Pitfalls of US employers in Europe
When US companies want to expand their business in Europe, European employment is a crucial topic. Managing a European workforce from overseas can be complex and may require professional assistance as an employer must comply with local laws and regulations. This blog, written by European HR Consultant Marina Babic Walton, shortly highlights employment considerations when US companies manage or acquire employees in Europe.
- The hiring and firing of staff
- Workforce restructuring, such as downsizing
- Business closures and mass layoffs
- Sale or transfer of a business
- Employee privacy (data protection).
Hiring and firing
In Europe there is no concept of “at will” employment. As a result, it is seen that an employee in Europe is more protected by law than an employee in the US. This is sometimes overlooked by US employers. Employment in Europe is primarily structured through formal, written contracts that set forth provisions regarding pay, benefits and working conditions. Most European countries have included such provisions in their country laws. Consequently, many countries in Europe offer way better-paid maternity/paternity leave, paid time off, and unemployment perks than in the US. To give an example; an employee in Europe is entitled to have a minimum of 20 paid holidays.
Also, because employment is not "at will", Europe has minimum standards for notice prior to termination. In some European countries, termination without a legally valid reason may be void or could result in large damage awards for unfair discharge.
When making changes to salary or working conditions, Europe imposes limitations which are not common in the US. In Europe, employers must give information to and consult with labour unions and works councils. In some countries, employers must even first obtain their permission before making any changes. Furthermore, because employment is pursuant to contract, unilateral changes are not permitted, so an employer must obtain the employees’ agreement (particularly if there is no labour union or works council) to changes in salary or working conditions.
Business closure and mass layoff
In Europe, there is normally a minimum period of prior notice and, in some European countries, a minimum severance that must be provided prior to business closure or mass layoff. In some European countries, it is necessary to consult with a labour union or works council as soon as closure or layoff is under active consideration by the employer. Furthermore, some countries will not allow a closure or layoff until the labour union or works council agrees to it.
Business sale, transfer or outsourcing
Not only is prior consultation with labour unions or works councils mandatory in Europe, but also the workforce cannot be dismissed by reason of the sale or transfer. Instead, the workforce is transferred to the new owner, along with their contracts and accrued rights. These same requirements apply to most outsourcing deals.
In Europe, many European countries severely limit an employer’s ability to conduct workplace monitoring or testing (e.g., drug testing, monitoring of emails, health checks etc., are severely limited), with the transfer of employees outside of the European Union subject to stringent restrictions. In addition, the data of employees needs to be protected by the employer. Since 2018 there is the General Data Protection Regulation (GDPR) for all companies operating in the EU.
If you want to know more about common pitfalls in Europe, please do not hesitate to contact Monique Ramondt-Sanders - VP of Human Resource Outsourcing. More information on our services can be found on our website and blogs.
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 300 companies to help them define and meet their European business goals. Services provided include Sales Outsourcing, HR Outsourcing and Digital Marketing.
Marina Babic Walton
Marina is an HR consultant with experience in organisational development, employee relations and HR management. She holds an MBA degree from University of London with specialization in Leadership and an MA in European studies of culture from University of Thessaloniki.
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