Skip to content

Pitfalls of Global HR Policies: It’s Not Such A Small World After All

If you work in the human resources department for a multinational company, you already know that it is impossible to have the exact same human resources policies and benefits in every country where you do business. And yet, most companies like to have some rules and policies that apply globally — prohibitions against bribery, harassment or insider trading, for example — because such rules and policies reflect the underlying culture of the entire company.

In enacting global HR policies, there are two issues that need to be addressed. The first is the substantive differences between the laws in different countries and how that might affect the actual content of the company’s policy. For example, a company seeking to enact a single global non-discrimination policy or anti-bribery policy needs to make sure that the policy is consistent — or at least does not conflict — with the non-discrimination and anti-bribery laws in each of the countries where the company does business.

But employers must do more than consider the substantive laws of the countries where they do business, because the various countries’ laws may also affect how the policy should be communicated to employees. In the United States, for example, a new policy is often distributed to employees electronically and is implicitly considered to be subsumed in a previously existing employment manual that contains an “employment-at-will/this-is-not-a contract” disclaimer. In most other countries, however, a new policy is intended to be contractual. Thus, a foreign court would likely find that employees are not required to comply with a policy distributed or communicated in a way that doesn’t create a contract in that country.

Even assuming that the employer treats the new policy as contractual, other procedural challenges remain. For example, will it suffice that the employee electronically acknowledged receipt of the new policy or does the local law require more? Is the employer required to bargain or “consult” with its unions before enacting the new policy? Finally, even if you decide that it is desirable to have a global policy, you may want to have each foreign affiliate separately issue that same policy as opposed to having that policy imposed on the foreign employees by the U.S. parent that does not actually employ them. Otherwise, the U.S. company may become jointly liable for employment claims.

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.