By Nancy CreminsNovember 2017
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Globalization Partners enables companies to quickly and easily expand into 187 countries without the hassle of setting up local branch offices or subsidiaries. You identify the talent, and we employ your team member via our in-country payroll. This enables you to quickly and easily hire around the globe, and lifts the burden of figuring out HR, tax and legal matters from your shoulders to ours.
If your company employs people internationally, terminating those employment relationships comes with a range of challenges, including when those terminated employees are finished working.
The concept of “at-will” employment, which refers to the idea that an employment relationship can be terminated at any time for any reason (as long as that reason doesn’t violate the law) or for no reason at all, is relatively unheard of outside of the United States. Termination laws in other countries are heavily weighted in favor of the employee.
As a result, when a company that has employees in countries outside of the United States must end the employment relationship—whether due to a layoff, restructuring, or otherwise—that employer must proceed with caution.
If an international termination is handled incorrectly, the employer could find itself on the hook for significant damages including back pay, front pay, emotional distress damages, and more. While an employee’s contract can be a good place to start in a termination, see below for a typical issue an employer may also have to navigate regardless.
Employee Notice Period
Statutorily, you must provide the required notice to an employee prior to termination. Notice periods are often set by law and related to seniority. However, it is not uncommon for employees to negotiate longer notice periods than the law requires.
If you are considering a termination, it is important to determine how much notice is required and whether you want to have the employee work through her notice period or provide her with pay in lieu of notice.
Note that it is also common for notice periods to be equivalent—meaning the employee must provide the employer with the same notice prior to termination. Generally, during the notice period, the employee is entitled to all the benefits he would receive during employment, regardless of whether he is working or receiving payment in lieu of notice.
You may be wondering whether there is a way out of the notice provision. Unless you have legally established cause, you must honor the notice period or provide payment in lieu of notice. In some circumstances, you may wish to treat the notice period as “garden leave,” which requires the employee to sit out of employment and receive full pay and benefits as though she were still employed. If you don’t want the employee to move to a competitor, this may be a good option to pursue.
(A word on independent contractors: If your employee served as an independent contractor with your company before transitioning to a full-time employee, it’s possible that, upon termination, local law may recognize the employee start date to be the start of the independent contract period, not the start of the full-time period.)