European employment laws differ significantly from U.S. employment laws. One of the biggest conceptual differences is the unique U.S. employment at-will doctrine—which does not exist in European employment law. Naturally, understanding this difference (among many others) is especially important when dealing with the European Union and its member states. Many U.S. employers have made mistakes and found out the hard way that errors can be costly, both in terms of dollars and time.
European Employment Law 101: Indefinite Employment vs. Employment At-Will
“The world’s employment law regimes really divide into two parts: there’s employment at-will—which is only the U.S.—and then there’s everybody else.” Don Dowling Jr. told us in a recent BLR webinar. Most other countries have indefinite employment. They regulate employment, but you can’t fire people for no reason as you can in the U.S. If an employer operating in Europe wants to terminate an employee, specific legal procedures must be followed.
Even if you get to the point – after going through all of the legal procedures – that you can fire an employee, you still have to pay severance pay or notice pay – which can be very expensive – unless you have good cause.
“Good cause in these countries, by the way, is very steep. The analogy I like to use . . . is the U.S. unemployment system with the concept of willful misconduct.” Dowling explained. In fact, the definition of good cause in every country is different. In short, there are very few reasons that an employer would not be liable for the severance pay, and the time frame that severance can be months or even years.
There are also some other concepts related to indefinite employment: constructive discharge and vested rights. The idea of constructive discharge refers to the concept of changing the terms of employment to the point that the employee wants to leave—done with the intention of forcing the employee out without being liable for the severance pay. That act is called constructive discharge—the employee is not technically fired, but for all intents and purposes they were.
Naturally the courts do not want to allow this to happen. As such, employees in many countries can place a claim against the employer for changes in the terms and conditions of employment (the employee’s vested rights), stating it is a form of constructive discharge and is not allowed without paying severance.
European Employment Law 101: Regulating Employment Terms
Another difference in European employment law versus U.S. employment law is the fact that in the U.S., fewer aspects of the employment relationship are regulated. For example, the U.S. is one of the few countries that does not have mandatory vacation laws. In Europe there are laws that relate to employee benefits, caps on hours worked, vacation allowances, holidays, sick leave, maternity/paternity leave, written employment contracts, and more. Of course the U.S. does have a few laws, such as the FMLA, HIPAA, and the FLSA, but these only provide minimal benefits in comparison to European employment law requirements.
“By European standards – and even Latin American and African and Asian standards – the Family and Medical Leave Act is stingy because it doesn’t give any paid leave. The people who go off on maternity leave or on FMLA leave don’t have a legal right to get paid. All we’re doing is holding open their job . . . by European standards, that’s laughable.” Dowling explained.
European Employment Law 101: Legally-Mandated Written Employment Contracts
Yet another difference between European employment law and U.S. employment law is the requirement of written employment contracts. While uncommon in the U.S., they’re legally-required in Europe.
“In the U.S., because we’re employment-at-will, employers are shy or reluctant to give employment agreements.” Dowling noted. However, the reality is that U.S. employment agreements exist, they’re just typically oral agreements. If someone is employed, they have a contractual right to get paid, even without a written contract. Even though it’s terminable at will, it does exist.
“In Europe, they make you give a written employment agreement.” Dowling told us. “There’s actually a European Union directive that requires written employment agreements or statements of terms and conditions of employment. They call them statements of employment particulars.” In short, employers in Europe have to give everybody a written agreement that covers the list of topics like the place of work, pay rate, title, office hours, etc. It has to be in writing and can’t be changed without agreement from the employee.
That said, it’s also important to realize that written employment contracts in Europe (and everywhere else abroad) actually protect the employer. The employer usually has the burden of proof in an employment claim, and the employer has this document to show the terms. This is the first line of defense against claims, and employers use them to protect themselves.
For more information on European employment law, order the webinar recording of “European Employment Law for HR: Compliance Strategies for U.S. Employers.” To register for a future webinar, visit http://catalog.blr.com/audio.
Attorney Donald C. Dowling, Jr. is International Employment Counsel for the international law firm White & Case, LLP. Based out of the firm’s New York office, he concentrates his practice on cross-border human resources law issues for multinational employers, with particular focus on European employment law.