As 2015 approaches, in-house Legal and HR professionals with growing international workforces tend to look for uniform branding and consistent approaches to global workforce management. One vehicle to achieves these goals is through company employment policies. This can seem challenging given local legal differences and varying cultural expectations.
As such, companies are faced with questions such as - should we develop a single, broad policy to cover our entire global operations in a consistent and predictable manner, or should we develop local policies, implemented according to local laws by the local employer? Or, is there something in between? Although there is no single answer to these questions, there are recognized and tested approaches based on a company’s growth needs, global footprint and workforce profile.
Three Approaches to International Policies
Generally the key approaches to drafting company employee policies for an international workforce fall into three categories: (1) Global Policy; (2) Local Policy; or (3) Hybrid Approaches, each of which has advantages and disadvantages depending on the type of policy and its implementation requirements.
- Global Policy
A single global policy that applies to a company’s entire U.S. and international workforce is the most efficient approach and ensures the greatest amount of drafting consistency. A common trade off, however, is a limited ability to actually enforce it against employees outside the U.S. This is because, to avoid offending local laws, the policy must be relatively general and include phrases such as “to the extent permitted by applicable law.” This leaves a question as to what the law actually is and how a local court will interpret the law to be.
Additionally, in seeking uniformity, a single global policy that is not properly drafted could actually extend U.S. protections to non-U.S. employees that would not otherwise apply. For example, an overly U.S.-centric global employee handbook or work rules may extend Title VII protections against discrimination or harassment based on categories such as gender or sexual orientation that are protected under U.S. federal and state laws, but not in other jurisdictions. In some cases, local law may actually require discrimination, such as in a reduction in force in many countries, where employers often need to consider employees’ national origins, ages, disabilities, when making the required “social selection”.
As such, there are only a few topics that can (and in fact should) be properly addressed in a global policy, such as an equity plan and a code of ethics and business conduct.
- Local Policy
The local policy applies only to the workforce in one jurisdiction, and can offer a company the greatest possible protection under local law while achieving consistency with cultural norms and expectations. For some U.S. multinationals, however, the management of numerous local policies combined with the concern of losing a uniform global identity discourages this approach.
Despite these concerns, in some cases fully localized policies are strongly recommended. Employee handbooks, for example, include a collection of topics that are strictly governed by local laws (e.g., working hours, leaves of absence, time off, IT monitoring and use, etc.). These types of policies must recognize local legal requirements.
- Hybrid Approaches
In an effort to obtain both the uniformity of a global single policy and the jurisdictional compliance of a local policy, companies often invent various middle-of-the-road approaches. The two most common hybrid approaches are: (1) regional policies (for APAC, EMEA, etc.), and (2) a modified U.S. policy with country-specific addenda.
Regional policies can be used for certain topics in areas where there are common rules across a region, such as a properly drafted anti-harassment policy. For other topics, however, even where there is regional regulation, local laws implement the regulation so differently that a regional policy will have the same consequences as a global policy. For example, although the EU working-time directive sets a maximum working week of 48 hours, countries like France still limit the workweek to 35 hours, whereas the U.K. allows employees to opt out of the 48 hour limit by separate agreement.
An alternative hybrid approach, is drafting locally complaint amendments to a U.S. parent company policy. This creates the appearance of a global policy while satisfying local requirements.
Practically speaking, however, it can be complex and even confusing for employees who have to review both the U.S. policy and the local supplement to understand what rules apply to him/her directly.
Once the company adopts an approach and drafts the policy, the next step is to ensure that it is properly implemented. Regardless of the approach, if a policy is not rolled out according to local requirements, the policy can become a nullity, in which case the company cannot rely on the terms of the policy, or even create liability. What is required for proper implementation varies by country, but may include translation (e.g., France and Russia), adoption by the local board, notification or consultation with works councils (e.g., Germany) or employee representative bodies (e.g., the democratic process in China), filings with labor authorities (e.g., for internal regulations in France, for work rules in Japan), proper distribution (electronic or hardcopy) to employees, and collection of acknowledgements or consents.
Whether to adopt a single global policy, local policies or a hybrid approach to employment policies depends most importantly on the type of policy, the jurisdictions where it will be implemented, and the company’s philosophy, values and risk tolerance for deviation from local law. Often, the first step in this process is to engage in advanced planning and discuss the various approaches with counsel.
If the right approach is selected and carefully managed, employment policies can be an invaluable tool to protect the company, respond to employee questions, guide local HR teams and globalize the company’s values and mission.