Bridging Borders

International employment laws and regulations vary widely—even among the countries within the EMEA region.

By Simon Kent

Whilst companies may wish to view their businesses as covering a unified EMEA region, employment law means that such unity can only ever be superficial. Even without the complexities of Brexit, deploying a consistent set of employment policies can seem impossible. “Some inward investors might consider Europe to be a single territory for business purposes,” says Helga Breen, head of the employment practice in London at global legal business DWF. “The reality is that each country has its own legal and regulatory framework and societal and cultural norms.”

“When it comes to the employment lifecycle—recruitment, reward systems, contracts, policies, termination, business reorganisations, redundancies, mergers, and outsourcing—there is no one-size-fits-all solution,” she continues.

Breen says this can be frustrating for organisations that would prefer to deploy a single employee handbook. But whilst the current 28 member states of the European Union may have common employment laws and social policies, the way those laws and policies are implemented make different demands on local businesses. This is further complicated by the Middle East and Africa regions, which have no commonality with these employment laws—with the possible exception of the Dubai International Financial Centre (DIFC), which has recently moved to align more closely with international practices.

“The differences in employee rights are very much an expression of local cultures,” says Richard Harris, chief legal officer at Robert Walters. Harris adds that the broadest distinctions are between the UK and mainland Europe, particularly in terms of employers’ ability to terminate employment and their ability to engage temporary labour.

In France, for example, a temporary worker cannot merely be engaged for any reason an employer chooses, whereas in Germany, temporary employees on fixed-term contracts are heavily restricted after two years and following that, an employee can claim that their fixed-term contract is converted into indefinite employment. Meanwhile, in the UK, a reasonable number of workers continue to work on zero-hours contracts. “It is not a question of bad versus good, but a very different tradition,” says Harries. “In my experience, the issues come where there is a lack of appreciation that what a client easily does in the UK or the U.S. is just not acceptable in other jurisdictions.”

Greg Burgess, partner in the employment law group at DMH Stallard, also finds similarities and differences: “Whilst most EU countries have consistently robust anti-discrimination laws, other areas of employment law protection are less consistent.”

Burgess’s practice keeps up to date with country-specific regulations through its involvement with LE International, a global network of law firms for which he is chair of the employment law practice group. “Through the membership of LE International, we regularly discuss with other employment lawyers across Europe the different approaches to employment law in each country and are therefore able to give guidance to our clients who have operations throughout Europe,” he explains. “In the last 12 months, we have worked on pan-European projects where the differences in the law have presented real challenges for HR professionals. The uncertainty that Brexit causes has further complicated the situation; for example, when trying to consult European Works Councils about closing sites in different EU countries.”

“Nobody knows exactly what the UK’s approach to European Works Councils will be post-Brexit,” adds Burgess, “and so planning a project which will complete post-Brexit has proved difficult for some businesses.”

Kate Ledwidge, senior associate in the London office of JMW Solicitors, agrees that the situation can be complex, even pre-Brexit. “There can be many unexpected knock-on effects of divergent law when it comes to workforce management,” she says. “With employee discipline, taking France as an example, what might be considered a clear example of gross misconduct justifying dismissal in the UK may well not justify a dismissal in France. This can be difficult for HR to manage and communicate internally, because senior managers elsewhere in the business will not understand why a case of serious misconduct cannot be dealt with quickly, easily, and cheaply.”

 

“In our experience, being an HR professional covering an international workforce is a complex and strategic role,” Ledwidge continues. “It is crucial to have international HR legal support that is strategic and commercial, and provided by lawyers who understand your business, so that plans can be implemented from the outset in a way that achieves the business’s goals and avoids storing up difficult issues for the future.”

One such issue is highlighted by Adam Penman, associate in the labour and employment department of international law firm McGuireWoods. Without the localisation of employment policies, he argues, a company could unintentionally create protections that do not exist under the local laws. “Employers may have difficulty justifying those variations in employee benefits,” he says. “For example, maternity or paternity pay and annual leave in Scandinavian countries is very generous, whereas these rights may be limited or not exist in other jurisdictions.”

Whilst managing a non-unified set of employment policies across the region may seem like a headache, Penman says there are some benefits. For example, employers may choose to set up a business in one location over another because of particular or less stringent laws or tax rules. Put this way, it is possible that information from HR regarding employment policies and requirements could influence the strategic decision of a company regarding its geographical spread.

As Brexit rumbles on, the issue of employment law—and the UK’s ability to increase its control of local employment law once outside the EU—has been debated at length. But according to Harris, there has never been a real push to harmonise such rights at a pan-European level—although there has been a natural progression towards commonality around key issues such as anti-discrimination legislation. “It could be argued that Brexit may well lead to a greater divergence between the UK and the EU,” he says. “However, in the context of employment law, I think this exists already.”

Posted October 17, 2019 in Risk and Compliance

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