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Writing Termination Clauses in International Employment Contracts

Writing Termination Clauses in International Employment Contracts

Phrases such as “termination of employment,” “getting fired,” or “quitting my job,” are not words you want to hear in the workplace, but it happens. When it does, it needs to be handled with care and due diligence in order to maintain compliance. In this post, we will discuss termination clauses and how to correctly implement them into your global expansion strategy.

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Importance of Termination Clauses

International employers need to be aware of the labor regulations around termination of employment in each country they have operations. In almost every country except the United States, it is very common to have a written employment contract that spells out the terms and conditions of the employment relationship between an employer and an employee. Many U.S. employers avoid written employment contracts and instead prefer “offer letters” with few terms of employment and at-will clauses.

Employment-at-will rarely exists outside of the United States. Therefore, it is very important that international employers and employees pay attention to termination clauses when ending an employment relationship.

Managing International Termination Clauses

International employment contracts often include a section devoted to termination requirements. These termination clauses usually cover required notice periods, severance obligations, and grounds for termination. The specifics vary from country to country, making it imperative that employers research the local labor laws before entering a country.

For example, in Japan, employers must give at least 30 days’ notice of dismissal or provide payment of 30 days’ base salary in lieu of notice. This practice is common throughout Asia and Europe.

In Myanmar, employees terminated by notice or without fault are entitled to severance payments dependent upon their years of service.

In Indonesia, the government highly regulates terminations. The law requires an employer to make all efforts to prevent the termination of employment. This means termination must be mutually agreed upon and the employer is obliged to discuss the termination plan with the individual employee or existing Labour Union in the company. If such discussion fails to resolve a mutual agreement, the employer must seek the government’s permission to terminate the worker. Additionally, if an employee chooses to resign they must give a minimum 30-day notice period.

Before terminating an employee, carefully read the termination clauses and take necessary steps to ensure that the termination is done in line with local labor laws. The consequences of failing to comply with local termination requirements can range from hefty fines to expensive lawsuits.

Make sure your international employment contracts are compliant from start date to termination. Team up with the experts at Velocity Global to help you manage termination clauses and ensure a successful global expansion.

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