 2.0"). This new program targets specific professions, including:
Benefits of "NHR 2.0" include a flat 20% tax rate on eligible professional income from Portugal and potential exemption on foreign-sourced income (excluding pensions).
Status: In effect
Portugal has introduced new personal income tax (IRS) withholding tables, effective from September 2024. These tables incorporate changes to the tax code, including lower rates for the first six tax brackets, an updated specific deduction, and adjustments to the minimum existence.
To accommodate these changes, two tax models will be applied: one with lower rates for September and October, and another for the remaining months of the year. The initial lower rates aim to compensate workers and pensioners for the tax withheld between January and August.
This may result in a temporary increase in take-home pay for many individuals in September and October. However, employers must ensure they adjust their payroll systems to reflect the new tables and deduct the appropriate amount of tax in subsequent months to avoid discrepancies at the end of the year.
Status: Pending
Portugal is considering a new tax regime aimed at attracting and retaining young professionals. The proposed "IRS Jovem" would significantly reduce the income tax rate for individuals under 35 years old. If approved, those earning up to €81,199 annually would face a maximum tax rate of 15% on their employment income.
This change could make Portugal an even more attractive destination for young workers and entrepreneurs. The proposal is currently under discussion in Parliament, and if approved, the new regime would come into effect on January 1, 2025.
Status: In effect from October 26th 2024
This month, the Worker Protection (Amendment of Equality Act 2010) Bill will boost the protection workers have against sexual harassment. This new law requires employers to take "reasonable steps" to prevent sexual harassment from occurring, holding them proactively accountable for fostering a safe and respectful work environment. If an Employment Tribunal finds that an employer failed to meet this duty, they can increase compensation awarded to the employee by up to 25%.
This preventative duty is comprehensive, requiring employers to take steps to prevent sexual harassment from any source, including colleagues and third parties such as customers, clients, or members of the public.
What does reasonable steps mean?
While the legislation doesn't precisely define "reasonable steps," the Equality and Human Rights Commission (EHRC) has published guidance to help employers understand their obligations. Some examples of reasonable steps include:
Status: Date pending
The Paternity Leave (Bereavement) Act has been passed, introducing important changes to the Employment Rights Act 1996. This new law guarantees that paternity leave (PL) is available to bereaved partners from the very first day of their employment, regardless of how long they've been with their employer.
As such, the Act eliminates the prerequisite of a minimum 26 weeks of employment for a mourning partner to access PL if a newborn's mother passes away. This right also extends to cases of adoption and surrogacy, and bereaved fathers/partners can now take PL even after having utilised shared parental leave.
With frequent regulatory shifts across borders, remaining compliant as an international employer can be challenging, especially for rapidly growing companies.
As an Employer of Record, Boundless has you covered. Our team handles in-country compliance as part of our premium global employment solution, so you can focus on doing what you do best: building your business.
If you have any questions about the updates outlined above or want to discuss our personalised Employer of Record services, get in touch with our team.
We're here to support you and ensure you remain compliant, no matter the changes ahead.