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Lost in Translation – Saying What You Mean in Cross-border RIFs

Lost in Translation: When “Salary” Doesn’t Mean What You Think it Means Background Decorative Image

As multi-national employers consider their workforce needs over the next several months, in-house counsel and HR teams at U.S. companies need to bear in mind that concepts and words that are familiar in the U.S. can have very different meanings in other jurisdictions.

A typical example is the word “lay-off”. In the U.S., this means a permanent termination of employment, usually in the context of a reduction in force. But under UK employment law, a lay-off is not a termination of employment, but rather a temporary period of unpaid leave when an employer is unable to provide work, with the expectation that the employment will resume as normal once the work returns. UK employers use the term “redundancy” when talking about terminations in the context of a reduction in force.

Similarly, the word “salary” in the U.S. usually refers only to base salary. In Germany, however, employment lawyers will often interpret this word to include not only the base salary, but also bonuses and certain other fixed compensation. Understanding the scope and meaning of the word in this context is critical to accurately assessing potential termination and severance costs.

It is often a challenge to translate unfamiliar concepts when taking advice from foreign counsel, and the job gets harder if incorrect assumptions are made about the meaning of commonly used words. One way to try to avoid this is to ask questions and to clarify the advice you’ve received. Another is to use counsel that have significant experience in cross-border matters and who are more likely to be aware of these issues and able to ensure that advice does not get lost in translation.

This information is provided by Vinson & Elkins LLP for educational and informational purposes only and is not intended, nor should it be construed, as legal advice.