In this era of internationally aligned business operations, multinationals roll out cross-border human resources policies, global codes of conduct and international benefits offerings. But launching these cross-border initiatives can be a complex process. Here we break out the steps for rolling out a global rule, code or benefits offering, such as, for example: ■■ International stand-alone HR policies on topics like discrimination, harassment, bullying, social media, BYOD, email monitoring, anti-bribery, smoking and drug/alcohol use ■■ Global codes of business conduct, codes of ethics, work rules and international employee handbooks ■■ International safety protocols on disaster response, pandemics and cardinal safety rules ■■ Cross-border one-time workforce orders like litigation holds, crisis communications and reduction-in-force communications ■■ Global and regional benefits and compensation offerings like global equity plans, regional sales commission plans, cross-border bonus plans, international tuition reimbursement plans, cross-border adoption expense reimbursement plans, global severance pay plans and expatriate benefit plans A multinational headquarters launching any of these cross-border workplace initiatives tends to focus chiefly on content. In essence, headquarters asks: What should the text of our new cross-border policy, code, rule or plan say? But drafting a global document’s text merely gets these projects started. As soon as headquarters crafts workable language for its latest cross-border code, policy or plan document, the project should shift to answering an entirely separate, often more complex question: How are we going to launch this document and impose it on our staff overseas? That is, while “phase one” of any global code of conduct, HR policy or benefits plan project is indeed drafting the document, “phase two”—the often overlooked but tougher phase— needs to be implementing the cross-border initiative by effectively imposing it on affiliate employees worldwide. Too many cross-border workplace initiatives gloss over this vital second phase. With draft text for your latest international code of conduct, HR policy or benefits plan in hand, consider taking these nine steps for launching and implementing a new headquarters initiative across workplaces worldwide.
Step 1: Number of versions A multinational rolling out a new cross-border code of conduct, HR policy or benefits plan should decide whether to issue one single global document worldwide, whether to bifurcate a headquarters version from a “rest-of-the-world” version, or whether to spin off distinct local versions or riders for each relevant country. These three approaches differ significantly. None works best every time. Selecting the most appropriate of the three approaches depends in part on the global initiative topic: Topics like ethics, insider trading and bribery lend themselves to a single global version. Topics like discrimination and harassment can be more appropriate for a bifurcated US headquarters plus “rest‑of‑the-world” version. Inherently local topics like holidays, vacation and overtime are most appropriate for local country‑by‑country versions or riders. Single global version Sticking with just one single global code, HR policy or benefits plan document offers a multinational a streamlined and uniform global approach. Using one global version is always simplest and best promotes cross-border alignment. Therefore the single‑version approach is usually the default; indeed, multinationals sometimes claim they need just one global document, to impose a uniform global rule, to streamline employee communications and to promote global unity. But sometimes a single global document is not ideal. Rules, provisions and benefits appropriate for headquarters employees sometimes need tweaking or reworking abroad. For example: ■■ An anti-harassment policy that ties the harassment prohibition to US protected group status is too narrow for jurisdictions that prohibit so-called “moral harassment,” “bullying,” “mobbing” or “psycho-social harassment.” (See our Global HR Hot Topic of March 2013) ■■ A detailed “use it or lose it” vacation policy or overtime pay policy cannot work internationally without local modifications, because of differences among local laws. ■■ A severance plan, equity plan or other employee benefits plan may be unworkable internationally unless modified locally to account for local employment, benefits, securities and tax laws. For example, clawback provisions in plan documents are particularly susceptible to local interpretations. Bifurcated headquarters versus rest-of-the-world versions US multinationals often decide to launch a US domestic code of conduct, HR policy or benefits plan plus a separate “rest‑of‑the‑world” version for their overseas employees. The bifurcated two-version approach lets the multinational account for issues from a non-US perspective without watering down nuances unique to the US employment-at-will environment. This approach is ideal for topics like diversity and reduction‑in‑force selection, where US principles differ intrinsically from best practices abroad. The bifurcated two-version approach is common among multinationals that have most of their workforce stateside, with only smaller employee populations spread out abroad. Local versions or riders Every country’s employment laws are different. The most compliant way to impose any global workforce initiative across more than one country is to tweak the documentation locally, tailoring for each jurisdiction a version or rider that accounts for local nuances. Coming up with local versions/riders can get unwieldy, expensive and slow, and can weaken the unifying character of a single global document. But accounting for local differences is always a best practice. Highlighting this, a recent Australian case struck down a US multinational’s otherwise-robust global sex harassment policy because it glossed over a few Australia-specific nuances and “made no reference to the legislative foundation in Australia for the prohibition on sexual harassment.” (Richardson v. Oracle Corp. Aust. Pty. Ltd, 2013 FCA 102, at ¶¶ 161-64) The only way the multinational in that case could have issued an Australia-compliant sex harassment policy would have been to issue a local Australian version or rider. Step 2: Non-conforming documents Never issue a new or revised international code of conduct, HR policy or benefits plan by imposing it “on high” from headquarters, “damn the torpedoes,” heedless of existing earlier versions. Always start by repealing or aligning all existing HR documents now in place. This step implicates three sub-issues: Repeal obsolete cross-border offerings; align local HR policies; and harmonize formal work rules. Repeal obsolete cross-border offerings A multinational that issues a revised or updated international code of conduct, HR policy or benefits plan needs to repeal all earlier versions floating around. Too often headquarters slaps its latest initiative onto its intranet without bothering to dig out and eradicate each extant now-obsolete version. Later, some hapless foreign employee stumbles across an old version and assumes it still controls. Or worse, some clever employee threatened with discipline for breaching the new policy (or held to less-generous terms under a new benefits plan) exploits the organization’s sloppiness and insists the looser, earlier version still controls.
Align local HR policies A more complex scenario is reconciling a new cross-border code of conduct, HR policy or benefits plan with existing, stillin- force—but inconsistent—local offerings. Global headquarters initiatives often contain provisions that clash with existing local HR communications on related topics. For example, a global code of conduct may address discrimination, harassment, conflicts of interest, expense reimbursement, business gifts, on-job smoking and alcohol in ways inconsistent with local affiliate protocols on similar topics. Or else a global severance pay plan may not align with severance pay clauses in overseas employment agreement forms. Even absent a head-on conflict, any global rule or offering that overlaps with local HR policies probably uses language inconsistent in some respects. Failing to harmonize a global initiative with local offerings can cause real problems. Think of a local employee who commits some act that, while compliant with an on-point local policy, violates a stricter headquarters code or rule. The employer will argue the newer headquarters policy trumps the local subsidiary’s laxer local policy, but local employees, local managers and even local judges may favor the looser local rule over the tougher, more distant headquarters edict—especially if the local rule is in the local language while the headquarters rule is in English (and even if the global document has a boilerplate clause saying that, in case of conflict with another policy, the “standard that requires the higher degree of ethical conduct controls”). In every affected jurisdiction, repeal or reconcile dissonant local HR policies or offerings. Align them with the new cross-border code, policy or plan. This can be a big job, but failing to do it gives locals leverage to flout headquarters edicts. Harmonize formal work rules Jurisdictions including Belgium, Chile, Colombia, France, Greece, Japan, Korea, Poland and Slovakia force local employers to issue formal work rules or so-called “internal work regulations” that list every infraction for which the boss can impose discipline. (In some jurisdictions this mandate reaches only workforces exceeding a minimum size—ten employees in Japan, for example.) The policy behind these work rules laws is workplace due process analogous to the American criminal procedure ban on ex post facto laws: Employers should not be allowed to discipline staff for acts the employer never previously prohibited. These formal work rules mandates amount to a real hurdle when US headquarters launches a cross-border code of conduct or HR policy. Imagine this hypothetical scenario: A multinational’s Tokyo affiliate has issued its Japanese work rules, which contain, say, 23 specific grounds for discipline. But none of the 23 grounds happens to mention bribery. Then US headquarters issues a tough global FCPA policy. Next, some ambitious Japanese “salaryman” entertains a Japanese government minister in a way that violates the FCPA policy but not the work rules. If the employer disciplines or fires the salaryman, he will argue discipline is illegal because none of the 23 posted grounds for discipline apply. A Japanese court will likely agree, even reinstating the salaryman with back pay. Actively amend local work rules to accommodate (or incorporate by reference) global headquarters mandates. Step 3: Dual employer Multinationals’ overseas staff typically work on the payroll of locally incorporated subsidiary affiliates. From the point of view of an employee working for an overseas subsidiary, headquarters is merely the employer stockholder, not the employer of record. When a headquarters entity imposes some new code of conduct, HR policy or benefits plan directly on employees of foreign affiliates, it triggers a significant but often-overlooked “dualemployer” challenge: How can a parent corporation impose work rules that order around people (staff of local foreign affiliates) whom it does not employ? As to a global benefits plan, how can headquarters compensate people it does not employ? If a parent corporation presumes to impose rules on (or pay benefits to) subsidiary staff it does not directly employ and with whom it has no privity of contract, then the headquarters entity risks being deemed a dual-/co-/joint-employer also liable (along with the subsidiary) for employment claims. This dual -co-jointemployer scenario raises three problems: ■■ Permanent establishment and headquarters co-defendant: The first dual-employer problem is that when a corporate parent imposes some cross-border human resources code or policy directly on staff working for subsidiary entities (or pays benefits to foreigners abroad), headquarters arguably starts transacting business in the foreign jurisdiction. This scenario risks triggering a local “permanent establishment” subject to corporate registration and tax-filing obligations. (See our Global HR Hot Topic of October 2013) Another risk is that employees asserting claims in local employment litigation against the local subsidiary might also sue the headquarters parent as a co-defendant. Certainly it can work this way stateside. (Brown v. Daiken America, _F.3d_ (2d Cir. 2014) (Japanese parent corporation held “single integrated enterprise with its American subsidiary to be properly named as a co-defendant” in employment litigation)) ■■ Void rule: The second dual-employer problem is that some jurisdictions will reject or nullify a workplace code, policy or plan unless the local employer took the steps necessary under local corporate law to impose it on local staff. A headquarters work rule not ratified locally may be unenforceable. For example, Russia requires that the “management body” (board of directors) of a local Russian employer entity formally approve and implement workplace policies.
Impotent rule: The third dual employer problem is the scenario of a clever overseas employee raising the “my non-compliance is your problem” argument. An employee disciplined for violating a headquarters-issued work rule argues the rule is powerless and does not reach him because his boss, the local employer affiliate, never implemented it. In essence he argues: That rule came from the shareholder of my employer. My employer never imposed it on me, so you can’t discipline me for violating it. Following that rule is not my responsibility. My non-compliance is your problem, not mine. Fortunately there is a simple way to resolve these dual-employer problems: Headquarters imposes all cross-border codes of conduct, all international HR polices and certain global and regional benefits plans on foreign affiliate entities rather than on overseas staff directly. Each affiliate entity, in turn, duly ratifies the global initiative and imposes it directly on its own staff. A related issue is imposing a code of conduct or rule on contractors. The texts of multinationals’ global codes and rules often purport to reach contractors and business partners—but of course third parties need not follow rules unless they expressly agreed to follow them contractually. Where appropriate (and where consistent with contractor classification), include a code‑compliance or rule‑compliance clause in contracts with business partners. Step 4: Collective consultation In many jurisdictions abroad, employee representatives are common—works councils, trade union “cells,” health and safety committees, employee advocates, employee delegations, worker ombudsmen and the like. Labor laws from Europe to China and beyond impose a consultation requirement analogous to the US labor union concept of “mandatory subject of bargaining”: An employer cannot add or change certain workplace rules until it sits down and discusses, negotiates or “informs and consults” (in Germany, “co-determines”) the proposed changes with employee representatives. This consultation or bargaining step can easily reach new codes of conduct, HR policies and benefits plans. Unionized American bosses understand exactly how this works, because US labor law requires employers to bargain over an HR policy change as benign as a new dress code. (Salem Hospital Corp., 360 NLRB No. 95 (2014)) Overseas, countries like China, France and Germany regularly nullify HR policies and codes that the employer unilaterally implemented in violation of this vital obligation. (See Hou case, Beijing Intermediate People’s Ct. no. 4, 11/26/09 (employer’s unilateral change in handbook void because employees never consulted over the change)) A multinational launching some new international code of conduct, HR policy or benefits plan needs to slow down and first involve its own overseas management-side labor liaisons (the team that bargains with worker representatives on behalf of management). Give your management-side labor liaisons a “heads-up” about the incoming cross-border initiative. Discuss with them local employee-representative consultation strategy and timing. Then take whatever steps are necessary to comply with local employee consultation obligations. Step 5: Translation Many American organizations consider English to be their official company language and assume their subsidiary employees worldwide are fluent. Many organizations issue global codes of conduct, HR policies and benefits plans in English only, sometimes posting an English-only version on the company intranet. But before headquarters issues some new HR document meant to apply abroad, it should consider translation requirements and strategy. In Belgium, Chile, France, Iraq, Mongolia, Portugal, Quebec, Turkey, Venezuela, much of Central America and elsewhere, local laws require that work rules or “obligations,” including mandates imbedded in a cross-border HR code, policy or plan, be communicated in the local language. In these jurisdictions English-language policies are not only unenforceable, they can be flatly illegal. One multinational once got fined €500,000 plus €20,000 per day because it distributed English-language HR documents to French staff in violation of the Loi Toubon French language law. Even in jurisdictions that do not impose locallanguage mandates, courts may prove reluctant to enforce Englishlanguage HR policies. Translations always buttress enforceability. (See our Global HR Hot Topic for November 2011) Step 6: Communication, distribution and acknowledgement A multinational cannot quietly slip a new code of conduct, HR policy or benefits plan onto its intranet and expect affiliate employees worldwide to find it, read it, understand it, and comply with it. Develop a proactive strategy for communicating and distributing any cross‑border HR document to overseas staff in a way that requires them to comply. Remember: If some overseas employee later disciplined for a violation claims ignorance of the headquarters initiative, the employer bears the burden to prove it had implemented and communicated the global rule. To ensure a new international code, policy or plan binds foreign staff, be ready to prove each foreign employee actually received the documents, and (ideally) agreed to comply. In addition, local law and best practices in jurisdictions from Austria to Czech Republic to Finland and beyond all but require employee-signed acknowledgements when an employer changes or adds new workplace rules. Also, many American multinationals believe the US Foreign Corrupt Practices Act, US Sarbanes- Oxley, US Dodd-Frank and US federal sentencing guidelines require that American organizations be able to demonstrate they communicated compliance policies to overseas employees. Further, some countries look to whether a workplace code, policy, rule or benefit is “contractual.” Those systems (which include common law countries outside the US such as Australia, Canada, England and Ireland as well as certain civil law jurisdictions like Belgium, Germany, Norway) elevate at least some workplace policies to the level of employment contracts and require that any new “contractual” policy integrate into employees’ written work contracts. Executing “contractual” policies in these jurisdictions usually requires employee signatures or assents. In effect, the policies become amendments to earlier-executed individual employment contracts. For these reasons, multinational headquarters often decides to collect acknowledgements or consents from affiliate employees worldwide. Each employee signs onto the organization’s new global code of conduct, HR policy or benefits plan. Staff signs (or electronically mouse-clicks) acknowledgements saying they received and read the new initiative and agree to comply. At first this strategy sounds logical, but collecting signed employee acknowledgements from staff across borders raises four serious logistical challenges: ■■ Presumptive coercion: Courts in parts of Continental Europe and beyond hold employee-signed acknowledgments void as presumptively coerced, because of the inherent inequality of bargaining power between an employer and staff—almost like a contract with a minor or someone mentally disabled (What choice does a worker have when his boss instructs him to sign a consent?) In these jurisdictions, signed staff acknowledgements might be worthless because they are presumed void. ■■ Presumptive employment contract: As mentioned, some jurisdictions treat an employee’s signed acknowledgement as an amendment to the employment agreement. In these countries, properly executed acknowledgements may indeed make a code, HR policy or benefits plan enforceable as “contractual.” But casually-signed or electronically mouseclicked acknowledgements may prove unenforceable under local law to the extent they fall short of local employmentcontract- execution strictures. (See our Global HR Hot Topic of Jan. 2014) Where an employee acknowledgement amounts to a “contractual” amendment, draft and execute it as a full-blown contractual amendment. An online click (“I agree”) is almost always insufficient. ■■ Non-signers: A 100% return rate on employee code/policy/ plan acknowledgements is all but impossible across big global employee populations. Local foreign staff may prove skeptical, sometimes even hostile, to new cross-border headquarters initiatives. Some employees will openly refuse to sign acknowledgements while others will passive-aggressively neglect to return them even after repeated reminders from local HR staff. Indeed, hapless foreign HR staff may be all but powerless to force locals to sign or click “I accept,” especially where local HR teams feel intimidated pestering superiors. Remember that local HR has little leverage: Away from US employment-at-will, there is no good cause to discipline staff for refusing or neglecting to acknowledge something. (See Hou case, supra, Beijing Intermediate People’s Ct. no. 4, 11/26/09 (reinstating chief guard fired for refusing to sign acknowledgement consenting to a changed handbook)) Non-signers of a headquarters code, policy or plan acknowledgement raise a serious “Achilles’ heel” problem: A non-signer who later violates the rule can argue he was exempt precisely because he never signed. Brandishing his co-workers’ signed (or computer-clicked) acknowledgements in his own favor, the scofflaw non-signer declares the cross‑border HR initiative reaches only those of his colleagues who agreed to follow it. At that point the multinational realizes, too late, that it would have been better off not collecting any signed acknowledgements in the first place. Before embarking on an effort to collect staff acknowledgements to some new cross-border code, policy or plan, first devise a viable strategy for handling non-signers. ■■ Proof problems: In-house human resources teams have unimpressive records retaining and tracking employee acknowledgements over time. Years after staff across far-flung offices were thought to have signed or mouse-click-accepted some company code, policy or plan acknowledgement, it can prove maddeningly difficult for HR to dig out that one specific acknowledgement of that one particular employee who now needs to be punished for violating a provision he claims he never saw. HR is sure the scofflaw executed an acknowledgement, but where is it? A second proof problem is that new hires who “onboard” after a cross-border code or HR policy launch may never get asked to sign acknowledgements. A third proof problem is that mouse-click acknowledgements are notoriously tough to verify after the fact, when a dispute later goes to court. Meeting the employer’s burden to prove a given employee actually clicked “I accept” can be all but impossible years later, under inflexible and antiquated local evidence rules in foreign courts with uncertain electronic signature proof requirements.
Before embarking on any initiative to collect acknowledgements from employees across borders, first work up a fool-proof plan for storing the acknowledgements in a way that they are readily accessible and admissible in court, years later. Because overseas employee acknowledgements implicate these four tough logistical challenges, always think carefully before deciding to ask local staff worldwide to execute code/policy/ plan acknowledgements. Consider alternatives. One alternative is to get collective buy-in from employee representatives, not individual employee buy-in. Another alternative is for local HR representatives personally to distribute the new cross-border document, or for HR to hand it out during training sessions; then HR representatives themselves sign forms or log sheets recording the date and circumstances by which each employee received and got trained on the new initiative. Yet another alternative is to time acknowledgements to coincide with some discretionary bonus payment, stock award or pay raise. Distribute the bonus, award or raise only in exchange for a singed acknowledgement. Step 7: Government filings Publicly traded American companies regularly file their codes of conduct, insider trading policies, whistleblower hotline policies and stock option plans with a US federal government agency—the SEC. Obligations to file HR documents with government agencies also exist overseas, but American organizations tend to chafe at foreign government filing mandates for HR documents. Filing or registering certain HR codes, policies or plans with foreign government agencies, while cumbersome, may be necessary to make the document effective locally. For example, French employers must file codes of conduct with France’s Labor Inspectorate or a French labor court. Chilean employers must file any HR policy inconsistent with company work rules (Reglamentos Internos de Orden, Higiene y Seguridad) with the Chilean Labor Board or Ministry of Health. And data protection authorities across much of Europe require employers to disclose or file internal HR policies and systems that “process” employee data (human resources information systems, whistleblower hotlines and the like). Be sure to make necessary filings. Step 8: Vested rights In discussing steps for launching a new international code of conduct, HR policy or benefits plan, we have assumed the headquarters initiative is neutral to employees, or at least does not materially cut pay or terms/conditions of employment. But sometimes a new headquarters code, policy or plan does materially reduce employment packages of at least some staff. And sometimes a new headquarters initiative is susceptible to an argument that it materially restricts the workplace environment. Where a new global initiative materially cuts existing terms or conditions of employment abroad, the employer must account for vital additional steps to address the infringement on staff’s “vested rights.” Outside employment-at-will, all employees enjoy vested rights in their current terms/conditions of employment, and bosses cannot necessarily abrogate these rights unilaterally. We discuss the issues here in our Global HR Hot Topic of December 2013: “How to Cut (or ‘Restructure’) Employment Terms, Work Hours, Benefits and Pay Outside the United States.” Step 9: Backstopping The above eight steps for launching a new international code of conduct, HR policy or benefits plan address what to do before the initiative “goes live.” But many cross-border initiatives that multinationals consider already in place today originally got rolled out without the employer scrupulously accounting for these eight steps. This leaves many existing multinational codes, rules, policies and plans vulnerable to challenge—findings of unenforceability or nullity. A best practice for a multinational that failed properly to implement its current package of cross-border codes of conduct, work rules, HR policies and international benefits offerings is to “backstop”— go back and correct past oversights in implementation.