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A multinational headquarters launching cross-border human resources policies, global codes of conduct and international benefits offerings tends to focus chiefly on content. In essence, headquarters asks: What should the text of our new cross-border policy, code, rule or plan say? But drafting a global document’s text merely gets these projects started. As soon as headquarters crafts workable language for its latest cross-border code, policy or plan document, the project should shift to answering an entirely separate, often more complex question: How are we going to launch this document and impose it on our staff overseas?
With draft text for your latest international code of conduct, HR policy or benefits plan in hand, consider taking these nine steps for launching and implementing a new headquarters initiative across workplaces worldwide.
Step 1: Number of Versions
A multinational rolling out a new cross-border code of conduct, HR policy or benefits plan should decide whether to issue one single global document worldwide, bifurcate a headquarters version from a “rest-of-the-world” version, or spin off distinct local versions or riders for each relevant country.
These three approaches differ significantly. None works best every time. Selecting the most appropriate of the three approaches depends in part on the global initiative topic. Topics like ethics, insider trading and bribery lend themselves to a single global version. Topics like discrimination and harassment can be more appropriate for a bifurcated U.S. headquarters plus rest-of-the-world version. Inherently local topics like holidays, vacation and overtime are most appropriate for local country-by-country versions or riders.
Using one global version is always simplest and best promotes cross-border alignment. Therefore the single-version approach is usually the default. Indeed, multinationals sometimes claim they need just one global document to impose a uniform global rule, to streamline employee communications and to promote global unity.
But sometimes a single global document is not ideal. Rules, provisions and benefits appropriate for headquarters employees sometimes need tweaking or reworking abroad.
U.S. multinationals often decide to launch a U.S. domestic code of conduct, HR policy or benefits plan plus a separate rest-of-the-world version for their overseas employees. The bifurcated two-version approach lets the multinational account for issues from a non-U.S. perspective without watering down nuances unique to the U.S. employment-at-will environment. This approach is ideal for topics like diversity and reduction-in-force selection, where U.S. principles differ intrinsically from best practices abroad.
Every country’s employment laws are different. The most compliant way to impose any global workforce initiative across more than one country is to tweak the documentation locally, tailoring for each jurisdiction a version or rider that accounts for local nuances. Coming up with local versions/riders can get unwieldy, expensive and slow, and can weaken the unifying character of a single global document. But accounting for local differences is always a best practice.
Step 2: Non-conforming Documents
Never issue a new or revised international code of conduct, HR policy or benefits plan by imposing it “on high” from headquarters, heedless of existing earlier versions. Always start by repealing or aligning all existing HR documents now in place.
A multinational that issues a revised or updated international code of conduct, HR policy or benefits plan needs to repeal all earlier versions floating around. Too often headquarters slaps its latest initiative onto its intranet without bothering to dig out and eradicate each extant now-obsolete version. Later, some hapless foreign employee stumbles across an old version and assumes it still controls. Or worse, some clever employee threatened with discipline for breaching the new policy exploits the organization’s sloppiness and insists the looser, earlier version still controls.
Failing to harmonize a global initiative with local offerings can cause real problems. Think of a local employee who commits some act that, while compliant with an on-point local policy, violates a stricter headquarters code or rule. The employer will argue the newer headquarters policy trumps the local subsidiary’s laxer local policy, but local employees, local managers and even local judges may favor the looser local rule over the tougher, more distant headquarters edict—especially if the local rule is in the local language while the headquarters rule is in English.
Step 3: Dual Employer
Multinationals’ overseas staff typically work on the payroll of locally incorporated subsidiary affiliates. From the point of view of an employee working for an overseas subsidiary, headquarters is merely the employer stockholder, not the employer of record. When a headquarters entity imposes some new code of conduct, HR policy or benefits plan directly on employees of foreign affiliates, it triggers a significant but often-overlooked dual-employer challenge: How can a parent corporation impose work rules that order around people whom it does not employ? As to a global benefits plan, how can headquarters compensate people it does not employ?
If a parent corporation presumes to impose rules on or pay benefits to subsidiary staff it does not directly employ and with whom it has no privity of contract, then the headquarters entity risks being deemed a dual-/co-/joint-employer also liable (along with the subsidiary) for employment claims.
Fortunately there is a simple way to resolve these dual-employer problems. Headquarters imposes all cross-border codes of conduct, international HR polices and certain global and regional benefits plans on foreign affiliate entities rather than on overseas staff directly. Each affiliate entity, in turn, duly ratifies the global initiative and imposes it directly on its own staff.
Step 4: Collective Consultation
In many jurisdictions abroad, employee representatives are common—works councils, trade union cells, health and safety committees, employee advocates, employee delegations, worker ombudsmen and the like. Labor laws from Europe to China and beyond impose a consultation requirement analogous to the U.S. labor union concept of “mandatory subject of bargaining.” An employer cannot add or change certain workplace rules until it sits down and discusses the proposed changes with employee representatives.
Unionized American bosses understand exactly how this works, because U.S. labor law requires employers to bargain over an HR policy change as benign as a new dress code. Overseas, countries like China, France and Germany regularly nullify HR policies and codes that the employer unilaterally implemented in violation of this vital obligation.
A multinational launching some new international code of conduct, HR policy or benefits plan needs to slow down and first involve its own overseas management-side labor liaisons. Discuss with them local employee-representative consultation strategy and timing. Then take whatever steps are necessary to comply with local employee consultation obligations.
Step 5: Translation
Many American organizations consider English to be their official company language and assume their subsidiary employees worldwide are fluent. Many organizations issue global codes of conduct, HR policies and benefits plans in English only, sometimes posting an English-only version on the company intranet.
But before headquarters issues some new HR document meant to apply abroad, it should consider translation requirements and strategy. In Belgium, Chile, France, Iraq, Mongolia, Portugal, Quebec, Turkey, Venezuela, much of Central America and elsewhere, local laws require that work rules be communicated in the local language.
In these jurisdictions, English-language policies are not only unenforceable, they can be flatly illegal. One multinational once got fined €500,000 plus €20,000 per day because it distributed English-language HR documents to French staff in violation of French language law.
Step 6: Communication, Distribution and Acknowledgement
A multinational cannot quietly slip a new code of conduct, HR policy or benefits plan onto its intranet and expect affiliate employees worldwide to find it, read it, understand it and comply with it. Develop a proactive strategy for communicating and distributing any cross-border HR document to overseas staff in a way that requires them to comply. Remember: If some overseas employee later disciplined for a violation claims ignorance of the headquarters initiative, the employer bears the burden to prove it had implemented and communicated the global rule. To ensure a new international code, policy or plan binds foreign staff, be ready to prove each foreign employee actually received the documents, and ideally, agreed to comply.
Step 7: Government Filings
Publicly traded American companies regularly file their codes of conduct, insider trading policies, whistle-blower hotline policies and stock option plans with the U.S. federal government. Obligations to file HR documents with government agencies also exist overseas, but American organizations tend to chafe at foreign government filing mandates for HR documents.
Filing or registering certain HR codes, policies or plans with foreign government agencies, while cumbersome, may be necessary to make the document effective locally. For example, French employers must file codes of conduct with France’s Labor Inspectorate or a French labor court. Chilean employers must file any HR policy inconsistent with company work rules with the Chilean Labor Board or Ministry of Health. And data protection authorities across much of Europe require employers to disclose or file internal HR policies and systems that process employee data. Be sure to make necessary filings.
Step 8: Vested Rights
In discussing steps for launching a new international code of conduct, HR policy or benefits plan, we have assumed the headquarters initiative is neutral to employees, or at least does not materially cut pay or terms/conditions of employment. But sometimes a new headquarters code, policy or plan does materially reduce employment packages of at least some staff. And sometimes a new headquarters initiative is susceptible to an argument that it materially restricts the workplace environment.
Where a new global initiative materially cuts existing terms or conditions of employment abroad, the employer must account for vital additional steps to address the infringement on staff’s “vested rights.” Outside employment-at-will, all employees enjoy vested rights in their current terms/conditions of employment, and bosses cannot necessarily abrogate these rights unilaterally.
Step 9: Backstopping
The above eight steps for launching a new international code of conduct, HR policy or benefits plan address what to do before the initiative goes live. But many cross-border initiatives that multinationals consider already in place today originally got rolled out without the employer scrupulously accounting for these eight steps. This leaves many existing multinational codes, rules, policies and plans vulnerable to challenge—findings of unenforceability or nullity.
A best practice for a multinational that failed properly to implement its current package of cross-border codes of conduct, work rules, HR policies and international benefits offerings is to backstop— go back and correct past oversights in implementation.
Donald C. Dowling is a partner in the New York office of White & Case.
Republished with permission. © 2014 White & Case. All rights reserved.
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