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International Employment Agreements – Avoiding the Speed Bumps

By November 30, 2016 November 9th, 2017 No Comments
International Employment Agreements - Avoiding the Speed Bumps

Getting up to speed on hiring overseas involves many requirements such as understanding the basics of international employment agreements. For example, in a typical employment contract in the United States, an employer-employee relationship is “at-will.” This clause means that either party can end the agreement at any time, without notice.

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Most countries outside the US do not have an “at-will” policy, which requires employers to give ample notice before ending an employment relationship. This is just one, yet very important, rule with international employment agreements that you and your business partners need to consider when hiring overseas.

In addition, as an international employer, you’ll need to clarify what type of agreements need to exist with your employees overseas. When planning a global strategy, get answers to questions such as does my company need an international employee agreement or is employment covered by collective bargaining agreements? Also, clarify if your contract can be in English, the local language, or both.

International Employment Agreements: What to Include?

Each country has varying degrees of statutory obligations for employers. Many countries have mandatory requirements that both parties must adhere to, which include standards for housing, health insurance, and paid time off. These obligations are always outlined in your international employment agreements.

For example, in China, an employee who’s worked continuously for more than 12 months receives an entitlement for statutory paid annual leave. The amount of annual leave depends on years worked and ranges from five to 15 days per year.

In addition to statutory rights like benefits, you will also have to find out the requirements for termination in your new country and lay out the policies in the agreement. Each country has different limits to termination notification.

For example, in Ontario, termination notices depend on the time of employment. If your employee has been on your team for one to three years, they need a two-week notice before termination. When crafting your contracts, be sure to clarify the specifics for these employee rights.

International Employment Agreements: Creation

Chances are unless you’re a law firm, you wouldn’t attempt to craft your own employment agreement in the States and you shouldn’t try to craft your own contracts overseas. We highly suggest soliciting the advice of a legal expert who understands employment regulations in your target country.

When you partner with an attorney, prepare a list of questions that cover specific items that your company plans to include in its contracts. Questions will cover areas like termination and statutory rights. You can also review our previous post to further understand the legal aspects of doing business overseas and prepare for your meeting.

In addition to working with an attorney to draft your company’s international employment agreements, you can also work with an international partner. A partner can help you manage cultural barriers, human resources, payroll requirements, and hiring in your new market.

Velocity Global has capabilities in 185+ countries and can help you navigate your global expansion. Call us today to learn how we can help with your international employment agreements and learn about the new cultural standards.