Labor Flexibility in Europe

Last updated: 1 June 2023

When deciding to expand overseas, companies need to consider the nuances and particularities of the new markets besides the benefits of a diversified workforce. Europe has posed as one of the leaders in the global trend of labor flexibility, whilst its four constituent forms have been complemented with local practices and regulations.  

The search for flexibility in Europe has two main traits – it relies on legislation and the tendency of employers to seek constructive approaches to finding the best solutions.  

Labor flexibility puts forward a strong emphasis on the need for performance improvement strategies and high-quality work. Consequently, employees have the opportunity of getting a closer involvement in time management and planning – and in the long term, these practices can improve internal communications and cooperative relations between the employer and employees and their representatives. There are 4 main types of flexibility in Europe – Numerical (External) flexibility, Working time flexibility, Functional flexibility and Pay flexibility.  

Numerical or external flexibility

It represents the employers' ability to alter the size of their workforce. It is subject to careful handling due to the strict regulations, often very difficult for the ones applying in the enterprise-headquartered offices. Before reaching out to such strategies, it is essential that employers are equipped with appropriate knowledge on the subject and familiarised with the local redundancy laws.  

The practices and regulations are very different from one European country to another, but in general, collective dismissals remain seen as the final resource employers should turn to, due to the concerns of the social partners and governments in most European countries. The practice usually requires employers to consult the representatives of employees to reach an agreement on either the prevention of dismissals or the number of employees involved. In addition, employers must also inform governmental institutions of redundancy intentions.    

On an individual employee level, there is a strong tendency in European countries to provide a protective legal framework to prevent unfair dismissal. The institutionalized approach to employee protection is in contrast with the employment-at-will model of the United States, characterized by the ability to legally dismiss an employee without prior notice, which is just one of the important employment aspects to take into consideration when hiring in Europe.  

The penalties for unfair dismissals in Europe are usually financial, but in some European countries, reinstating an employee is common practice as well. 

Working time flexibility 

It's a widespread practice in the post-covid world that new models of working are introduced, which are to a greater or lesser extent regulated in the European markets. From ensuring home safety and obliging the employer to provide means of work in the home surrounding for remote workers to a legal obligation to offer a certain proportion of work-from-home options, practices seem to be altering as we speak. More so, increased worktime flexibility models are seen as part of fringe benefits in many countries and are worth considering by non-EU employers as well. 

Functional flexibility

It is a common tactic to increase productivity and internal mobility. It's a practice that allows organisations to up-skill and re-skill the workforce. Fragmentation of work is regulated to a certain extent in European practices, however, a common remark in national labor codes is that job-related tasks cannot be expanded by requests extremely dissimilar in nature from the primary job description.  

In addition, employers are expected to align expectations of additional tasks with employee skills, i.e. not to engage an employee in jobs that would downgrade their skills. Long-term, job redesigning must be a subject of both employer and employee development and growth. And lastly, companies expanding in Europe need to take into concern the legal frameworks around this topic.

Pay flexibility 

In Europe pay ranges are often determined through collective agreements, so the introduction of any flexible framework must be subject to analysis before being implemented in practice. Globally, with the increase of freelancing as a hiring model, performance-based salaries are not as uncommon model as they have been for the previous generations.  

For the contracted employees however, bonus schemes have been subject to complex national legal frameworks, requiring at times that the schemes be applied at a company-wide level (i.e. not limited to management staff alone), transparently communicated etc.  


Seeking flexibility remains one of the key strategies to keep up with the fast-paced and competitive international markets. If implemented correctly and with the level of advisory to protect both the employer and employee interests, they can be proven to favor greater security of employment for the workforce and increase ROI for employers. 

About EuroDev

EuroDev, established in 1996 with offices in The Netherlands, has a single, defined purpose to help mid-sized North American companies expand their business in Europe. We have created a proven, successful business development model and since our founding, have partnered with over 500 companies to help them define and meet their European business goals. Services provided include Sales Outsourcing, HR Outsourcing, and Digital Marketing.

Disclaimer: While we strive to provide accurate and timely information, please note that HR policies and regulations can change frequently. It is recommended that you seek guidance from our HR consultants to ensure that the data presented here is current and accurate.

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