Overview of Key Issues in International Employment Law

Labor & Employment Workforce Watch
February 2021

Coordinating advice on international employment law issues from Locke Lord’s London office has given us a good understanding of the applicable principles across many of the world’s key economies. The United Kingdom has a degree of alignment in its contract law not just with the US but, to varying extents, with other common law jurisdictions such as Ireland, Hong Kong, Singapore, Australia, India and the Dubai International Financial Centre. Key civil law jurisdictions across Europe such as France, Germany, Italy, Spain, and the Netherlands instead have their fundamental basis in a civil code (as also the Federal UAE system), and often in industry-wide collective bargaining agreements which mandate many of the terms of employment. European Union members derive much of their employment law from EU directives and, post-Brexit, all of this has been transposed into domestic UK law. Saudi Arabia and China operate on different bases again. This bulletin provides just a brief overview of some key differences that exist across jurisdictions.

First, none of these other jurisdictions recognize employment at will. Employers should assume that absent grounds for termination for cause, they must observe a notice period or pay in lieu of notice. There is no jury assessment of damages, and rarely punitive damages or class actions.

There is a marked commonality concerning restrictive covenants across much of the world. The underlying principle is that restrictive covenants impermissibly contravene freedom to trade, unless the scope and drafting are tightly circumscribed. Across civil law countries like France, Germany, Spain and the Netherlands, a non-compete covenant will be binding only if the former employee is paid 30 to 50% of total remuneration for the duration of the covenants. In some countries like the Federal UAE and China, there is no scope to obtain an injunction, only damages, and enforcing an injunction is everywhere an involved and expensive exercise.

Many countries grant employment protection rights to employees after a qualifying period, such as the two year period in the UK. In France the cast-iron protections previously in place have been reduced by President Macron’s scale of maximum compensation (the cap gradated by length of service) and in Germany employers need consent of the works council to dismissals in all but the smallest workplaces. In the Netherlands any dismissal requires consent of the court or public authorities, which employees use to leverage generous settlements, and in Italy there is a risk of employees going off sick to protect themselves when they believe they are about to be dismissed. In many locations terminating employment for poor performance is nearly impossible. In the UK, performance management terminations are not easy but possible, while in Dubai, Singapore, and especially Hong Kong, the protections are very much more limited.

Most countries have the full range of discrimination legislation, but only UAE and Saudi Arabia have specific protections for local nationals.

Among features of local law which would be particularly counter-intuitive to a US audience are:

  • the two years of salary to which employees in the Netherlands are entitled if they become sick;
  • the social stigma which applies in India to being fired, such that if employers allow departing employees some control over messaging around the reasons for their departure, they are far more likely to strike a better deal;
  • in Germany employers need to consult the works council over even a change of IT systems;
  • in Australia, there is a system of industry-wide or sector-wide collective bargaining agreements and a culture of class actions otherwise not much seen outside the US.