International Employment Contracts - From Marriage to Divorce!

Transcription

1 International Employment Contracts - From Marriage to Divorce! The role of the contract in the relationship between Employer and Employee Jeanette Wheeler Partner, Eversheds, UK Darryl Weiss General Counsel, TVA Fire & Life Safety, USA June 2005

2 International employment contracts From Marriage to Divorce The role of the contract in the relationship between Employer and Employee: Agenda: Courtship and engagement - the Pre-nup? The wedding - status counts - employee, self employed contractor or agent? The divorce case study Before the breakdown Checklist of terms and conditions 2

3 Approach Europe England & Wales France Germany Australasia and India Singapore Australia India 3

4 The Courtship, Engagement & pre-nup What type of engagement? Self employed? Contractor? Commercial Agent? (England: 2 years) Worker? Sources of the contract: Pre-nup = Offer letters conditional references etc Handbook Collective Agreements Mandatory terms 4

5 The wedding Status Employee? Worker? Self Employed Contractor? Commercial Agent? A Pre-nup? Written contract? What law? 5

6 The Divorce! Case Study Facts Bob Maddog is a Senior Area Sales & Account Manager with IT Global Inc and as well as having his own sales accounts he is responsible for a team of 10 Sales & Account representatives across Europe and Asia. He has a US at will style contract subject to the laws and Courts of California. Bob has 5 years service and in the past has bought in some very profitable new accounts although in recent months his performance has been less than brilliant and his client expenses account is extortionate. Bob says this is the cost of keeping his client accounts happy however Global s FD suspects he spends too much time on the golf course! Bob reports to the new VP of Sales, Top Dog who finds Bob difficult to manage and says he doesn t fit with the company s new style and culture. Top Dog tells the Head of HR, Molly Brown that he wants Maddog to go asap. 6

7 The Divorce Continued The FD is worried about the impact on the sales figures if IT Global inc lose key accounts as a result of Bob s departure and wonders whether he can withold any outstanding commission or bonus payments. Molly Brown is worried about the impact on the rest of the sales team some of whom she suspects might leave with Bob if he gets a comparable position with one of a number of competitors in the area. The IT director is worried about protecting trade secrets in relation to some new products the company has been developing and which are just about to be launched. 7

8 The Divorce Continued. Counsel is passed a copy of Bob s contract of employment and is asked to report on the following questions: 1. Can the company rely on the contract and dismiss forthwith? 2. Will there be any financial penalties or compensation due? 3. Does the contract contain any terms that might assuage some of the Boards fears around confidentiality and loss of accounts and staff? 4. Are there any mandatory rules that will supersede anything in the contract? 5. Anything else they should note? 8

9 Divorce in England & Wales Assume Bob is living and working in England Applicable law? (Contractual/mandatory rights) Notice period (statutory & what is reasonable?) Termination provisions Garden Leave (or other duties?) PILON clause (affects quantum, tax position and validity of post-termination restrictions) Benefits (car allowance, pension, accrued untaken holiday pay) Confidentiality provisions Post-termination restrictions staff, customers/suppliers, non-compete IP rights, power attorney (capturing IP) Share options Commissions and bonuses Resignation of Directorships Expenses, company property 9

10 Divorce in France Assume Bob is living and working in France: Applicable law? (Contractual/mandatory rights/ Public Order rules) Notice period (as provided in CBA/Contract of employment if more favourable) Termination provisions (statutory / CBA) Severance payment (CBA) Benefits (car allowance, accrued untaken holiday pay) Post-termination non-compete, confidentiality provisions Commissions and bonuses Resignation / Revocation of Directorships 10

11 Divorce in Germany Assume Bob is living and working in Germany: Statutory notice periods mandatory Garden Leave only if agreed PILON not possible Benefits payable until effective date of termination Confidentiality provisions Post-termination restrictions attracts compensation payment IP - Act on Employee Inventions applicable Commission - may even be payable for certain period posttermination if the deal due to ex-employees efforts and only concluded after exit of employee bonuses - in most cases to be paid until effective date of termination on pro rata basis Resignation of Directorships -shareholders resolution required unless director resigns voluntarily. Please note: statutory company directors do not enjoy unfair dismissal protection as they are not seen as "employees" under German law 11

12 Divorce in Australia Assume Bob is living and working in Australia: Notice period (Breach of Notice) Workplace Relations Act governs EE s under a certain salary No written contract of employment required Notice periods increase if EE is over age 45 May not contract out of statutory awards Confidentiality Commissions and bonuses Expenses, company property 12

13 Divorce in India Assume Bob is living and working in India: Written letter of appointment required Governed by the Industrial Disputes Act Dismissal versus Removal PILON Statutory benefits cannot be denied (Provident Fund etc) Benefits entitlement Confidentiality clauses 13

14 Divorce in Singapore Assume Bob is living and working in Singapore: Notice period (Breach of Notice) Leave to offset notice Termination provisions Employment Act does not allow less favourable conditions PILON Not meeting the terms of the contract Appeals go to the Ministry of Manpower 14

15 Termination Agreements: England & Wales negotiating the compromise agreement France agreement to reach a settlement agreement! Australia Not required India Not required Singapore Not required 15

16 Summary Checklist of Clauses England & Wales Termination Provisions (as per earlier slide) Mandatory laws: Holiday & holiday pay Working time hours of work Equal pay Maternity and parental time off (& pay provisions) Protection of part-timers and temporary workers (pro-rata) Statutory sick pay vs contractual sick pay Unfair dismissal & discrimination law Data protection Fixed term contracts Permanent Health Insurance, life assurance, pension and other benefits. rules from time to time in force 16

17 Summary checklist of clauses England & Wales continued Expenses Duties Place of work Deductions from salary Remuneration No golden handshakes or parachutes 17

18 Summary checklist of clauses - France Start date Duration of the contract (indefinite term or fixed term as rules are different) Information on relevant Collective Bargaining Agreement ( CBA ) Duration of probationary period (CBA) Notice period (as provided in CBA/Contract of employment if more favourable) Duties and job description (reference to classification as provided by CBA) Holiday entitlement (statutory/cba) Working time (statutory/cba) Remuneration and its components Place of work + mobility clause if needed Confidentiality clause Exclusivity clause (if full time contract) Restrictive covenants (non compete must be paid) 18

19 Summary checklist of clauses - Germany MUST haves: Names and address of employer/employee Commencement of employment Place of work Job description short description of job duties Remuneration basic salary, overtime, bonus scheme, commission, benefits in kind) (Note: If bonus makes up substantial amount of package it will usually be considered contractual) working time holiday entitlement notice periods Any collective agreement applicable? Good to have: Probationary Period (if appropriate) Confidentiality Data protection clause - especially if personal data to be transferred outside the EEA company car clause deductions from salary Expenses 19

20 Summary checklist of Clauses - Australia No statutory requirement for an employment contract or memorandum in writing If you do choose to make one the contents are determined by the parties Australian Workplace Agreements (AWA) and Certified Agreements (CA) are negotiated collectively but signed individually Employers cannot contract out of statutory awards Compulsory unionism is prohibited Statutory right of entry to the workplace by unions 20

21 Summary checklist of Clauses - India Written letters of appointment are generally required Terms and conditions of service, pay, benefits, etc Industrial Employment (Standing Orders) Act requires the employer to define, with sufficient precision: Rules of salary determination Time scale of pay grade Contributory or other compulsory deductions Other benefits Termination Retirement benefits Misconduct 21

22 Summary checklist of Clauses - Singapore The employment relationship is guided by the law of contract subject to statutory requirements There is no requirement as to the form of the contract of service whether in writing or oral, express or implied No preference in hiring must be given with the exception that employers of more than 10 employees must not employ anyone who is not registered as having completed full time national service (with some exceptions listed under the various National Servicemen s Acts. 22

23 Summary checklist of issues - Europe Type of contract employment, commercial agent? Applicable law & Courts? Care: Mandatory laws Termination provisions (see earlier slides) Collective agreements Restrictions on variation! Consent required TUPE no harmonisation of terms! 23

24 Summary checklist of issues - Asia Extended notice Unpaid commissions Statutory notice periods Non-compete clauses Confidentiality Entitlements Government approvals 24

25 Thank you for listening. If you would like further information, please contact Jeanette at or Darryl at 25