THE 2011 GLOBAL EMPLOYER: Highlights of Littler’s Fourth Annual Global Employer Institute February 2012 AUTHORS Garry G. Mathiason Margaret Hart Edwards Bruce J. McNeil Peter A. Susser Gail A. Engstrom Kristen M. O’Connor Barry A. Hartstein Katherine C. Franklin Bruce J. Sarchet Michael G. Congiu Steven J. Friedman Trent Sutton Earl “Chip” M. Jones Tahl Tyson Laurent R.G. Badoux Elizabeth A. Lalik Juan Carlos Varela Philip M. Berkowitz Johan Lubbe Jaffe D. Dickerson Stefan J. Marculewicz IMPORTANT NOTICE This publication is not a do-it-yourself guide to resolving employment disputes or handling employment litigation. Nonetheless, employers involved in ongoing disputes and litigation will find the information extremely useful in understanding the issues raised and their legal context. The Littler Report is not a substitute for experienced legal counsel and does not provide legal advice or attempt to address the numerous factual issues that inevitably arise in any employment-related dispute. Copyright ©2012 Littler Mendelson, P.C. All material contained within this publication is protected by copyright law and may not be reproduced without the express written consent of Littler Mendelson. Table of Contents SECTION / TOPIC Page I. INtroDUCtioN 1 II. THE GLOBALIZATION OF EMPLOYMENT AND LABOR LAW: BREAKING DEVELOPMENTS, TRENDS, PRACTICAL COMPLIANCE INITIATIVES FOR 2012 2 III. INterNatioNal seCUrity: keepiNG employees safe IN DANgeroUS loCales 9 A. Introduction — 2011: A Year of Tumult and Transition 9 B. International Security — The Legal Perspective 9 C. International Security — The Practical Perspective 10 IV. BEST PRACTICES FOR CROSS-BORDER EMPLOYMENT AGREEMENTS 12 A. Selecting the Right Person for the Assignment 12 B. What Are the Most Common Structures for C ross-Border Employment Agreements, and What Are the Advantages and Disadvantages of Each? 13 C. What Are the Best Practices for Creating a Good Cross-Border Employment Agreement? 13 V. CORRUPTION: A PRACTICAL APPROACH TO THE FOREIGN CORRUPT PRACTICES ACT AND THE UK BRIBERY ACT 16 A. Introduction 16 B. Anti-Corruption Laws — What Do They Prohibit and What Are the Penalties 17 C. Best Practices for Preventing Bribery and Corruption and Minimizing Liability 21 VI. OUT of the FINANCial Crisis “FryiNG PAN” AND INto the CompliaNCE “Fire”: What MUltiNatioNals NeeD to KNOW AboUT New FINANCial Reforms 25 A. Introduction — Financial Crisis Leads to Heightened Oversight 25 B. US Imposes Unprecedented Changes in Pay Practices 25 C. Continental Europe Regulates the Financial Industry 26 D. UK Regulations Under the Financial Services Authority 27 E. Practical Measures to Address New Global Policies 27 VII. global labor relatioNS: global UNioN feDeratioNS, INterNatioNal labor staNDarDS, AND HUMAN rights 28 A. Introduction — A Brave New World 28 B. CSR — A Historical Perspective and Primer 29 C. Emerging Trends — How Will Companies Be Pressured? 30 D. Practical Considerations: Responding Through Thoughtful and Comprehensive Self-Regulation 31 COPYRIGHT ©2012 LITTLER MENDELSON, P.C. i Table of Contents (continued) SECTION / TOPIC Page VIII. BULLIES AT WORK: SOLUTIONS FROM DIFFERENT LANDS 33 A. Around the World, Bullying Is Not Uncommon in the Workplace 33 B. What Is Bullying and How Is It Legally Addressed? 34 C. Latest Developments in a Sampling of Jurisdictions 34 D. Employers Should Take Practical Steps to Prevent Bullying 38 IX. AFRICA: A WEALTH OF BUSINESS OPPORTUNITIES IN AN UNFAMILIAR LEGAL LANDSCAPE 40 A. Introduction — Modern Day Africa 40 B. Background 40 C. Conducting Business in Africa 42 D. The Employment Relationship 44 E. Conclusion 48 X. THE EVOLVING LABOR RELATIONS AND LABOR LAW PICTURE IN THE PEOPLE’S REPUBLIC OF CHINA 49 A. Introduction 49 B. Labor Law in China — A Historical Perspective 49 C. Emerging Trends 49 D. Practical Considerations 53 XI. INterNatioNal EMPLOYMENT LAW UPDATE: 2011 54 A. Introduction 54 B. Employment Discrimination 54 C. Workplace Privacy 56 D. Wage and Hour Law 56 E. New Statutes 57 F. Fraud 58 G. Workplace Climate 58 H. Arbitration 59 I. Text Messages in the Workplace 59 J. Philosophical Beliefs 60 K. Can You Get Fired for that? 61 L. Cat’s Paw Liability 62 XII. APPENDIX A — US FCPA vs. UK Bribery ACT: Key DiffereNCes for US Employers 63 ii LIttLER MENDELSON, P.C. • EmplOYMENT & LABOR LAW SOLUTIONS WORLDWIDE™ THE 2011 GLOBAL EMPLOYER: Highlights of Littler’s Fourth Annual Global Employer Institute INtroDUCtioN In November 2011, Littler Mendelson conducted its Fourth Annual Global Employer Institute (GEI) in Washington, D.C. Attorneys and human resources professionals from 13 countries participated in the GEI. Regions represented included North and South America, Europe, Africa and Asia, including rapidly expanding markets such as Brazil, India and China. Each year we highlight and discuss some of the most challenging issues facing global employers. Topics featured at the 2011 GEI included: • The Globalization of Employment and Labor Law: Breaking Developments, Trends, and Practical Compliance Initiatives for 2012 • International Security: Keeping Employees Safe in Dangerous Locales • Best Practices for Cross-Border Employment Agreements • Corruption: A Practical Approach to the Foreign Corrupt Practices Act and the UK Bribery Act • Out of the Financial Crisis “Frying Pan” and into the Compliance “Fire”: What Multinationals Need to Know About New Financial Reforms • Global Labor Relations: Global Union Federations, International Labor Standards and Human Rights • Bullies at Work: Solutions from Different Lands • Africa: A Wealth of Business Opportunities in an Unfamiliar Legal Landscape • The Evolving Labor Relations and Labor Law Picture in the People’s Republic of China • International Employment Law Update: 2011 We also held a workshop on “Investigating Employee Misconduct Across Borders” and presented a special panel on corporate social responsibility in the mining industry in Latin America. This Publication is intended to highlight many of the topics from Littler’s 2011 GEI. We hope you find it to be a useful resource. Garry G. Mathiason Peter A. Susser Littler Mendelson, P.C. COPYRIGHT ©2012 LITTLER MENDELSON, P.C. 1 THE 2011 GLOBAL EMPLOYER: Highlights of Littler’s Fourth Annual Global Employer Institute I. THE GLOBALIZATION OF EMPLOYMENT AND LABOR LAW: BREAKING DEVELOPMENTS, TRENDS, PRACTICAL COMPLIANCE INITIATIVES FOR 2012 Employers increasingly work across borders. At the same time, employers must maintain employment and business practices that meet standards of legal compliance, ethics and transparency. With increasing public scrutiny of employment and business practices, multinational employers face significant challenges. The United Nations designated October 31, 2011, as the date when our population around the globe reached seven billion.1 Along with this growth, business is becoming more global and interconnected. Internet user growth, which reached 30.4% around the world as of June 2011, best illustrates such globalization. With the Internet and global media, business and employment practices that are challenged in an isolated location can reverberate around the globe. Based on such developments, employers should anticipate increased efforts toward global employment law standards. Discussed below are eight global employment and labor law “hot topics” that relate to trends Littler has been monitoring for the last five to ten years . This introductory section is intended to paint these topics with a broad brush, and the subsequent sections of this publication discuss many of these trends in greater detail. Hot Topic #1: Dangerous Workplaces There is no question that the world is still a place of potential treachery. About 10%of US expatriates are assigned to countries and situations that would be classified as dangerous. The potential legal ramifications for employers need to be considered. A recent lawsuit highlights the potential risk to employers in making certain foreign assignments. In December of 2009, two Scottish oil workers were kidnapped in Nigeria. The workers had previously complained that there was poor security. Significantly, the employer failed to make a risk analysis prior to the overseas assignment. The lawsuit that followed was brought on a theory that works in most countries – breach of the duty to provide a safe workplace.2 A “dangerous workplace” can pose risks ranging from terrorism or kidnapping to lack of infrastructure, lack of medical facilities, or extreme physical conditions. A detailed Littler Report,3 which provides both a legal and practical guide to dealing with international employee assignments, recommends developing a comprehensive strategy that includes consideration of factors such as: (1) determining the assignees’ access to health care and health insurance; and (2) having an international assignment policy and agreement. Because of the significant issues raised, this topic is discussed in greater detail below in Section II. Hot Topic #2: Social Media and Global Privacy More than a decade ago, email and the Internet redefined the workplace. Now, there is a compliance challenge regarding social media with the line between one’s private life and work life becoming increasingly more difficult to define. New policies have to be written and enforced. There has been an explosive growth of social media. One year ago, Facebook had 500 million users. Today, Facebook has 800 million users. Half of them log in daily, and 75% of the users are outside of the United States. If you add LinkedIn, you have