Understanding Employment Law Outside the United States for Multinational Employers – Part 1

Employment and labor laws in the United States are complex and vary significantly across federal, state, and local levels. While some states (such as Washington) are more employee-friendly, all but one (Montana) adhere to the at-will employment doctrine. This generally permits either party to end the employment relationship at any time, with or without notice, as long as the termination does not breach the parties’ agreement, or contravene any legal protections such as anti-discrimination and anti-retaliation laws. Outside the United States, employment laws differ substantially in structure, philosophy, and enforcement. A key distinction is the near-universal absence of the at-will doctrine: In most jurisdictions, termination is subject to statutory protections, notice periods, and valid legal justification.

For U.S.-headquartered multinational employers, managing HR matters across jurisdictions presents considerable challenges. Legal compliance alone is insufficient; employers also need to recognize and adapt to local norms. Practices considered routine or low risk in the United States may carry substantial legal or reputational consequences elsewhere. To operate effectively and foster strong employee relations, multinational employers need to balance local legal frameworks and cultural expectations with internal consistency.

This article offers a high-level overview of several key considerations for managing employment globally, with a focus on compliance, risk mitigation, and practical planning. To illustrate jurisdictional contrasts, we draw on examples from China, South Korea, and the United Kingdom.

Pro-Employee Frameworks 

Employment law frameworks outside the United States often prioritize procedural fairness, statutory entitlements, and protections rooted in public policy. Employment is typically viewed as a regulated status rather than a purely contractual relationship. As a result, employee rights are not easily waived or contracted out of unless expressly permitted by law.

In the United Kingdom, for example, employers must follow strict procedures and demonstrate a fair reason for dismissal after two years of service, with protections against discriminatory or retaliatory dismissal applying even earlier. Dismissals must fall within one of five legally defined categories (such as conduct or redundancy) and comply with the Acas Code of Practice. Non-compliance can lead to unfair dismissal claims and substantial financial liability. UK employers are also required to provide statutory redundancy pay and minimum notice periods, and conduct meaningful consultations. Where 20 or more employees at a single establishment are affected within a 90-day period, collective consultation rules apply. Key employer obligations include notifying the government in advance, informing appropriate employee representatives, and engaging in consultation with them. Employers need to follow the statutory process to avoid criminal liability and costly protective awards to each affected employee.

Employment Contracts Are Standard 

In most jurisdictions outside the United States, written employment contracts are either legally required or strongly recommended. These contracts typically set out essential terms such as job responsibilities, compensation, working hours, benefits, and procedures for termination. Importantly, any changes to these terms generally require the employee’s express consent and formal documentation. Unilateral changes, such as altering job duties or salary without agreement, can expose employers to legal disputes and financial liability.

In China, for example, employers are required by law to execute a written employment contract with employees within one month of their start date. Failure to do so may result in a penalty of double wages for every month the employee works without a written contract. If no written contract is signed within one year, the employment relationship is presumed to be open-ended—meaning the employee may be entitled to remain employed until mandatory retirement, unless early termination is permitted under limited legal grounds. Chinese law mandates that contracts include several statutory elements, including but not limited to job responsibilities, duration of employment, work location, remuneration, working hours, social insurance, working conditions and labor protection. Attempting to change terms unilaterally, such as reducing salary or demoting an employee, can lead to disputes, and courts tend to favor employees unless the employer can demonstrate a clear legal basis and procedural fairness.

Termination Is Challenging 

The at-will employment doctrine is not recognized in most jurisdictions outside the United States. Terminating employees typically requires a legally permissible cause, adherence to strict procedures, and clear documentation. Severance pay is often mandatory or expected, calculated based on length of service and salary. Termination payments may also include additional elements such as payment for unused vacation days, pro-rata bonuses (e.g., thirteenth-month salary), seniority premiums, and other accrued entitlements. In many jurisdictions, there are strict rules regarding the timing of termination payments. Private releases of claims in exchange for severance may be unenforceable or heavily restricted. For example, enforceability may require court approval, independent legal counsel, or labor authority involvement, and may be discouraged due to tax or procedural constraints. Additionally, certain categories of employees, such as pregnant individuals or those on medical leave, may be protected from dismissal until their protected status ends.

In South Korea, for example, termination is governed by the Labor Standards Act, which requires a “justifiable reason” such as serious misconduct or poor performance. This is a very high bar to clear under Korean law. Even probationary employees cannot be dismissed arbitrarily. Employers must provide 30 days’ notice of involuntary termination or pay in lieu, and severance is mandatory for employees with at least one year of service, calculated as at least 30 days’ average wages per year (or fraction thereof), regardless of the reason for the separation from employment. Disputes concerning disciplinary action often result in employee claims to the Labor Relations Commission, which generally favors employees unless the employer can clearly demonstrate both substantive and procedural compliance, especially in termination cases. However, due to the difficulties involved with defending unilateral termination of employment, it is market practice to at least consider mutual, voluntary separation.

Extensive Benefits and Leave 

Generous leave entitlements are common outside the United States, with statutory paid and unpaid time off often exceeding U.S. norms. Many jurisdictions mandate paid sick leave, and parental leave policies are typically more expansive and inclusive. Implementing a global leave or benefits policy can be complex, as benefits considered generous in the United States may fall short of legal minimums elsewhere.  Moreover, discretionary benefits—such as enhanced parental leave or wellness stipends—can become binding if they are consistently offered and perceived as contractual through custom and practice. Once adopted, such benefits may be difficult to modify or withdraw. In certain jurisdictions, changes to benefits may require consultation with employee representative bodies, such as works councils or unions. Public holidays also vary widely in number and observance across countries, and employers need to account for these differences when designing compliant and culturally sensitive policies.

In the UK, for example, employees are entitled to 28 days of paid annual leave, which may include public holidays. Statutory Sick Pay is available for up to 28 weeks, and maternity leave can extend to 52 weeks, with 39 weeks of statutory pay. While discretionary benefits like enhanced sick pay or bonuses are not legally required, they can become implied contractual terms if offered regularly and without clear disclaimers. 

Cultural Sensitivity 

Cultural norms play a critical role in global HR practices. Although employers may not always be able to choose the “ideal” timing for executing a reduction in force (RIF), timing matters. For example, announcing a RIF during a major local holiday can harm employee morale, attract negative media attention, and even trigger legal claims. Additionally, local counsel may be unavailable during holidays, delaying necessary legal reviews, and the employer’s local team may be understaffed and unable to carry out actions desired by the U.S.-based headquarters. Certain practices that are common in the United States—such as disabling employee system access prior to formal termination—may be considered unlawful or culturally inappropriate in other jurisdictions. It is recommended to be mindful of these differences and consult local advisors to ensure respectful and compliant handling of sensitive employment matters.

Additionally, headquarter-centric policies may be poorly received or unenforceable without local adaptation. For example, performance review frameworks or benefit structures designed for U.S.-based teams may conflict with local expectations around hierarchy, privacy, or work-life balance. Multinational employers should engage local HR and legal advisors early to ensure culturally and legally appropriate implementation.

Key Takeaways

• Managing international employment requires more than translating policies; it requires legal adaptation and cultural fluency.
• Allocate sufficient time for planning, issue-spotting, implementation, and compliance review.
• Partner with local HR and legal experts to ensure alignment with jurisdiction-specific requirements.

Please stay tuned for our upcoming presentation, “International Employment Law Snapshot: Key Updates and Future Trends,” at the 2025 Pacific Northwest Regional Employer Conference, and Part 2 of this article, where we will explore emerging developments and practical strategies for multinational employers.