Effective Employee Termination: Managing the Complex Process Overseas

Working with remote workers can be a very positive and rewarding experience, but you will inevitably find yourself in a situation where you have to let employees go.

Terminating an overseas employee can be complex and challenging, as international labor regulations vary from country to country. If not done properly, it can lead to reputational damage and costly litigation.

So, what's the best way to handle the termination of an employee in another country? Read on to find out.

The Risks of Terminating International Employees

When you terminate employees abroad, you must be aware that they enjoy the protections and rights customary in that country. Here are some of the most common obstacles your company might face.

Damaged Reputation: Dismissing an employee improperly can lead to bad press and/or a lawsuit and severely damage your company's reputation.
Wrongful Termination Lawsuits: Wrongful dismissal occurs when an employee is dismissed for reasons that are against the law. However, the definition of "wrongful dismissal" differs internationally, so it is essential to know the local laws.
Discrimination Lawsuits: A discrimination claim occurs when an employee believes he has been dismissed based on factors such as race, gender, or age.

Terminating expatriate employees is not easy, but there are certain steps you can take to ensure that each employee is terminated fairly and in accordance with local law. Here's what you should keep in mind:

Understand the Employment Laws and Regulations. As a company, you need to know what you are getting into when you start working with external employees. This means that you need to find out about the labor laws and regulations in the employee's country before drawing up the employment contract. Also, you must check whether there are any collective bargaining agreements (CBAs) that contain further provisions on employee termination.
Review the Employment Contract. Be sure to check the individual employment contract to determine whether there are any other requirements or restrictions in addition to the legal provisions that you need to take into account.
Work with an EoR Agency. Many employers choose to partner with an employer of record (EoR) agency to better manage the termination process. A global EoR agency handles all tasks related to managing international employees, including recruitment and termination of contracts.

How Can an EoR Agency Help with Employee Termination Abroad?

Working with an employer of record can save you valuable time and prevent unnecessary headaches. This is how an EoR agency can simplify the termination process for your company:

Local Expertise

A global EoR has local expertise that ensures the termination process is done correctly from the start. Knowing the local regulations before drafting an employment contract is the best way to avert stressful situations.

In addition, knowledge of regional regulations guarantees that the employment contract complies with all local laws and serves as a formal agreement, setting out the terms and conditions of employment, including termination. These articles usually lay the grounds for termination of employment, severance obligations, and notice periods.

Accurate Implementation

Terminating an employment relationship has a financial component that must be appropriately implemented. The exact amount to which an employee is entitled in the event of termination may depend on several important factors, such as length of employment, statutory payments, unpaid bonuses and allowances, and accrued vacation entitlements.

An experienced EoR provides global payroll management, gathers tax and severance information, and accurately calculates an employee's entitlement regardless of the country or type of business.

Security

One of the main problems with dismissed employees is access to sensitive information. The company's intellectual property must be legally protected when the employment contract is drawn up in order to prevent digital access after termination. An international EoR has policies in place to legally protect and reclaim your intellectual property.

In Conclusion

Improper dismissal of employees is a menace to any company operating abroad. It carries reputational and compliance risks as well as costly litigation.

For these reasons, it is crucial to ensure compliance with the labor laws of the country in which the employee is based. One solution is to work with a global employment agency or EoR.

Swapp Agency provides international payroll and HR services, focusing on the Nordic countries. It ensures that employees are hired and terminated in accordance with local legislation.