Should Multinational Employers Have a Global Handbook?

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This is the third in a three-part series of articles on employee handbook updates. This article focuses on global handbook policies. The first article reviews changes to California law, and the second part explores federal and state workplace compliance trends.

Businesses based in the U.S. generally create a handbook for their employees that explains workplace policies and procedures, employee benefits, and other important information—but a handbook may not be needed for worksites abroad. Here are some factors that U.S.-based employers should consider when developing policies for international locations.

Think about what purpose a local handbook would serve, said Donald Dowling, an attorney with Littler in New York City. In the U.S., handbooks usually contain a lot of information about benefits and paid time off and observed holidays. But in some countries, such as France, vacation days, holidays and health care coverage are dictated by law, so employees aren't going to look to the handbook for information about these benefits.

Employers should find out if similar businesses in the applicable country have handbooks, Dowling suggested. "What do the local companies know that we don't?"

Perhaps developing an internal guide for the HR department about the country's workplace laws is a better option than creating an employee-facing handbook, he added.  

Employment at Will

The employment-at-will doctrine applies in every U.S. state except Montana. Under this doctrine, businesses and workers have the right to terminate the employment relationship at any time, for any lawful reason (or no reason at all).

As a result, employers can also change the conditions of employment, Dowling noted. Employers in the U.S. usually include a disclaimer in their handbook stating that the company can change or revoke its policies at any time.

However, as a general rule, it's best to assume that countries outside the U.S. don't recognize the concept of at-will employment, said Carson Burnham, an attorney with Ogletree Deakins in Boston. Businesses may be forbidden from making one-sided changes to contractual employment terms.

[SHRM members-only toolkit: Introduction to the Global Human Resources Discipline]

In some countries, employers are encouraged—or even required—to give workers detailed individual employment contracts that spell out the conditions of employment, Dowling said. Employees generally have a vested right to those benefits, so employers are locked in.

"Imagine if you had to change the U.S. handbook to state, 'This handbook won't change,' " he said. "It can be that strict in some places."

Local Differences

It's helpful to consider how certain terms that are used in the U.S. translate in other countries, Burnham said. For example, U.S. handbooks often refer to "retaliation" in policies without explaining it, but many countries don't have similar anti-retaliation laws.

"Retaliation" often gets translated to mean "revenge" or some other concept that incorporates physical violence, she said. It goes without saying that a manager shouldn't physically harm an employee who has complained about a workplace issue, but the policy may be ineffective if the employer fails to explain more-subtle forms of retaliation.

How policies are communicated to employees is critical in determining whether they will be enforceable and taken seriously, she added. Most countries in Europe and some in Asia require employers to engage in a great deal of consultation with existing employees before a policy can be adopted. This is an impediment to quick distribution, but companies that don't engage in the consultation process may appear to be ignoring local law, she said.

Global Code of Conduct

It's a good idea to establish a global code of conduct (or code of ethics) that explains what behaviors are acceptable and how the company expects employees to treat one another, Burnham said. The code of conduct can also provide global employees with information about U.S. laws that apply worldwide, such as the Foreign Corrupt Practices Act and insider trading prohibitions.

"There's no magic distinction between a handbook and code of conduct, but a handbook can sometimes be too granular," Dowling said. After employers remove all the U.S.-specific benefits and legal information from the handbook, they may wind up with a global code of conduct that sets cross-border standards on harassment prevention, insider trading, bribery and other broad issues, he said.

The code of conduct can harmonize U.S. policies on harassment and discrimination prevention with bullying, mobbing and moral-harassment-prevention rules in Europe, Latin America and parts of Asia. Burnham noted that many employers opt to protect workers from bullying and harassment through company policies, even when there isn't a legal remedy available. "This sends a message to the workforce that the policy comes from the company's ethical principles."

Employers may still want to establish country-specific leave of absence, vacation and other policies that are required by local jurisdictions and don't lend themselves to harmonization, Burnham noted.

Key Considerations

If U.S. businesses develop policies for international locations, Burnham recommended that they take the following steps:

• Clarify that any global policies are subject to local law and include language stating that local law will govern in the event of a conflict.
  
• Remove at-will language, since it is generally unenforceable and can be perceived as invalidating the entire set of policies.
  
• Consider the key substantive differences between U.S. laws and non-U.S. laws, particularly when it comes to bullying, harassment and whistleblowing.
  
• Review any confidentiality requirements for local compliance. Many employers have boilerplate confidentiality policies that could conflict with an employee's right to disclose legal issues or seek help from an ethical standpoint.
  

Multinational organizations need to be crystal-clear about who is covered by the handbook, particularly if they have different policies for different locations, Dowling said.