DIFFERENCES BETWEEN U.S. AND EUROPEAN LABOR LAWS: Part 3 Notice Period

PART 3

If you are an American seeking to do business in Europe, or vice versa, it is useful to have an overview of the cultural and legal differences between the two continents to understand how these impact the respective work cultures.  As each state in the U.S. and each country in Europe has its own quirks, it would be impossible to cover all variables.  This series is intended to give a basic overview of some common and general points to bear in mind.

So over the next few months, we’ll be addressing quickly the most common questions we entertain.  We’re also hoping to start a conversation – if there’s a topic you’d like us to cover, please let us know.  This is Part 3 of our series.  To view Part 1 (on minimum wage), click here, or Part 2 on Severance Payments, click here.

 

Notice Period

Europe.  There is no Europe-wide law on mandatory notice periods in employment contracts.  England has mandatory minimum notice periods based on the length of service, which provide minimum notice even when the period of employment was short as one month. France has mandatory minimum notice periods based on various factors, including whether the employee was an executive, the length of service, and if a collective bargaining agreement was in place.  Germany has complex notice laws. Notice periods there can extend to the range of 7 months depending on the length of service and there are strict rules on how notice must be communicated and whether termination is even permitted. Spain looks at whether the termination was for disciplinary reasons, in which case no notice is required.  Italy’s laws on notice are tied to the reason for the termination, the length of service and the type of employee, with the required notice period usually being between 15 days and 6 months based on these variables.  As can be seen, there is no one-size-fits-all when hiring and firing employees in Europe.  It is very important to consult local counsel before hiring anyone so that you understand what the cost of terminating that person could be.

 

United States.  It is usually a surprise to European businesses that there is no federal or state law in the U.S. regarding advance notice from either the employee or the employer.  In the U.S., the question of notice is a contractual issue.  Employment in the United States is generally “at-will” unless a specific period of employment has been agreed between the parties (which can occur in writing or by oral promises). The at-will doctrine allows either party to end the relationship for any reason and without any notice, although employers may not terminate for prohibited reasons, such as discrimination on grounds of race, sex, color, national origin, age, disability etc. Union contracts usually include minimum notice periods.

Despite the lack of a mandatory notice period, it is customary in many industries to require notice for employees who are not entry-level.  However, notice periods, when used, are usually in the range of 1-4 weeks.  It is highly unusual in the U.S. to have a notice period that is longer than one month except for senior executives. Of course, there are practical downsides to having an employee still in the office during the notice period, particularly if the employee could have access to sensitive information during that time. Employers coming from a European background should bear this in mind so that, if they do wish to retain a notice period, their offer letters or employment contracts provide sufficient get-out methods during the notice period. (A “notice period” may, however, end up looking more like a severance payment.) Conversely, Europeans doing business here should be aware that, if they have not put a notice period in their agreements, lower level employees are known to quit there and then when a better offer comes along, which can sometimes come as a shock.  It is therefore important for employers to plan for sudden employee departures and have a good source of recruitment at the ready.

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