“At-will employment” is uniquely American. If your company employs people internationally, terminating those employment relationships comes with a range of challenges.
By Nancy Cremins, Chief Administrative Officer & General Counsel, Globalization Partners
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.
Below is one key issue to consider when terminating international employees. and efficient as possible.
Review the Employment Contract
Before making any termination decisions, it is always a good rule of thumb to review the operative employment contract. There will be key elements to consider including seniority, contractual notice period, severance provision, benefits, and/or whether a collective labor agreement applies that will help to determine the timing and related costs involved in terminating a particular employee.
Another critical component to consider is the basis for the termination. Does your company need to undergo a reduction in force? Are the needs of your business changing? Or must you terminate because an employee is failing to meet performance standards or engaging in misconduct? There are different paths and requirements to follow to properly effectuate a termination depending on the grounds for termination.
Perhaps the most challenging is to be able to properly establish cause. Many process requirements to correctly terminate for cause, which vary by country, come as a shock to U.S.-based employers.
For example, in Singapore, an employer must grant the employee an “inquiry” in which the employee should be allowed to present his case. Additionally, an employer may suspend the to-be-terminated employee for no longer than one week, and must pay the employee at least half of his salary during the suspension period.
In Mexico, the employee must acknowledge wrongdoing in writing.
To terminate for cause in Germany, the notice of termination must be served in writing within two weeks of the employer gaining knowledge of the underlying facts leading to the termination. The writing cannot be in email or fax form and must include a handwritten signature.
In each case, learning the laws of the land as they pertain to terminations—coupled with a review of the employment contract— will insulate you from sustaining damages from the outset.