International Employment 101: What it Means to be a Global Employer in 2015? Issues and Concerns That Arise When Moving People Across Borders and Becoming a Global Employer March 10, 2015
Today s Presenters Nicole J. Simonian, Partner, Asia Coordinator and Asia Labor and Employment Group Leader, Bryan Cave (nicole.simonian@bryancave.com) Marilyn Fish, Partner and Practice Group Leader, Atlanta Employment Team, Bryan Cave (marilyn.fish@bryancave.com) Jackson Pai, Associate, Trade and Employment Law, Bryan Cave (jackson.pai@bryancave.com)
Roadmap Becoming a Global Employer What U.S. Laws Apply Abroad? Specific Issues When Hiring Abroad Thinking About Global Mobility
Becoming a Global Employer Who is an employer? Forming foreign corporate entities subsidiaries, joint venture Using staffing agencies co-employment liabilities, who has control Engaging consultants or independent contractors Most countries have strict rules on who is an employee which is dependent on what actually happens in the relationship rather than what the contract says Assigning U.S. employees abroad Consequences of being an employer Local employment laws apply most countries are much more protective of employees than the U.S. Tax having an employee usually means doing business locally thereby creating a permanent establishment or nexus
What U.S. Laws Apply Abroad?
Main Requirements to be Protected by Anti- Discrimination Employment Laws 1. Be an employee ( individual who is a citizen of the United States ). Foreign nationals working abroad are not protected, whether they work for American or foreign employers 2. Work abroad for U.S. companies or for entities controlled by U.S. companies. Whether a foreign entity is controlled by a U.S. corporation depends on whether the two entities share (i) interrelationship of operations, (ii) common management, (iii) centralized control of labor relations and (iv) common ownership and financial control. Determined on a case-by-case basis
Applicable Anti-Discrimination Employment Laws 1) Title VII of the Civil Rights Act of 1964 Prohibits discrimination based on race, color, religion, sex (including pregnancy) or national origin Exceptions for foreign-compulsion defense Three element test: (i) action taken with respect to an employee in a foreign country; where (ii) compliance with Title VII would cause respondent to violate the law of the foreign country; (iii) in which the workplace is located. Post-world-war-II Friendship, Commerce and Navigation Treaties between U.S. and various countries.
Applicable Anti-Discrimination Employment Laws (Cont.) 2) Americans with Disabilities Act of 1990 (ADA) Prohibits discrimination against qualified individuals on the basis of disability and those regarded as having a disability Does not cover foreign employers of U.S. citizens working abroad but covers U.S. employees working abroad for U.S. controlled employers.
Applicable Anti-Discrimination Employment Laws (Cont.) 3) Age Discrimination in Employment Act of 1967 (ADEA) Prohibits discrimination against individuals aged 40 or older Express but limited provision to cover U.S. citizens working for U.S. controlled companies. Generally applies to foreign employers operating in the United States. However, does not apply to employment actions involving work abroad.
Additional Issue for U.S. Companies Foreign Corrupt Practices Act (FPCA) Corporations have potential exposure for the actions of their employees, agents, subsidiaries Elements: Acting on behalf of an issuer or Corporation of domestic concern Corrupt intent Payment or offer of payment Foreign official including political candidates and employees of state owned enterprises Business purpose High penalties and collateral consequences U.S. employers to create, implement and disseminate to subsidiaries and local staff FCPA compliance programs
Specific Issues When Hiring Globally
Sources of Law Local Laws Laws of Other Countries In certain situations, employees may be protected by more than one country s laws (e.g. expats) Directives of Regional Governing Bodies Corporate Code of Conduct & Policies Individual Contracts (e.g., employment contracts, assignment agreements) and Collective Bargaining Agreements Religious law
General Trends Legal traditions may dictate attitudes toward employees ( at-will vs. not at-will ) wide range in levels of protections Common law generally less protective of workers Civil law generally more protective General trend toward increasing worker welfare, as wages rise across the region and workers assert more rights Trend toward European-style data protection laws
Background Checks, Drug Tests and Pre- Employment Testing Certain jurisdictions may impose legal restrictions In most cases, requiring prior consent from prospective employees is highly recommended Credit checks and criminal records checks are more problematic Discrimination laws may apply Recommended to have HR policies with clear language and definitions Keep results confidential to protect data privacy and avoid discrimination claims
Employment Contracts / Offer Letters Written labor contracts or offer letter generally required; offer letters may be sufficient in common law jurisdictions In certain jurisdictions where no employment contract or offer is required, a written contract or offer may still be recommended Documents generally required for onboarding: Tax Social benefits and pension Immigration documents or proof of eligibility to work (relieving letter from previous employer)
Confidentiality and Restrictive Covenants What to Consider? Confidentiality obligations are accepted in most jurisdictions Not all jurisdictions allow enforcement of restrictive covenants such as non-competes or non-solicitation, and those that allow usually require some business reason Where permissible, enforceability of restrictive covenants postemployment generally requires consideration in the form of payment and is limited to a reasonable period of time Internal policies and employment/stand-alone agreements addressing confidentiality and restrictive covenants to ensure protection of companies interests recommended There may be different mechanisms of enforceability (employment vs. contract obligation)
Termination Jurisdictions may have at-will employment, while others may not In certain jurisdictions, severance may not be mandated by law, but provided by local company s severance plan Separation or release agreements may not be legally required and waiver of employment/labor rights might be unlawful No one-size-fits all -- different types, requirements, procedures and protections for terminating an employee
Data Privacy Strong data protection laws may affect processing and storing of personal information European-type data privacy laws are being enacted in many jurisdictions Certain jurisdictions require Data Transfer Agreements (DTA s) and consent from the employees for the collection, storage, transfer of data Restrictions on the collection of Personal Data/Information from employees and candidates
Thinking About Global Mobility
Most Frequently Selected Countries for International Assignments Country Percentage United States 21% China 12% United Kingdom 10% Singapore 7% Germany 4% Hong Kong 3% Switzerland 3% Canada 3% Netherlands 3% Source: 2014 Global Mobility Trends Survey, Brookfiled Global Relocation Services
Global Mobility Issues Determine that the person is truly an expatriate and intends to return home at the end of the assignment Determine how to structure the assignment Localization, direct foreign posting, secondment, temporary transfer/localized, and dual-/co-/joint employment Structure contracts and assignment documents appropriately to ensure that no additional obligations are created for the employer and employee expectations are met Consider any offer letter issues once provided with an offer letter, it may be hard to modify/adjust it later Lack of clarity may mean significant financial implications later in the employment/termination process
Global Mobility Issues (Cont.) Determine what country s laws apply generally (based on work location, assignment structure) but understand some host country laws may apply no matter what Example: is the employee at-will or is cause required? Ensure that when an assignment ends that the expat is compensated according to the terms dictated in the jurisdiction where the law would apply Severance packages may be statutory in some countries Consider what other obligations may be owed to the expatriate (e.g., relocation costs) check local policies and the assignment agreement.
Future Perspectives Global mobility continues to play a role in the following years due to increasing international engagements: Companies involving in more complex foreign transactions including investments abroad, sourcing from abroad, foreign sales and distribution Companies providing more flexibility for global employees and hiring a global workforce Variety of assignments types rather than traditional hometo-host international assignments Review of relocation packages, benefits, allowances and tax equalization agreements For industries with longer lead time for overseas development, the need for traditional long-term assignments will remain.
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