The Evolving Asian Workplace Law Landscape – New Developments and HR Survival Strategies October 1, 2008

1. The Evolving Asian Workplace Law Landscape – New Developments and HR Survival StrategiesOctober 1, 2008 Mark S. Askanas Partner – San Francisco, California Heath A. HaveyAssociate -- Sacramento, California

2. Asia’s Global Impact • 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.

3. Road Map To Avoiding Common Pitfalls 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

4. 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

5. The Art of Hiring in Japan • Hiring is the most importantstep 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.

6. 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.

7. 2008 Part-Time Workers Act • 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.

8. Strategies of Managing Employees in Japan • 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.

9. Dismissals in Japan • THE THREE TYPES OF DISMISSAL • Incompetency/Poor Performance Dismissals • During the Probationary Period • During normal employment • Disciplinary Dismissals • The “Capital Punishment” of discipline

10. Dismissals in Japan (cont.) • Economic Dismissal (seirikaiko) • Four Legal Prerequisites • Financial Need (2 years of distress) • Exhaustive Efforts to Avoid Dismissal • Application of Objective and Fair Standards in Selection Process • Procedural Due Process

11. Risks and Liabilities of Dismissal 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

12. Techniques for Terminating Employees in Japan • For Individual Dismissals • Solicitation of Resignation • Conciliation Procedure • Labor Trial System (new as of 2006) • Always get employee releases • For Mass Layoffs and Economic Dismissals • Implementation of Early Retirement Program • KataTataki (tapping on the shoulder) • Secondments • Solicitation of Resignation

13. China’s Fast Changing Workplace Law Landscape

14. China – Manufacturing Home to one-fifth of all humanity China uses 40% of the world's concrete and 25% of its steel

15. China – Anti-Discrimination 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 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

16. China – Sexual Harassment 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

17. China – Employment Contracts Employment Contract Law 2007, effective January 1, 2008 Employment contracts must be in writing Signed within 30 days, otherwise double wages for month If unsigned after 12 months, indefinite term of employment Limits fixed-term contracts Two extensions/roll-overs Severance pay if not renew Limits probationary period Depends on term of employment Limits post-employment non-compete clauses Reduces restrictive period from 3 to 2 years Payment of wage during restrictive period

18. China – New Regulations (September 2008) 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: 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.

19. India’s Archaic Employment Laws – Hurdle or Assest?

20. India 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

21. India – employment law 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) Efforts to extend affirmative action to private employment Cultural and stereotypical challenges.

22. India – Sexual harassment No express statutory provision or protection “Legally binding guidelines” issued by India Supreme Court Employers’ duty to prevent and deter sexual harassment and provide procedure for resolution of complaints Preventative steps include 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)

23. India – Non-competes 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: 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.

24. 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

25. 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 Presenter

26. jacksonlewis • 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.