You could be exposed to hefty severance liabilities, if you don’t plan ahead.

1. Terminating Jobs Overseas?
You could be exposed to hefty severance liabilities,
if you don’t plan ahead. — Vyoma Nair
Terminating jobs is always a difficult situation but when you dismissal is considered a misuse of the employer’s right to
have to do it overseas, the process gets far trickier. The con- dismiss and void.
cept of “employment at will” is unique to the U.S. and world-
wide there are laws and procedures, which if not adhered to, Brazil
could lead to substantial damages awarded in favor of the Brazilian law provides significant benefits to the employee
employee. Knowing the fine print can help companies plan on termination of employment. The amounts payable depend
ahead and save on the often heavy severance costs. on whether or not the employer has a “just-cause” for termi-
nation. “Just-cause” is defined in the legislation.
Netherlands
Dutch rules on termination of employees are unique in All employees in Brazil participate in the FGTS – a Fund
Europe in imposing a priori control over dismissals. Effec- Dependent on Length of Service. Employers are required to
tively, this means that any employer wanting to dismiss an contribute 8% of the employee’s monthly salary to the fund.
employee who is on an open-ended contract must have the If “just-cause” is not established, the employer must pay a
permission of the Central Organization of Work and Income penalty of 40% of the accumulated balance in the fund and
(CWI) or a rescission of the contract by a judge. Even where a an inflation adjustment. An additional 10% fine may be levied
judge agrees to the rescission, severance pay is due. by the Courts.
For an employee over the age of 50, this could amount to China
more than two times his or her annual salary. Severance pay is due for termination (amongst other rea-
sons) caused by restructuring or difficulties in business
Japan operations. This is one of the main causes for employee ter-
Theoretically, under Japanese civil law, it is not necessary to minations today. The payments, however, are not punitive,
have a valid reason for a dismissal to be justified by law. An severance payment being one month’s salary for each year
employer may dismiss workers at any time, provided notice of service, with half a month’s salary for each partial year.
requirements are adhered to. However, companies should However, if the employee earns three times or more than the
check as any collective agreements in force often list rea- average monthly wage of the region, then the compensation
sons, which constitute grounds for dismissal. is capped at three times the average monthly wage up to a
maximum of 12 months.
In addition, Labor Standards Law (LSL) has the concept
of a dismissal lacking “objectively rational grounds” and For more information on a Workforce Reduction Assess-
not being “appropriate in general societal terms”. If the ment or Workforce Retention Assessment, please visit:
employee can show that it falls into these categories, the www.globaloutsourceexperts.com
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