Epstein Becker & Green

The COVID-19 pandemic has altered the international workplace and international employee-employer relations in profound ways.  As employees now work from home in significant numbers around the globe, multinational companies have suddenly been confronted with managing issues they may not have previously prioritized. Matters such as outfitting employees’ homes with the necessary technology to stay connected with clients and coworkers, and ensuring that employees receive sufficient ergonomics support and training to maintain a safe and healthy home office space, now are part of the “new normal” to sustain both employers and employees’ efficiencies and morale.  These issues are especially challenging for multinational companies that might wish to implement uniform global policies and practices, but that may be prevented from doing so by the varying protocols and guidance of the different countries in which they operate.

In addition to taking steps to maintain business continuity as citizens worldwide are being asked or ordered to “shelter in place,” many companies are exploring measures to avoid layoffs and mitigate economic insecurity during this crisis.  Options may include, for example, requiring employees to use accrued, unused paid leave; salary reductions; deferring salary increases, bonuses, and/or equity awards; and furloughs.  In many countries, however, actions such as these cannot be undertaken without employee consent and consultation with employee representatives or works councils; further, they may bring with them risks of constructive or wrongful dismissal with the associated damages.  And, as a last resort, many employers may find it necessary to consider permanent layoffs, which are highly regulated outside the United States, and which often require notice and/or severance, consultation with employees and works councils, and government notifications and/or social plans.

Like domestic businesses, multinational employers may consider several different approaches to address the economic impact of the COVID-19 epidemic. Global companies, however, also must consider the different ways that each option would have to be implemented in the various countries in which they do business.   Multinational employers, for example, are more likely to need to review and analyze any collective bargaining agreements that may be in effect – and which may apply by industry or position – and to follow mandatory procedures with respect to affected workers.

Although country-specific statutory and regulatory requirements will preclude a uniform, one-size-fits-all multinational solution, several important global themes have emerged during this crisis.  For example, in response to the COVID-19 pandemic, many countries are implementing legislation (e.g., Brazil, the Netherlands, and the United Kingdom) to socialize the idea that employers may seek to reduce employees’ pay in exchange for greater job security.  Such legislation has been widely publicized, and employees in other countries are unlikely to be surprised that their employers are considering similar measures outside the established statutory scheme.

As we enter a “new normal,” it will behoove multinational employers to lay the ground work for employee “buy-in” before implementing changes that their businesses need to weather the COVID-19 storm.  Effective communications with employees and works councils will be paramount to help ensure that (i) the proposed measure is implemented successfully, (ii) the risk of subsequent legal action is reduced, and (iii) employee morale issues are minimized.  Straightforward and honest communications with employees can ease employee relations concerns. Employees inevitably will learn who will and will not be impacted by a company’s actions; however, open communications in advance can be a valuable tool in successful implementation of painful, but necessary measures.  And, of course, to the extent the employment actions being undertaken can be truthfully presented as temporary as opposed to final, the more likely employees will be willing to accept such changes, especially in the current COVID-19 business environment.  These communications must come from the top ranks of the organization in order to legitimize the effort to save as many jobs as possible.

The global coronavirus pandemic ignores international borders and has created a worldwide health and financial crisis.  The business response to the financial consequences wrought by COVID-19, however, will be constrained, and must be informed, by the workplace laws and practices that govern in different countries around the world.

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