Challenge:

Employee handbooks can be vital communication tools for US employers, but are not necessarily as useful internationally.

Most every major American employer has issued an employee handbook telling US staff how its workplace works. In addition to listing disciplinary rules, these “handbooks” —which increasingly exist electronically on an organization’s intranet—summarize a wide range of day-to-day terms and conditions of employment. They cover topics as varied as, for example: office hours/work time/overtime, pay period, paid time off (absences, sickness policy, vacation, holidays), leave, benefits/health care/insurance, safety, security, dress code, smoking, expense reimbursement, moonlighting, access to employee e-mails/Internet, confidentiality, “social networking,” co-worker dating, anti-nepotism in hiring, “bounties” for recruiting new employees, discounts at local merchants, dispute resolution, and other subjects. Well-drafted US handbooks include a conspicuous “employment-at-will disclaimer” saying the document is not an employment contract and reserving the employer’s right unilaterally to change or revoke human resources policies at any time.

With employee handbooks so vital stateside, a US employer venturing abroad might assume they are equally important internationally. Indeed, beyond the business case for handbooks in the US, a multinational might have additional reasons to issue handbooks overseas: International handbooks could help align a multinational’s far-flung HR operations across borders, and could serve as a sort of cross-operational inventory of employee benefits, practices, rules and offerings.

Perhaps surprisingly, though, in most (but not all) overseas jurisdictions, local home-grown employers tend not to issue employee handbooks. In some countries a detailed US-style handbook is actually risky. Yet without a handbook, a US employer can feel helpless, with no way to communicate basic workplace benefits, practices, rules and offerings. A multinational contemplating international handbooks therefore needs some strategy, and any international handbook strategy should account for four issues: Employment-at-will; the myth of the single global employee handbook; aligning local-jurisdiction handbooks; and alternatives to employee handbooks outside the US. We examine each.

Pointer:

Employment laws and practices in many jurisdictions outside the US raise hurdles to US-style employee handbooks. Develop any international handbook strategy carefully.

  1. Employment-at-will

US employment-at-will contrasts starkly with the more regulated “indefinite employment” regimes of the rest of the world, and the difference is vital to international employee handbook strategy. Employment-at-will leaves unregulated basic aspects of the employment relationship that, abroad, tend to fall under local statutes (topics like vested/acquired rights, holidays, vacation, sick leave, capped hours, bonuses, notice before individual employment termination, severance pay). In addition, at-will employers tend to be reluctant to give rank-and-file workers detailed written contracts guaranteeing specific terms and conditions, even though elsewhere, binding work contracts and “statements of employment particulars” tend to be common, even legally mandated (and tend to cover topics like pay rate, benefits, bonus scheme, office location, work schedule).

With so many human resources topics in the US left both unregulated and uncontracted-for, American employers end up applying divergent practices, particularly across industries. A US bank, insurance company, or professional services firm might offer employees bonuses, sick leave, maternity leave, vacations, holidays, and severance pay, but a US restaurant, retailer, or hotel might offer none of these, at least not fully paid. A newly hired US worker starts a job ignorant of the new employer’s benefits, practices, rules, and offerings. American employers therefore offer detailed handbooks, not only to communicate how they address these topics, but also to streamline “onboarding”/orientation and to insulate human resources staff from repetitive questions.

Outside the US, though, all this plays out differently. Local employment laws and work contracts—be they individual employment agreements, individual “statements of employment particulars,” works council agreements, collective “enterprise level” trade union agreements, or collective “sectoral”/industry-wide union agreements—tend to dictate many of the same terms/conditions of employment discussed in US employee handbooks. Outside the US, in theory, a new hire arrives at a job already understanding employer offerings dictated by statute and spelled out in employment agreements. A detailed employee handbook could therefore be redundant—or, at least, would play a less central role as a communication piece. Additionally, whatever a handbook outside the US might say about some term/condition of employment controlled by statute or contractual provision risks introducing contradictions or inconsistencies, unless the handbook clause parrots the text of the applicable statute or contract precisely.

  • Exceptions.This explains why detailed employee handbooks are uncommon among local employers in much of the world. But there are exceptions—jurisdictions where handbooks can be common and helpful employer tools. In China, for example, a handbook can help comply with the 2008 Employment Contract Law. Handbooks are also fairly common in certain common law jurisdictions, such as Canadian provinces like Ontario with conditions somewhat similar to the US.

Another problem with issuing employee handbooks outside the US is that well-drafted American handbooks contain prominent “employment-at-will disclaimers” reserving the employer’s right to change or revoke handbook provisions at any time (even without employee consent) and saying the handbook is not a binding contract. Not surprisingly, employment-at-will disclaimers are not necessarily enforceable outside employment-at-will. Elsewhere, under the “vested rights” doctrine, even a handbook with a disclaimer can lock an employer into benefits, practices, rules and offerings—in theory forever.

  • Example. For example, countries outside the US tend to require employers to grant national holidays as paid days off. Korea used to grant “Constitution Day,” but at one point delisted that particular holiday—whereupon Korean employers immediately stopped granting it as a day off. But Korea branches of US-based employers that had previously issued employee handbooks with a “Company Holidays” provision had a problem: They were stuck with a quasi-contractual obligation to grant Constitution Day because the handbook grant had become a vested right, impossible to remove absent employee consent.
  1. The myth of the single global handbook

Notwithstanding these challenges, some multinationals have strong reasons to issue employee handbooks internationally. Taking a global approach to handbooks raises a threshold question: Can one single global handbook apply across workforces worldwide, without local amendments or riders? Or is a series of aligned but locally tailored documents—local handbooks or local addenda/riders to a master handbook—necessary, one per jurisdiction where the multinational employs people?

The answer is simple: The latter. As distinct from a global code of conduct, there is no such thing as a single global employee handbook (without local riders or addenda) that dictates detailed terms and conditions of employment across jurisdictions. This is for the simple reason that employee handbooks focus on workaday topics that necessarily differ across jurisdictions. Consider the basic example of holidays: The Fourth of July will be a day off only in the US, the fourteenth of July (Bastille Day) will be off only in France, and the fifth of May (Cinco de Mayo) only in Mexico. A single handbook’s “Company Holidays” provision cannot possibly apply internationally unless it lists every holiday everywhere. Inevitably, tailored provisions will also be necessary to address all other inherently local topics, from vacation, office hours and overtime to pay period, benefits, site-specific security procedures—even smoking policy.

This discussion concludes with our next Global HR Hot Topic, May 2011.