You’re Fired!

While that may have been an effective catchphrase of a certain reality show celebrity, the lack of at-will employment laws outside the U.S. makes it significantly more complicated to process involuntary terminations in other countries. Labor laws are usually more protective of employee rights and impose several rules and procedural mandates on the employer in order to ensure a fair and just separation process. The basic considerations when you need to let someone go in an office outside the U.S. are: Termination Process and Fair Selection; Proper Notice Period; and Calculation of Severance Pay and other Statutory awards.

Termination Process and Fair Selection
Most countries require employers to go through defined procedures before deciding on and notifying employees that their employment is ending. Some are pretty simple, such as in the Czech Republic, where employers need to document the reasons for termination and submit the decision to the employee in writing. In other countries, such as the U.K. and France for example, employers must go through a lengthy, multi-step determination and notification process which include documentation, presenting a case to the employee, allowing for representation in order to bargain/argue against termination, offering alternatives and potential reassignment of duties.

In many countries, employees are part of collective bargaining agreements which must be reckoned with, as part of any termination decision. In addition to a union, employers may also be subject to the approval and negotiation requirements of a governmental body, such as an employment tribunal and in many countries, such as China, the authorities may even prevent the employer from firing the individual in question if they feel the ‘cause’ is not just.

Proper Notice Period
Most countries outside the U.S. have a mandated notice period for letting affected individuals know they’ve been terminated and this timeframe is usually based on tenure and seniority. It can range from one day to hourly employees to several months for executives. However, many countries do allow the employer to pay the employee in lieu of a notice period, especially if the notice period is so long as to prove to be a detriment to productivity and employee morale. Sometimes a notice period, or pay in lieu, stands in place of a mandatory severance payment.

In countries where employees may participate in a collective bargaining agreement, the agreement itself might contain specifics on a notice period that is over and above the statutory local minimum. In those cases, the agreement usually takes precedent in terms of what an employer is required to follow.

Severance Pay and Other Awards
There are many different types of severance pay that can exist in different countries. If an employee is discharged without cause, there is usually a mandated minimum amount in those cases, with the wages due based on tenure and seniority. In Brazil, for example, the pay is processed through a government entity that collects unemployment wages of a certain percentage of an employee’s income, part of which goes to the employee, and part to the government, presumably for continuing unemployment insurance. In Mexico for example, severance pay is three months’ pay plus 20 days’ pay per year of service plus the lower of an additional 12 days’ actual pay or 12 days’ pay at minimum wage, per year of service. As one can see, these calculations can become very expensive and serve as pretty large disincentives to employers for letting go of staff inappropriately.

There are also instances of wrongful termination claims that employers may be subject to, if they haven’t conducted their due diligence in determining the termination in the first place. An employee tribunal in the U.K. for example, would award an employee an ‘indemnity’ for a successful claim of wrongful termination against their employer, where the final amount is usually determined by the court itself. In addition, if a court of tribunal determines that an employer has ignored or incorrectly followed the rules for termination, they may impose a higher than statutory minimum penalty on the employer.

Finally, if the employee is a signatory on a collective bargaining agreement, the severance amount is usually determined by the specifications within the agreement, which are usually above and beyond the local statutory minimum requirements.

One of the potential downsides of such restrictive termination policies is that businesses in many countries shy away from hiring full time employees for the allowed period (of hiring fixed term or temporary staff) in order to minimize their financial risk if things don’t work out. However, an easy way to ensure all parties are on the same page is to be very specific and detailed in all relevant documentation, such as employment contracts and handbooks, on what constitutes expected and appropriate behavior in the workplace, as well as what the company’s policies are if an employee violates them. Transparency and clarity are usually the best approach to risk mitigation.

And of course, using a software such as Global People Strategist gives an employer full access to the termination rules, do’s and don’ts, notice period requirements and severance pay requirements of all countries they are subscribed to/operating in, thereby significantly minimizing risk in an area of HR that usually causes the most anxiety for all parties!

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