Tag Archives: employment

Global HR Issues That Keep Executives Up at Night – Part 2

Guest Author:
Jacqueline Vilet – TriNet

Editor’s NoteWe are pleased to welcome Jacque Vilet as a guest author for the International HR Forum. Jacque is a Global HR/Benefits Consultant for TriNet, providing global Human Resources services to SME’s with international operations.  She has over 20 years experience in International Human Resources with both local nationals and expatriates, and has been an expat twice during her career. Jacque holds the Certified Compensation Professional (CCP) designation from WorldatWork, and the GPHR (Global Professional in Human Resources) designation from the Society of Human Resources Management.

In Part 1 of “What Keeps Executives Up at Night”, we talked about the importance of employment contracts and how requirements vary from one country to another.  But employment contracts are only one of the major labor issues that companies face when doing international business.   Terminating local national employees can also create major problems.

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It’s the World Cup — Do I Have to Work?


Mariana Villa da Costa – Littler Mendelson

On June 11, the world has seen the launch of one of the biggest sporting events – the World Cup, this year being hosted in South Africa.  The World Cup is a passion to millions and millions of people around the world, and a much anticipated month-long series of games that unfortunately, for those who love futbol (soccer)  like me, only happens once every 4 years.

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Independent Contractor or Employee?

Mariana Villa da Costa – Littler Mendelson

There are many situations when companies consider hiring “independent contractors” rather than direct employees.  When considering such a step in an overseas market, each country’s labor law should be consulted to determine the specific requirements of independent contractors in that country.  Here are some issues to consider that are commonly addressed by most country labor laws.

Independent Contractor or Employee?
The difference between an employee and an independent contractor is determined based on the requirements that one must have to be an employee.  While each country is different, generally, an individual will be considered an independent contractor and, therefore, will not be covered by the labor legislation, if he or she has independence to perform the work and it is not subordinate to a company’s directives and regulations, and when there is no exclusivity in the relationship between the parties.

5 Questions to Assess Independent Contractor Status

Here are 5 questions to help you determine if a relationship is a true independent contractor:

  1. A worker is an employee if the company has the right to control the manner and means of accomplishing the result desired.
  2. An employee is paid for his/her time and bears no risk of wage loss if the employer’s product is unprofitable.  An independent contractor has the opportunity to profit from the project and the risk of loss, depending on the worker’s managerial skill.
  3. An employee is not required to invest in the employer’s business.  An independent contractor makes some investment in tools, equipment, supplies, and facilities appropriate for his/her business.
  4. An employee may receive training.  An independent contractor has the skills necessary to perform the task without additional training.
  5. An employee enjoys a continuing relationship with the employer.  An independent contractor generally works on one project and moves on, accepting additional projects when and if available.

Key Considerations for Independent Contractors

Before engaging an independent contractor, be sure to consider the following:

  1. Determine the real need to have an independent contractor.  Could this work be done by an employee instead?
  2. Draft an independent contractor agreement that makes the case for real independence. Prepare a very clear and specific agreement.  Address all possible issues and avoid having the contractor sign non-compete restrictions.  Avoid mention of bonuses or other provisions, such as  vacation, work hours and other stipulations that look like employment terms, in the independent contractor agreement.
  3. Structure the day-to-day working relationship to support the contractor’s independence. For example:
    1. Do not put the contractor in the employment list or in the payroll and keep the contractor off organization charts.
    2. Do not provide an office or company business cards and do not schedule hours.
    3. Avoid constant email with requests that are more closely to control than simply guidelines on how the company wants a final product to be delivered.
    4. Do not pay the same amount every month.
    5. Ask the contractor to invoice the company with detailed information on hours worked and project deliverables to justify payment.

Additional Tests to Assess Independent Contractor Status

This checklist is based on the one developed by the US Internal Revenue Service (IRS).  It gives valuable information that characterizes most independent contractor relationships across the globe:

  • No instructions
  • No training
  • Services do not have to be rendered personally
  • Set own work hours
  • Not a continuing relationship
  • Control their assistants
  • No interim reports
  • Paid by job
  • Time to pursue other work
  • Decide on job location
  • Order of work set
  • Work for multiple companies
  • Pay business expenses
  • Have own tools or equipment
  • Significant investment in their business
  • Offer services to general public
  • Can make entrepreneurial profit or loss
  • Cannot be fired at will
  • No compensation for non-completion

Maintaining the proper classification of employees versus contractors is very important to ensure compliance with labor law regulations.  The rules are unique to each country, and HR professionals are urged to review the specific requirements for each country as needed.

Important Note: These guidelines are intended to provide a brief overview of the independent contractor issues in foreign countries.  It is not intended as a substitute for professional legal advice and counsel.

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International Employment Law “Quick Facts”: Canada

Mariana Villa da Costa – Littler Mendelson

Hello Readers! The first edition of our “International Employment Law Quick Facts” was a success! Many readers commented on the article and asked me to prepare profiles for other countries.  Again, please feel free to add a comment, or send me a note to let me know what you think about this post.  We will try to publish additional installments in this series based on what you request, so keep checking back!

Q. What are the definitions of employee, employer and independent contractor?

A. Before going into our definitions it is important to note that in Canada, the employment practices of most employers are provincially regulated, whereas federal jurisdiction is limited to employers that deal with national infrastructure, for example, banking, railways, and airlines.  Since each jurisdiction in Canada has specific legislation, it is important to become familiar with the local specifics before engaging in any labor and employment matters.

In Canada, the statutes that confer rights and obligations to employees and employers usually contain definitions. The Ontario Employment Standards Act has a good definition of Employees:

  • a person, including an officer of a corporation, who performs work for an employer for payment (wages);
  • a person who supplies services to an employer for wages;
  • a person who receives training from a person who is an employer, and
  • a person who works from home  for an employer.

Employer, on the other hand, is an owner, proprietor, manager, superintendent, receiver or trustee of an activity, business, work, trade, occupation, profession, project or undertaking who has control or direction of, or is directly or indirectly responsible for, the employment of a person on it.

Although there is no precise definition of the term “independent contractor” the idea is always of direction and control.  An employer is entitled to direct and control how and when the work is performed.  An independent contractor is left to determine how to perform the services for the client; the firm that retains the independent contractor  can only specify the product and result of the independent contractor’s work.

Q. Is it necessary to have written employment contracts in Canada?

A. In Canada there is no need to have a written employment contract.  A contract of employment will exist if it was agreed, either orally or in writing. However, written contracts are not customary, unless it is for executive positions, or if employees are hired for a fixed term or task.

The main reason for having a contract for executives is to clarify and address the severance package.  On the other hand, the need to have them in place for employees hired for a fixed term or task is to avoid the statutory obligation to give notice of termination.

Q. Are there any specific rules in regards to the duration of employment contracts?

A. In Canada, if there is no specified term, the contract will be presumed to be for an indefinite term. However, parties to an employment relationship can agree on employment for a fixed term.  In this case, the employer will not have to dismiss the employee and give reasonable notice.

It is important to note that if the fixed term of a contract expires and the employee continues to work without entering into a new fixed term agreement, it is understood that the contract becomes for an indefinite term.

Q. Are there any rules in regards to discrimination in employment?

A. Canada has very serious regulations in terms of human rights and discrimination; this is prohibited in various grounds.

The Canadian Charter of Rights and Freedoms sets a constitutional standard that all governments must follow — federal and provincial. The Charter states that every individual is equal before and under the law and has the right to equal protection. However, this Charter cannot be directly used by an employee against the employer; in those cases, the individual must rely on human rights statutes to challenge discrimination on employment terms and decisions.

The Ontario Human Rights Code is an example which defines that discrimination is prohibited in the areas of employment, accommodations, services, facilities and signage. It protects employees from discrimination on the grounds of race, place of origin, ancestry, race, ethnic origin, citizenship, creed, gender, sexual orientation, age, marital and family status, disability, and also addresses sexual harassment.

Q. What are the rules regarding working hours?

A. Different employment statutes in Canada define the work day and work week.  In most provinces, the standard work day is eight hours, but the standard work week varies in different provinces – the low is 40 hours per week, for example in British Columbia, and the high is 48 hours per week (Ontario) .

It is also important to note that most employees who perform supervisory and management functions are excluded from standard hours regulations.

Q. Are there any minimum wage requirements in Canada?

A. In Canada, an employer is obligated to pay employees wages of at least the minimum established in the jurisdiction of employment. In some cases and in some jurisdictions, employers do not need to pay minimum wage, for example, students who work in Ontario.

Q. What are the rules regarding the termination of employment?

A. In Canada the employment relationship can only be terminated for:

(i) Just Cause – When the employee engages in serious misconduct, e.g., disobedience, unlawful or dishonest conduct, violence, subordination, etc.  In this case, the employee is not entitled to any compensation beyond salary up to the day of termination.

(ii) Without Cause – Employer does not need any motive to terminate employee, however, reasonable notice or pay in lieu of notice must be provided.

Q. What should an employer know about benefits and social security in Canada?

A. Canada has an extensive social security system covering pensions and social welfare benefits, which provide coverage for almost the whole population.  Responsibility for the planning, management and delivery of social security programs is shared between the federal and provincial governments.

The universal pension system is state-funded, while employees, employers and the self-employed must contribute to the earnings related pension scheme and the employment-related benefits scheme, which covers sickness and maternity pay, unemployment benefits and other welfare assistance.

The only benefits that employers need to provide to employees are those related to the mandatory statutory social security programs, such as:

  • The Canada Pension Plan (CPP) for residents outside the province of Quebec and the Quebec Pension Plan for the residents. The CPP is a national social security program mandatory for all employers.
  • Federal employment insurance – a mandatory contribution that fund income frpm loss of employment, maternity, parental and sickness benefits.
  • Provincial worker’s compensation regimes – maintained in each province –  provide benefits in case of workplace injuries.
  • Provincial health and hospital insurance plans – provide for basic medical assistance and essential hospital care.

In Summary

I hope this quick summary can be used as a road map for employers doing business in Canada.  Please post your questions and comments.

Important Note:  This posting is intended to provide a brief overview of employment law in Canada.  It is not intended as a substitute for professional legal advice and counsel.

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Россия – Questions and Answers on Labor and Employment Law in Russia

Mariana Villa da Costa – Littler Mendelson

Are you doing business in Russia?  Need help to understand the basics of Russian Labor and Employment Law?  This post will provide you with a basic understanding of how to employee staff and operate your business in Russia.  I will also highlight some key requirements that every employer needs to know.

Russia has a labor code that is extremely employee-friendly, as compared to other countries, such as the U.S.  For example, did you know:

  • Almost everything in Russia must be done formally and on paper;
  • Contracts are normally for an indeterminate term – fixed-duration employment contracts are almost unheard-of;
  • It is very difficult to terminate an employee; and
  • Any employee, without regard to seniority or nationality, is free to leave the company after just two weeks’ notice and has the right to work for a competitor immediately.

What is the main source of labor and employment law in Russia?

The Labor Code is the main codified statutory act and it governs the relationship between employees and employers of all types.

The parties to an employment relationship cannot contract differently from what is imposed by Russian labor law.  Therefore, if any provision of the employment agreement harms or makes the employee’s situation worse it will be considered invalid under the Labor Code.

Employees are entitled to minimum guarantees and protections that are mandatory and cannot be altered, even if the employee allows the employer to do so.  This allows the employees to have a bargaining power normally not found in the many countries.

Who is an employee? And an employer?

An employee is a natural person who enters into an employment relationship with a an entity/natural person for the personal execution of work, with an specific remuneration and under the employer’s subordination.

An employer is a natural person or a legal entity that is an employment relationship with an individual.  It must provide the employee with work specified in an agreement and it must ensure that the labor conditions are adequate and legal.  Furthermore, the employer pays remuneration on a regular basis.

Does a foreign employer need to have a local entity in Russia to employ local workers?

Russian law does not require a foreign employer to set up a local entity in order to employ workers in Russia.  Individuals can be employed by a company which is incorporated in a country other than Russia and has no representation in Russia. However, a signed employment contract between a local worker and an entity having no representation in Russia still will be guided by Russian law as the main place of work is Russia.  And, a foreign entity might be considered to have a Permanent Establishment (PE) in Russia, which could have profound corporate tax consequences.

Are employment contracts necessary in Russia?

Yes. Under Russian law, an employment contract is necessary and should be executed in writing.

However, if the company fails to have a contract, the employment relationship will still exist and be valid, and it will be considered to have existed upon the actual commencement of work.

In this case, the employer is obliged to conclude an employment agreement within three days of the employee’s actual commencement of work.  Therefore, an employment contract not executed in writing still is considered concluded and thus binding, effective and enforceable if the employee has commenced work with the employer’s knowledge.

In general, employment agreements in Russia are for an indefinite term.  A fixed-term employment agreement (for up to five years) may be concluded only in limited circumstances (for example, temporary positions, or temporary replacement of an employee).

Are there specific terms that every employment agreement should have?


Besides basic information for employee and employer, such as name and taxpayer identification number, every Russian employment agreement should include:

  • Employee job title; occupation; the specific type of work the employee is to perform;
  • The place of work, and whether the employee is hired to work in the organization’s branch, representative office or another detached structural unit located in another area;
  • Start date and, if the agreement is for a fixed-term, the effective term of the agreement and the circumstances serving as grounds for why having a fixed-term employment contract under the Labor Code or other federal law;
  • Compensation and benefits;
  • Working hours and leisure hours;
  • If necessary, the terms and conditions defining the nature of work (mobile, traveling, en route, or other kind of work); etc.

Can we prepare the contract in a different language than Russian?

Russian, as the official language of the Russian Federation, must be used by all companies in their employment agreements, regardless of their ownership structure.

However, if you are sending foreign employees to work in Russia,  in practice, the employment contract will also be signed in the fluent language of the foreign employee. That will guarantee that the individual has a clear understanding of rights and responsibilities under the agreement.

How must salary payments be made in Russia?

Salary in Russia must always be paid in Russian currency (rubles).  Employees should be paid not less than twice per month, and must receive at least the minimum monthly wage established by law.

Many foreign companies tend to pay the employees in a currency different than the Rubles.  This is considered a violation of Russian law which the authorities deem discriminatory.

What else do I need to know about employment regulations in Russia?

In addition to the specifics I mentioned above, you also should know about the following if you have employees in Russia:

  • Employment contracts may be terminated only for certain reasons. Dismissal should be effected in strict compliance with the procedures established by law; failure to follow these procedures may serve as grounds to prove the dismissal to be unfair.
  • Russian labor law is bureaucratic, and thus employers are required to keep a large amount of internal documents and closely follow the procedures stipulated by law which also require execution of various documents.
  • Background checks and medical examinations are mandatory for certain jobs, while for other jobs, requesting such information on the applicant or employee might constitute invasion of privacy.
  • Noncompetition agreements, and customer and employee nonsolicitation agreements, are generally not enforceable in Russia.
  • Discriminatory conduct may constitute a criminal offense;
  • The employer in most cases acts as taxpayer or a tax agent.
  • To obtain certain (extended) rights to the intellectual property created by the employee, the employer should undertake certain actions within a limited time span.
  • The employer should not impede employees meetings and strikes, and lockout is prohibited.
  • Workplace safety regulations require special training of employees, certification of workplaces, investigation of workplace accidents, etc.
  • The employer should not impede employees meetings and strikes, and lockout is prohibited.
  • Sale of business (shares, assets of the company) does not generally constitute ground for dismissal.
  • Maintain an ongoing dialogue with employees to build loyalty. The ethical and moral aspects of employment are considered very important in Russia.
  • Be aware that the Russian labor code applies to all types of employees from all nationalities.
  • Initial recruiting processes are crucial, since it is very complicated to dismiss an employee.

This posting is intended to provide a brief overview of labor and employment law in Russia.  It is not intended as a substitute for professional legal advice and counsel.  Please post your questions and comments!

Employment Laws in China

mariblack3 Author:
Mariana Villa da Costa – Littler Mendelson

The Chinese labor environment has changed considerably over the past few years, to keep up with China’s shift towards capitalism and explosive economic growth.  The world’s attention is on China now, and in particular, the abuses of employees’ rights have caught the attention of the government and the international community, triggering new sets of laws that are being strictly enforced today.

Companies doing business in China must pay attention to these new laws and, in particular, HR practitioners need to understand the PRC’s employment laws to avoid conflicts in the country.

2008 PRC Employment Contract Law – A Very Liberal Piece of Legislation for Workers

The 2008 PRC Employment Contract Law (effective January 1, 2008) is a very generous law for workers, granting employees more protection than the old legislation.  For example, employers in China used to profit from using temporary workers; however, with the new law,  if employers keep using a temporary individual for more than one short-term contract period, this person would be viewed as a permanent employee, receiving all the benefits associated with permanent status.

 Even though employers had concerns about the legislation they knew it would be important to show more clarity in the employer – employee relationship.  This would, ultimately, send a message to the world about China’s willingness to adopt more transparent principles in support of positive employer-worker relations.

 Below are more details on provisions of the new law.

 2008 PRC Employment Contract Law – Mandatory Employment Contract

 This considerably new law does not replace 1995 Labor Law of the People’s Republic of China, but substitutes some of the chapters in individual employment contracts and also, details and adds other portions of the existing labor laws.

Before 2008, it was not very common for employees to have formal contracts with the Chinese companies, a  path to violations and abuses.  With this new law, a very detailed written employment contract is mandatory.  The contract must include details such as job description, working hours, and compensation, and it must be created during the first month of employment.

If the company fails to create the contract on time, then the employer is required to pay the worker twice his or her salary for every month that there is no contract.

More Protective Provisions

The law also has other interesting rules that increase the protection of employees in the workplace.  Some of them are:

  • Limitations of reasons for dismissal to serious issues such as incompetence or  rule breaking company rules
  • Determining that in mass layoffs some categories of employees are spared, such as sole family wage earners, and those who support a minor or an elderly person
  • Specifying actions and penalties for unlawful terminations
  • Prohibition of employers retaining employee’s documents and ID’s
  • Definition of what constitutes a fixed-term, an open and a specific contract
  • Stipulating grounds for termination that requires 30 days’ written notice or the payment of one month’s salary 

 Complying With the New Provisions:  Some Advice

Companies doing business in China are expected to comply with the new rules; therefore, it is important that HR practitioners bear in mind the following:

  • Use specialized legal counsel for interpretation of the new provisions
  • Establish a good relationship with the government authorities and with the trade unions
  • Complete the contracts in a timely manner and add all the specific provisions addressing the employee-employer relationship
  • Work along with the Chinese HR practioners to ensure a better understand of the cultural aspects
  • Create HR systems to manage the work relations
  • Carefully decide on termination of employees in China

 China, with its increasing economic power, has caused employers to focus more on operations there.  HR Professionals should pay careful attention to how business is conducted in China and especially, how labor and employee relations are managed.  Full compliance with the domestic laws will ultimately ensure the success of your operations in this fascinating land.

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