Compliance with international labor and employment issues has become a concern for more organizations because each country in which they operate has its own labor laws. If organizations want to remain compliant, those laws must be taken seriously and followed.
The laws and regulations in different countries may change quickly; this is one of the main challenges related to compliance. As a company in any given market, it’s your organization’s responsibility to stay up-to-date and comply with that market’s laws. Globally, organizations and their executives need to be constantly updated regarding new legal developments and rulings, especially as organizations expand into new territories.
Because of this complexity, organizations that are expanding globally need to direct more resources toward labor law compliance. They can help moderate risk by investing in skilled compliance professionals, who can help institute a sound compliance program.
For example, in the European Union, the Working Time Directive requires EU countries to guarantee an average 48-hour limit to weekly working hours including overtime, and paid annual leave of at least four weeks annually, with special rules on working hours in a limited number of sectors, including doctors in training, offshore workers, sea fishing workers and people working in urban passenger transport. In addition, individual EU countries are free to provide higher levels of protection if they so wish. Compliance professionals can ensure that your organization is current and legal.
In another example, Brazil has enacted new amendments to their labor laws impacting employer-employee relations while including topics such as collective bargaining, severance pay, vacation hours and pay, and tax treatment of medical insurance contributions and travel allowances. For instance, the new amendments make payment of union tax optional for employers, and 30 days of vacation time can be divided into three periods, at most, provided one of the periods is at least 15 days long.
Regardless of which countries they’re working in, organizations must manage dozens of complicated regulations, which can be difficult to track when you’re writing contracts and taking care of the hundreds of other details involved in setting up a new office.
The global compliance market is in constant motion. Help your organization stay nimble by using tools to help keep you current, efficient, productive and compliant.
Penalties for Non-Compliance
Complying with the employment laws of the country in which your organization has or is establishing an office is critical. Organizations risk significant fines, and damage to their reputation, among other fallout, if they do not comply.
The risks of non-compliance for a foreign employer include the potential for penalties and fines where local employment laws are violated. Further, employers could find face legal actions in host countries to address from disgruntled employees, who might make claims for statutory severance or compensation. In the UAE, termination without cause can result in payment of damages to the employee, up to an amount equal to three months’ salary.
Another example: Australia’s Fair Work system regulates several key areas of the employment relationship strictly. The country’s Fair Work law website was established to help ensure compliance with workplace laws. [4] Significant fines for noncompliance can be imposed. Starting in 2018, employers who do not follow federal guidelines for employee superannuation (pension) entitlements are subject to court-ordered financial penalties as well as up to 12 months’ imprisonment.
And another: In 2016, the Brazilian unit of McDonald’s was fined $30 million for violating labor laws. The violations included using a rotating hours system, which is illegal in Brazil. McDonald’s also had failed to provide employee work breaks and to comply with overtime labor laws.
Think about the damage control that follows any one of these incidents or even incidents that are considerably smaller. Your organization can face a global public relations disaster—remember, we are living in the age of social media and viral sharing. It’s also generally understood that a “bad news” story has a more longstanding presence than the solutions taken to fix the implications of that story – people remember what was broken, not how it was fixed. In the case of one of these incidents, your organization can feel the impacts, such as a reduced hiring pool, for years.
Organizations may also experience being protected by local governments; labor measures in China, put into effect in 2017, publicly shames companies that are non-compliant. Employers who do not meet compliance regulations have their names published along with announcements on federal government websites and in mass media in the employers’ regional markets.
If you find yourself concerned about global compliance on behalf of your employer, help is but a click away!