what to expect in 2023 

As 2022 draws to a close, 2023 is looking to be a year packed with new developments, and many countries have already announced changes closely linked to current HR trends: digitalization, well-being at work, flexibility of working conditions, diversity and inclusion, etc. 

Here is a round-up of the reforms and new measures announced for the start of 2023.  

On immigration

Many countries are reforming their migration policy to attract new foreign talents and to make their access to residence simpler.

In Europe, the German coalition government recently announced a plan for immigration reform, starting in 2023. The planned changes are intended to attract highly qualified employees and to make it easier for them to remain. A simple announcement, then, but one which is to be developed and implemented over the course of the year. 

In Slovakia, migration reform will come into effect on 1 January, simplifying residence and work for nationals of states eligible for a visa waiver. Notably, it will allow people to change their migration status while remaining in the country for the duration of the process. 

In Singapore, too, a new residence permit, the Overseas Networks & Expertise Pass, will be available from 2023. Valid for 5 years, it is aimed in particular at highly qualified or high-potential employees.  

On employment and unemployment insurance 

In France, the government recently announced unemployment insurance reform to come into force on 1 February 2023. The decree, which is to be published soon, introduces a counter-cyclical mechanism which will reduce the duration of the payment period when the economic situation is deemed favorable.

This mechanism is to apply until the end of 2023; new negotiations will then be undertaken with the social partners on the next unemployment insurance agreement. 

As of 1 January, in the Czech Republic, employers can obtain a 5% reduction on their social contributions when they hire certain categories of employees (notably part-time) by informing the Czech social security authorities. 

In UAE, the unemployment insurance scheme will be mandatory as of 1 January 2023. This scheme is for all Emirati employees and residents, whether they work for local or foreign companies. Unemployment insurance, financed by beneficiaries, launched in October 2022. 

On working conditions 

Labor law is evolving globally to simplify flexible working and to improve work-life balance.  
 
As such, in Belgium, labor law reform comes into effect on 1 January 2023, notably intending to reach 80% employment by 2030. Among other things, it includes the requirement for companies with over 20 workers to conclude agreements on the right to disconnect.

Under labor code reform in Lithuania, of which most provisions are in force since August, non-transferable parental leave of 2 months exists as of 1 January. It is available to each biological parent, adoptive parent, or legal guardian, and can be taken before the child reaches 18 or 24 months of age. 

In Malaysia, the 1955 labor law was recently reformed. As of 1 January, it notably allows workers to make a written application to the employer for flexible working conditions and introduces paid paternity leave of 7 days.  

Nonetheless, the scope of this law is restricted in that it applies only to domestic staff and workers: 
   * whose salary does not exceed MYR 2,000 a month; 
   * carrying out manual work or supervising such work; or 
   * responsible for maintenance of “mechanically propelled vehicles or seagoing vehicles”. 
For others, working conditions are set by the employment contract.

On international remote working 

Due to the Covid-19 pandemic, flexible-working measures have been in place since 2020 to allow border workers to work from home.

On social security, the member states of the EU introduced a period of flexibility for border and cross-border workers having to complete a significant portion of their work remotely from their place of residence.  

As such, the 25% rule, which stems from regulations on the coordination of social security schemes, was neutralized until 30 June 2022. As of this date, member states have decided to implement a transition period, extending the neutralization period until 31 December 2022. This transition period has now been extended further to 30 June 2023. The 25% rule therefore remains neutralized until this date, with a view to a change of EU legislation to offer greater flexibility to border workers. Changes are therefore expected in 2023. 
 
On income tax, numerous border states have concluded amicable bilateral agreements in order to neutralize the tax consequences of remote working for cross-border workers. Most of these agreements have come to an end and the rules of tax treaties apply once again.  

As such, cross-border workers are taxed in their place of residence provided that the duration of work outside the border area does not exceed: 

• 45 days a year under the tax treaty between France and Germany; 
• 30 days a year under the tax treaty between France and Belgium. 

 
The agreement with Switzerland has, however, been extended one last time, to 31 December. The ordinary rules (45 days a year in general) will apply again as of 1 January 2023. 

The amicable agreement between France and Luxembourg has come to an end. However, the tax treaty between France and Luxembourg has been amended so that, as of 2023, the number of days of work or remote work from the country of residence will increase from 29 to 34 days a year.  

Lastly, the amicable agreement concluded between France and Italy ended on 30 June. Since 1 July, cross-border workers are therefore taxed according to the tax treaty between the 2 countries, in their state of residence. 

On payroll 

In France, the 2023 finance bill is to abolish the requirement to file a monthly declaration with the non-resident tax authorities via PASRAU (withholding tax for other income) as of 1 January 2023. The employer remains subject to an annual reporting requirement, but payment of income tax will be made each month through a direct debit from the taxpayer’s bank account.  

Lastly, following the adoption on 4 October of the directive on adequate minimum wages in the European Union, it is up to member states to transpose the directive in the next 2 years to set a procedural framework based on clear criteria to set and/or update minimum wage at least every 2 years (every 4 years if there is an automatic indexation system).  

As such, Cyprus recently announced the introduction of a national minimum wage of EUR 940 a month as of 1 January 2023.  

This is a non-exhaustive list; other reforms are to come into force in 2023. To be continued…