As organisations expand internationally, they should consider how employment law across different jurisdictions is a key part of global HR practice. There is a growing trend among large multinational employers to standardise employment terms and benefits, as Nick Howard and Jonathan Iyer explain.
Employers may be motivated by ethical considerations, regulatory requirements, or by a desire for efficiency and consistency. A good example of such harmonisation is Vodafone’s recent announcement that it intends to introduce a global maternity pay policy for its employees worldwide that offers 16 weeks of maternity leave with full pay, as well as full pay for a 30-hour working week for the first six months following a return from maternity leave.
This article looks at five key challenges that employers face when trying to harmonise their employment practices around the world.
1. Choose which practices to harmonise
Employers should first consider which areas of their employment practices that they wish to harmonise. Subject to compliance with locals laws and overcoming the practical implications of harmonisation, a universal approach could be adopted for a variety of employment practices including: equal opportunities; international secondments; business ethics; disciplinary and grievance processes; and, as in Vodafone’s case, the field of family-friendly rights such as maternity, paternity and adoption leave.
2. Consider the impact of local laws and market practice
Before drafting the terms of a policy, employers must consider the impact of local employment laws in each jurisdiction (and, in some cases, federal and regional differences) in which it wishes to implement the relevant policy. Employers should have a thorough understanding of the mandatory requirements and restrictions of local law before deciding on the content or nature of a policy or practice.
The employer will need to take a strategic decision as to whether or not it should apply the highest level of protection or benefit to all employees across its global network. In some cases, the employer will accept that the differences in the protections in respect of a particular area of employment law are too varied between countries to harmonise. Often, employers will apply a basic standard, but will ensure that if an employee is entitled to a more generous statutory minimum then they will continue to receive those benefits.
Employers should also bear in mind the need for ongoing monitoring of local employment laws for any changes to minimum statutory requirements that could render the policy inaccurate in any jurisdictions later down the line.
In addition, employers may wish to conduct an analysis of what competitors in particular regions offer their employees in terms of benefits, before implementing a blanket policy that may be competitive in one jurisdiction but less so in another.
3. Understand cultural sensitivities and discrimination laws
When considering the impact of local laws, care should be taken to note cultural differences and issues of discrimination. Employers should question whether or not a particular benefit will integrate with cultural norms.
An example would be the implementation of a global equal opportunities policy, which could raise problems in countries that outlaw homosexuality, or the promotion thereof. A global company recently made headlines for having to withdraw its lifestyle magazine in one country for fears it could violate local laws against propagating homosexuality.
Employers should also take care when structuring a particular company benefit to ensure that the terms do not unwittingly fall foul of local anti-discrimination laws. An example would be rolling out a contractual redundancy policy that links the level of redundancy pay to the age or length of service of the employees. Such a policy could be discriminatory in some jurisdictions, such as the UK, where there are age-discrimination laws.
4. Know your consultation obligations
When considering the implementation of a global policy or practice, employers should seek local advice on whether or not the implementation triggers any collective consultation obligations with its employees. The proposed policy or practice may require information and consultation duties to consult a recognised trade union, a works council or employee representatives. Compliance with these duties could have a significant impact on the timing for the rollout of the policy; while failure to comply with consultation obligations in some jurisdictions could lead to penalties (financial, or otherwise).
5. Identify practical considerations
Having confronted local law challenges to harmonising employment practices for a global network, employers must also consider the practicalities of the implementation of a particular policy or practice.
There are obviously a number of financial implications from the harmonisation of employment policies, such as legal, organisational, training and administrative costs. The employer may take the view that the long-term savings of having one central, streamlined policy justify initial set-up costs. In Vodafone’s case, the company took the view that in the long term, a harmonised maternity pay policy would lead to cost savings of having to recruit and train new hires to replace women who did not return to the workplace after becoming pregnant.
Implementing the policy
The actual implementation of the policy may vary by region. For example, it may be possible to impose the policy unilaterally or, as set out above, it may only be possible to implement such a policy after consultation with a representative body of the employees or agreement with individual employees.
As with any workplace policy, there is little point in implementing something, only for it to remain unknown. Employers should ensure that managers promote the relevant policy and highlight its existence at training sessions or workshops. Publicity around the workplace highlighting the new policy should be encouraged (eg in staff newsletters, internal magazines and intranet pages).
Employers should also ensure that local line managers in the relevant jurisdictions receive adequate training on the contents of the policy and that compliance is monitored regularly. Again, the use of workplace intranet pages can go some way to achieving collective compliance, as well as discussing the relevant policy at any cross-jurisdiction training days or seminars.
Harmonisation is not without a considerable number of challenges and hurdles, not least the need to seek legal advice on minimum statutory protections in particular regions, and advice on whether or not the implementation of universal policies will trigger information and consultation obligations with the employees. However, with a thorough analysis of the legal and practical issues, and an understanding of customs in each jurisdiction, the harmonisation of employment practices can drive efficiency, flexibility and consistency within a business. It can also be a good way for an employer to showcase its ethical considerations from a PR perspective.
In an international world, where employees want the best employees globally, the issues considered in this article become more and more relevant. The key to the success of harmonising employment policies is to consider these issues at the outset of a project.