Firing an employee in the United States can be a challenge. Group firings—reductions in-force — can be an even bigger challenge. And from the point of view of a multinational headquartered in the United States, overseas individual dismissals and “collective redundancies” can be an intractable challenge.
We often hear the point that “[u]nlike many other…countries, the default presumption in the United States is that employment is ‘at will,’ meaning an employer or employee can terminate the employment relationship for any reason or no reason at all.” The other side of this coin is that when an American employer emerges from its at-will cocoon and ventures out abroad, staff dismissals become more rigid and less hospitable. Yes, the United States imposes plenty of federal and state laws that regulate certain aspects of a domestic US dismissal— anti-discrimination laws, anti-retaliation laws, whistleblower protections, the WARN Act, unemployment compensation mandates. But outside the United States, countries regulate firings much more comprehensively, either by prohibiting no-cause dismissals entirely or by imposing expensive notice and severance pay obligations and pre-dismissal procedural steps. Restrictions of this nature exist more or less worldwide, in rich civil law jurisdictions like Continental Europe and Japan, in common law jurisdictions like Australia, Canada and England, as well as in developing countries like Chad, Indonesia and Paraguay. To draw a loose analogy we might think of a US at-will employee dismissal as analogous to the end of a business relationship, when a customer or client stops using a preferred provider. By contrast, a firing overseas looks more like a divorce. Even amicable divorces can be slow, complex and drawn out. Contested divorces can become interminable, expensive and ugly.
This is a primer on how a US- headquartered multinational employer can conduct either a one-off overseas individual employment dismissal or a full-blown global reduction-in force. Our discussion breaks into five parts:
(1) general approach to dismissing staff outside the United States
(2) threshold dismissal circumstances (cause, economic necessity, employee rank and status) outside the United States
(3) individual employment dismissal obligations outside the United States
(4) agreed separations and employment releases outside the United States
(5) reductions-in-force and “collective redundancies” outside the United States
This reprints a chapter from Global Labor & Employment Law: Reports from Law Offices Worldwide, Oxford Univ. Press 2014 (S. Estreicher, M. Gray, J. Hirsch, eds.)
Please see full chapter below for more information.