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Terminating employees is not exactly an enjoyable process. There’s a strict policy to follow to ensure everything is compliant. It often means a restructure of some kind, which could require project or client handovers or new recruitment. And even the most straight-forward endings can be fraught with emotions on both sides.
Terminating an international employee can add another layer of complication to this already taxing time. Different countries, and sometimes different states or territories within a country, will have different laws and requirements to follow when it comes to termination, which aren’t always initially apparent. The consequences of non-compliance makes this part of international employment risky, particularly if you have employees in multiple markets.
For those taking a DIY approach, or who want a better understanding of the termination process, we’ve compiled a list of the main areas to look out for terminating an employee overseas.
“The most important thing to find out is what is the reason for the termination,” says Svetlana Bettiol, our head of implementation and part of our termination team.
“Is the contract ending? Is the employee resigning? Or is this a more complicated case where the employee will be terminated due to performance?”
The reason for termination will inform the next steps. From there, you can then determine the notice period, the severance requirements as well as any additional requirements.
“For performance, there is a very strong protocol for many European countries,” Svetlana says. “You have to document the performance, so you have examples and grounds to terminate for this reason.”
“Don’t wait until it’s gotten so bad that you really have to terminate this person,” adds Jennifer Henne, one of our subject matter experts and part of the Shield terminations team.
“Address what options are available now and start documenting it so that the process is smooth, even if you have to performance manage someone.”
Once you’ve determined the reason for termination, the first thing you should do is carefully read through the individual’s employment contract. These contracts, which are signed at the beginning of the employment, will often include, in writing, termination entitlements and requirements.
“The critical point here is to review everything, so you don’t miss out on anything,” Svetlana says.
One of the most important factors in determining the right termination process is the notice period. It will determine when you can terminate, and the steps that must take place before the specified end date.
“What we often see is that clients look at the world through their glasses,” Jennifer says.
Notice periods can vary depending on the reason for termination and are dependent on the host countries local laws or the employee contract, whichever is highest.
“Some countries will surprise you. They have stricter rules in place than, I think, the client is often aware of,” Jennifer says.
“Don’t assume just because it’s that way in your home country that it means it’s going to be that way in the host country.”
Once again, any severance or end of employment payment will be determined by the host country laws and the employment contract. Every termination will be different, and the amount needs to be calculated on a case by case basis.
“Typically, it’s the salary pro-rata for the last months, then unused annual leave or any unclaimed expenses or bonuses,” Svetlana says. “Then the termination entitlements such as severance pay or end of contract payments are on top of that.”
“We work together with our local partners in country to basically do all the calculations for the final settlement,” Jennifer says.
“The other payments that get a little more complicated are in those countries where they often times have a vacation bonus or a Christmas bonus. The calculations have to take that into consideration when the final payout [will be made] because during the year [these have] been accrued.”
In some cases, employees are entitled to extra accommodations on top of their termination packages.
On top of the legal requirements, some companies like to provide terminated employees with additional services or perks to help the situation go as smoothly as possible.
This can simply mean how you agree to frame the termination to adhere to cultural norms or could be an extra month’s salary to relieve pressure while they find other work.
This is where cultural norms become really relevant. In some countries, it can be extremely difficult to find work if you are unemployed, so coming to an agreement around the official dates of termination may be extremely beneficial to the employee, particularly if you are terminating based on financial or restructuring reasons.
Compliance is critical in termination cases. Particularly in countries with strict employee-centric laws.
Companies can find themselves in hot water if employees choose to take action against them for not fulfilling their legal requirements.
Unfortunately, employment law isn’t exactly the easiest area to research.
“It’s not something that you can easily Google because it’s very specific and oftentimes it really depends on the factors in the situation,” Jennifer says.
“For a layman who doesn’t have access to legal resources on staff with their company, it can be very challenging and also very expensive.”
While a DIY approach is certainly doable and often works successfully, there are always risks around termination that can be lowered by using experienced termination teams.
“We have in-depth subject matter expertise,” Jennifer says.
“[In addition to that] we’ve been developing guides as we’ve been doing terminations, so that our clients will benefit from what we’ve learned.”
Having a third party involved can often make the process run smoother for the employee too.
“The good thing about involving shield is that we’re in the middle,” Svetlana says. “If it’s about performance, the employee is usually more comfortable to talk to someone that’s not involved in the business. We are like a neutral party, so they are feeling like they trust us more.”
Whether you decide to terminate international employees yourself or through a third party like ShieldGEO, the important lesson is: do your research.
“Don’t assume just because it’s that way in your home country that it means it’s going to be that way in the host country,” Jennifer says.
Make sure you’re aware of the cultural and legal requirements of each country your employees are working from and follow them.
– Bree Caggiati
Without the diverse, hardworking, intelligent, and kind people who make up our team, Shield wouldn’t be able to offer the level of service we do. At Shield, we love ourRead More
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