Employer of Record and International Terminations
What happens if I am not satisfied with a worker’s performance? How can I terminate or put a worker on a performance review? What if it the employment relationship doesn’t work out between us?
These are just a few of the common questions we receive from our clients when they are deciding to expand into a new country and hire staff.
Managing a global workforce can be very rewarding, but it can also bring many challenges such as how best to handle terminations. If a termination is handled poorly or unjustly the worker may well have grounds for dispute which can result in a lengthy and costly legal battle. In order to avoid such scenarios, we have highlighted below several factors that should be considered before taking drastic action.
1. Notice Periods
Each country has a mandatory notice period which usually varies depending on the length of service and the country. Notice periods typically range from a couple of weeks to several months. A notice period must be strictly adhered to as it’s primarily in place to protect the worker and allow him/her time to source future employment. However, if a company does not wish to keep the worker onsite during the notice period, they can be requested to leave the premises and not return. In this case, the worker will continue to be paid and receive all due salary and benefits during the duration of his/her notice.
2. Reasons to terminate
Terminating a worker is not something that should be considered lightly. Legal advice should be sought in all countries before dismissing someone due to the complexities of local labour laws. In Germany, for example, there must exist a documented justification for dismissal otherwise the employee can challenge this in court. If an employee does challenge this dismissal in court and it’s deemed unfair, the company incur a significant fine. Therefore, in Germany a negotiated agreement with the employee is advisable in all cases.
3. Severance Pay
In some European countries, severance pay is mandatory when terminating an employment contract and usually depends on seniority of the worker.
4. Procedures to follow
Every country has different procedures to follow when dismissing someone, therefore it is always important to seek advice before terminating a worker.
Below we have provided you with examples of the termination procedure in three countries.
In the Netherlands, employers need approval from the authorities in order to terminate an employee. The administrative body will assess the requirements for the dismissal to authorise or reject the termination. A negotiated agreement with the employee is possible provided the parties negotiate the terms and conditions in a settlement agreement. The employee has a two-week period to reconsider their consent or approval to the settlement agreement. Therefore, you should allow enough time to go through all the steps before terminating the worker.
In Spain, terminations are often complex and should be discussed with local experts before any notice is issued. There are three common forms of termination: disciplinary, unfair dismissal and dismissal on objective grounds; the process around termination varies between each form. Employees can appeal to a labour court if they consider the dismissal unjustified. Additional compensation may be due if a labour court deems the dismissal to be unfair.
In Switzerland, termination is not as complex as other European countries as the employer can terminate by either giving notice or by paying an indemnity in lieu of notice. In the latter case, the contract is terminated with immediate effect.
Using a global employer of record provider for international terminations
Many companies can struggle with how to effectively end an employment relationship with a global worker. By using a global professional employer of record, like Capital GES, you do not have the burden of understanding the local labour laws and regulations of each country. Our EOR service ensures compliance from the on boarding of a worker right through to minimising the complexities associated with international terminations.
Capital GES offers an in–country employment solution, that guarantees a compliant and swift solution to employ workers in a location where you do not have an entity. Our team of in-country specialists are on-hand to provide the round-the-clock support whenever you need them.