Companies seeking global expansion in the East must start to understand the labor rights in BRICS. This collection of quickly growing markets is growing more and more influential each day, making it a popular choice for international business.
Despite BRICS’ economic promise, there are implications regarding labor laws in each of the five countries. Legislative powers are incredibly different than those in the West, and each has a large impact on employment. We’ll explore an overview of the labor rights in the BRICS countries below, but when expanding into a new country, be sure to consult with your attorney.
Introduction to BRICS
BRICS is an acronym for five of the fastest growing nations in the world. It stands for Brazil, Russia, India, China, and South Africa. BRICS makes up a combined 43% of the world’s population and accounts for 30% of the globe’s GDP.
Its goal is to create an economic co-operation and maintain self-sufficiency rather than relying on the West-dominated banks like IMF and World Bank. As a result, the member countries formed the BRICS bank, or New Development Bank, and has a collective pool of money worth more than $100 billion. The largest contribution is from China.
Labor Rights in BRICS
The collective goal of BRICS is to form an alliance among nations for economic benefit, but this alliance also trickles down into labor rights. The five countries all have different degrees of regulations in regards to labor laws despite its collective financial goals.
For example, South Africa has a history of imposing strict labor laws making it difficult for small to midsize businesses to succeed in-country. The requirements for compliance place a burden on trust between employers and employees, which leads to high unemployment and significant expenses.
Below we’ll focus on three areas of the law, including contracts, IP, and termination, to give you an overview of the labor rights in BRICS and help guide your international expansion decisions.
Contracts
In all of the countries, labor rights in BRICS state that contracts must specify the legal age requirements of workers, proper working conditions, and allotted work hours per week. Although conditions vary from country to country, there are mandates in place that govern fair working conditions for the people of that country.
A big difference among the countries is the overall idea of a contract. For example, in Russia, a contract is a necessary means to comply with so-called “essential” and “general” conditions of the work described. In South Africa, an agreement lists the “basic,” “conferred by statutory law” and “expressed” conditions. Finally, in Brazil, contracts list out specifics regarding the position.
Requirements for labor contracts also vary from country to country. In Russia, there is a long list of information that needs to be included in each contract for it to be deemed valid. These requirements include:
- Salary
- Working Conditions
- Employment Term
- Social Security Terms
- Job Description
Be sure to work with an in-country partner when crafting your foreign employment contracts. Some countries require contracts to be in both the local language and in English, for example. You will need to meet all of the requirements to remain compliant and avoid fines and penalties.
Intellectual Property (IP)
Each of the BRICS countries, especially Russia, India, and China, have similar standards regarding the protection of IP.
International companies can protect their IP by registering with the proper departments in each country. For example, Russia’s legislative environment is historically unpredictable but in recent years, its Federal Service for Intellectual Property (Rospatent) has been deemed highly effective.
Employers run into the greatest risks regarding IP when they work with independent contractors overseas. In many countries, including BRICS, standard employment contracts are not valid when working with contractors. As a result, there is virtually no way to protect your company’s IP because you have no authority over these workers.
If your company has important data, processes, or branding to protect in your overseas ventures, register it with the proper departments and hire employees through a valid agreement. For added protection, work directly with an expert in your new country to include language about your IP.
Labor Rights in BRICS Regarding Termination
When employing in any foreign country, employers face a risk with termination. Outside the U.S., “at-will” employment doesn’t exist. As a result, you cannot fire a member of your team without cause or an allotted notice period, which must be laid out in the initial agreement. Given the strict nature of termination requirements, this is another area where working with a local expert can help keep your company compliant.
Let’s take a look at firing an employee in China. Termination requires a good cause, which is very vague in China’s labor laws, and a severance payment. Also, a China employer must be able to show that any unilateral termination was based on statutory grounds. Typically, employers must give the employee at least 30 days notice before termination and at least one month’s severance pay.
Understanding the labor rights in BRICS is a big task, but you don’t have to do it alone. Our team works in these countries and has a vast understanding of the compliance requirements for companies of all sizes. Give us a call today to learn about our services. We can help you quickly expand into one of these countries.
