Multiple Country Compensation Programs

United States Employment at Will

In the United States, the legal and cultural foundation for the employment relationship comes from the common law doctrine that states employment is "at will." This means that the employer may terminate the employee for any reason: a good reason, a bad reason, or no reason at all. Employees are also able to resign from their jobs at any time without any legal consequences. The employer's right has eroded over the years: first through union demands, then through laws (mainly civil rights laws), and more recently through courts using the doctrine of implied contract. In the United States, despite the at will doctrine, it is difficult to fire an employee for anything other than cause or economic need. If the termination of an employee unintentionally skews toward a protected class (e.g. minority, over age 40, etc.), the company may be at risk of discrimination allegations.

Unions and European Works Councils

When considering multiple countries' total reward programs, practitioners need to factor in union and government influences on wages, which can be more significant in some countries than in others. In Europe, a labor union may exist at an industry, profession, or national level rather than at a company level.

European Works Councils are established at the company level and serve as a conduit between companies and employees. Keep in mind, a works council is different from a union. A works council represents a company's workers for the purpose of receiving information from and consulting with the company’s management on a range of issues affecting employees.

Works Councils are common in Germany, The Netherlands, Austria, Switzerland, France,and Spain. In fact, a European Union Works Council is required for EU companies that:

• operate in two or more countries and employ 1000+ employees
• have at least 150 employees in two member states (each)
• have at least 100 workers who request creation of a European Works Council

A separate European Union Directive requires all EU members to adopt minimum legal standards pertaining to information and consultation between management and employees and is aimed at national works councils for companies with 50+ employees.

European states have adopted even lower thresholds in granting power to works councils. For example, in France, employee delegates are required in all companies with at least 11 employees, while works councils are required only once the 50-employee threshold is reached. European Works Councils are established under Directive 2009/38/EC.