EXAM 2 (CH 6) ~ International Employment Law, Labor Standards, and Ethics ~ GLOBAL HRM

Global Legal/Regulatory: Context of MNEs

What IHR Managers must do: - comply with the laws of the countries in which it operates - comply with international standards and supranational regulations - comply with the extraterritorial laws of its own country

The International Framework of Ethics and Labor Standards

What is right and wrong in business conduct across borders and the impact of cultural (country and company) variances on ethical conduct of MNEs International ethics deals with issues of corruption and bribery, and the various ethical dilemmas that MNEs face in the conduct of their international activities

Ethical Relativism

What is right is whatever a society defines as right May be at the individual (individual relativism) or at the societal (cultural relativism) level

Legitimacy

The necessity of the data to execute a contract or comply with a legal obligation; employee consent

Anti-discrimination and Harassment

- All EU members are required to pass legislations that prohibit discrimination on the basis of race, gender, disability, age, sexual orientation, family status, and religion or belief - Cultural interpretation of what constitute a sexual harassment and bullying varies extensively between countries - In the US, sexual harassment prohibition is also applied extra-territorially - 10% of employees around the world report that they have been sexually harassed or bullied at work

Immigration and Visas

- An international worker needs a work visa if they stay for more than 6 months - Visa requirements are becoming more difficult to meet - IHR managers need to account for those requirement and the time to initiate visas - Work visas are complicated, time-consuming, difficult, and expensive - Within the EU, EU members' nationals are free to move and get an occupational anywhere within the EU commercial area

Implementation of Global Ethical Standards

- Be clear about the reasons for developing a global ethics program - Treat corporate values/formal standards of conduct as absolutes - Consult the stakeholders - Choose your words carefully - Translate the ethics code carefully - Translate the "ethics code" training materials - Designate an ethics officer for overseas operations - Speak of international law, not just parent country law - Recognize the business case - Recognize the common threats

OECD Guidelines for Multinational Enterprises (MNEs)

- Contribute to economic, environmental and social progress with a view to achieving sustainable development - Respect the internationally recognized human rights of those affected by MNE activities - Encourage local capacity building through close co-operation with the local community - Encourage human capital formation, in particular by creating employment opportunities and facilitating training opportunities for employees - Refrain from seeking or accepting exemptions not contemplated in the statutory or regulatory framework related to human rights, environmental, health, safety, labor, taxation, financial incentives, or other issues - Support and uphold good corporate governance principles and develop and apply good corporate governance practices, including throughout enterprise groups - Develop and apply effective self-regulatory practices and management systems that foster a relationship of confidence and mutual trust between enterprises and the societies in which they operate - Promote awareness of and compliance by workers employed by multinational enterprises with respect to company policies through appropriate dissemination of these policies, including through training programs - Refrain from discriminatory or disciplinary action against workers who make bona fide reports to management or, as appropriate, to the competent public authorities, on practices that contravene the law, the Guidelines or the enterprise's policies

Protection of Intellectual Property

- Countries and cultures have different perceptions of the level of protection of intellectual property (patents and copyrights). - Non-compete agreements are subject to different legislations and enforcement levels. - It is very difficult to enforce non-compete agreements in employment contracts at a global level. - IHR managers ensures to make international assignees and employees at various localities to sign non-compete contracts. - IHR should ensure proper communication and training on intellectual property - especially where this concept is not robust.

Assurance of Ethical Behavior and Conduct

- Develop a clear set of core values as the basis for global policies and decision making - Train international employees to ask questions that will help them make business decisions that are both culturally sensitive and flexible within the context of those core values - Balance the need for policy with the need for flexibility or imagination

Implementing a CSR Program

- Develop a global CSR policy - Obtain a high level of support - Communicate CSR activities and policy - Create a CSR culture - Provide adequate training - Install reporting and advice mechanisms - Include CSR in management's performance management - Lead by example

Umbrella of CSR Programs

- Sustainability - Business Ethics - Corporate Structure & Governance - Human Resources - Labor & Human Rights - Environmental Management - Community Involvement & Economic Development - Accountability

Termination and Reduction in Force

- Individual employment is highly protected by many countries, including robust contracts that define the terms and conditions of employment. - Employment cannot be ended unilaterally or arbitrarily by employers. - Employment at will, practiced in the US, do not exist at other countries. - Employers rights to terminate, lay off, reduce, restructure, move, outsource, or subcontract work is highly constrained. - Employees cannot be terminated on the basis of health & safety, pregnancy or maternity, asserting a statutory right, union activity, or on the basis of discrimination. - If termination is performed, usually it mandates extensive notice, consultation and severance payment (based on tenure, age and latest salary). - At many countries, reducing pay and benefits due to relocation is not allowed.

Application of National Law to Local Foreign-owned Enterprises

- MNEs must abide by the laws of the countries in which they do business - Friendship, Commerce, and Navigation (FCN) treaties make exceptions for key parent-country personnel of commercial entities - Foreign government-owned are exempted from national laws and civil claims

Development of a Strategic Global Code of Conduct Policy

- MNEs need to develop strategic policies to establish a code of conduct that defines acceptable behavior in terms of employment relations - Codes of conduct should be defended as the "company culture" - Remove the possibility of managers disagreeing with certain practices because they perceive them to go against local or national cultural practices - The decision to abide by certain labor standards is based on the defined company culture and policies, not on any given individual biases or preferences

Latin American and Asian trade agreements

- Mercosur/Mercosul - The Andean Community - The Association of South-East Asian Nations (ASEAN) - Asia-Pacific Economic Cooperation (APEC)

World Trade Organization (WTO)

- Replaced General Agreement on Tariffs and Trade (GATT) - Defers to ILO for pursuit of global labor standards

Principles for Shaping Ethical Behaviors in International Operations

- Show respect for core human values, which determine the absolute moral threshold - Show respect for local traditions - Maintain the belief that context matters when deciding what is right and what is wrong

European Union (EU)

- Social Charter sets out 12 principles of workers' fundamental rights - Established the European Social Fund to promote worker mobility - Adoption of employment standards prevents locating of MNE in pursuit "softer" employment standards

Examples of US Laws with Extraterritorial Intent

- Title VII of the Civil Rights Act - Age Discrimination Act - Americans with Disabilities Act - Foreign Corrupt Practices Act - Sarbanes-Oxley Act

Tolerating Cultural Diversity While Avoiding Moral Recklessness:

- Why is the practice acceptable in the host country but not at home? - Is it possible to conduct business successfully in the host country without undertaking the practice? - Is the practice a violation of a fundamental right?

Data Privacy and Protection

- Within the EU, Data privacy and protection are robust (many countries are duplicating the EU standards) - American firms that agree to EU standards may certify to the US Department of Commerce, reviewed by the EU - You need to get consent from employees, with limited power to get consent as an employment prerequisite - EU standards are increasingly becoming the global standards

International trade organizations and treaties

- World Trade Organization (WTO) - European Union (EU) - North American Free Trade Agreement (NAFTA) - North American Agreement on Labor Cooperation (NAALC) - Bilateral Agreements - Latin American and Asian trade agreements

Human Rights Principles

1. Businesses should support and respect the protection of proclaimed human rights 2. Make sure that they are not complicit in human rights abuses

Data Privacy and Protection: EU Personal Data Protection Principles

1. Legitimacy 2. Proportionality 3. Finality 4. Notice 5. Accuracy and Retention 6. Security 7. Access

National Laws and Regulations

Employment laws vary significantly among countries IHR should use local HR practitioners when possible

European Community Charter of the Fundamental Social Rights of Workers

1. freedom of movement 2. free to choose and engage in an occupation; fairly remunerated 3. improvement in the living and working conditions 4. adequate level of social security benefits 5. right of association in order to constitute professional organizations or trade unions of their choice 6. access to vocational training 7. equal treatment for men and women 8. information, consultation and participation for workers 9. every worker must enjoy satisfactory health and safety conditions 10. limited to certain light work, the minimum employment age must not be lower than the minimum school-leaving age and, in any case, not lower than 15 years

Anti-corruption Principle

10. Business should work against all forms of corruption, including extortion and bribery

Labor Principles

3. Businesses should uphold the freedom of association and the effective recognition of the right to collective bargaining 4. The elimination of all forms of forced and compulsory labor 5. The effective abolition of child labor 6. The elimination of discrimination in respect of employment and occupation

Environment Principles

7. Businesses should support a precautionary approach to environmental challenges 8. Undertake initiatives to promote greater environmental responsibility 9. Encourage the development and diffusion of environmentally friendly technologies

Common law

A constitution enunciates a few, long-standing, general principles to which everyone is subject. The law, then, is based on tradition as stated in the constitution

Ethical Absolutism

A single set of universal ethical standards or principles, which apply at all times, in all circumstances, in all cultures

The Association of South-East Asian Nations (ASEAN)

Accelerate economic growth, social progress, cultural development and peace and stability between Brunei, Indonesia, Malaysia, Philippines, Singapore, Thailand, Vietnam, Laos, Maynamar, and Cambodia

Commercial Diplomacy

An emerging interdisciplinary field that refers to the processes of influencing foreign government policy and regulatory decisions that affect global trade Involves - trade negotiations (tariff and non-tariff trade barriers) - impact of policy on decision-making (business interests) - government regulations (affecting banking) - legislation (anti-trust/competition law) - standards (health, safety) - industrial subsidies (agricultural, R&D) - corporate conduct (corruption and bribery)

Extraterritorial Laws

Apply beyond the sovereign territory of the nation that enacted them Apply only if they do not conflict with host county laws (foreign compulsion defense)

Civil code or law

Based on an all-inclusive system of written rules, of which there are three types: commercial, civil, and criminal

The North American Free Trade Agreement (NAFTA) includes which of the following countries?

Canada Mexico The United States

Under the 1998 EU directive on the protection of employee privacy, personal data on European employees _______ transferred out of the EU unless the country in which the data recipient resides has acceptable privacy protection standards in place.

Cannot be

Finality

Cannot be used for other purposes than its stated use

Notice

Collection and use must be disclosed to employees

_________ is a legal system commonly adopted in Anglo countries such as the United States and the United Kingdom

Common law

Mercosur/Mercosul

Common market agreement between Argentina, Brazil, Paraguay, and Uruguay

Bilateral Agreements

Linking liberalization of trade and labor standards between the USA and Jordan, Chile and Singapore

Comparative Law

Major Issues for IHRM: - Immigration and Visas - Personal Data Privacy/Protection - Anti-discrimination - Termination and Reduction in Force - Intellectual Property

Accuracy and Retention

Data must be up-to-date and maintained only as long as its stated use

International Ethics and Culture

Difficulties in understanding and working with another country's practices are unavoidable Differing country cultures view various employment and business conduct issues, such as bribery, gifts or favors, tax evasion, or child labor, differently In the area of global ethics, even the best-informed, best-intentioned executives often have to rethink their assumptions

Supranational Laws

Either directly binding on member states or indirectly binding on employers Directives seek to harmonize (reduce the legal diversity of) legislation among member states

Access

Employees have the right to access and are allowed to correct personal data

Asia-Pacific Economic Cooperation (APEC)

Enhancing economic growth, trade, investment and cooperation among 21 countries including Australia, Canada, China, Indonesia, Japan, etc.

Ethical Dilemmas in IHRM

Example: An employment practice that is illegal or viewed as wrong in the home country but is legal or acceptable in the host country

Integrated Enterprise Test

Factors Determining Integration: - Interrelation of Operations - Common Management - Centralized Control of Labor Relations - Common Ownership or Financial Control

The Andean Community

Integration and economic and social cooperation between Bolivia, Columbia, Ecuador, Peru, and Venezuela

Determining Sustainability

Is the decision - fair to employees? - sustainable in the long run? - green in terms of the carbon footprint? - -making process transparent and open for scrutiny?

Establishment of Labor Standards By International Institutions

Labor standards that apply to many countries/firms that conduct international business ~ Freedom of association (i.e., the right to organize and to bargain collectively) ~ Equal employment opportunity and non-discrimination ~ Prohibitions against child labor and forced (prison or slave) labor ~ Basic principles concerning occupational safety and health ~ Consultation with workers' groups prior to carrying out substantial changes such as workforce reductions and plant closures ~ Grievance or dispute resolution procedures ~ Use of monitors (internal or external) to audit employment practices

Corporate Sustainability

Meeting the needs of the present without compromising the ability of future generations to meet their own

Religious law

Most common of which is Islamic law, or Sharia, which refers to the "way" Muslims should live or the "path" they must follow

North American Agreement on Labor Cooperation (NAALC)

Provides mechanisms for problem-solving consultations when there are differences in policy and practice

On an ethical continuum, ethical ________ suggests that what is right is whatever a society defines as right

Relativism

Proportionality

Relevant and not excessive

Security

Safeguards to prevent unauthorized access

Other laws

Such as Tribal laws, local customs...etc.

Corporate Governance

The basis upon which decisions are made in organizations Involves the structure and relationships that determine how corporate objective are met and regulated by the different performance monitoring mechanisms - management team - board of directors - investors - shareholders

Corporate Social Responsibility (CSR), Corporate Governance, and Sustainability

The continuing commitment by business to: - behave ethically and to contribute to the economic development of their communities - to improve the quality of life of their work forces, their families, as well as society at large Makes MNEs aware that they product both benefits and harm when operating globally Can be viewed on a continuum of providing value from stockholder to external stakeholder

The ILO Declaration on Fundamental Principles and Rights at Work

~ Adopted in 1998, the declaration is an expression of commitment by governments, employers' and workers' organizations to uphold basic human values - values that are vital to our social and economic lives ~ These principles and rights are: 1. freedom of association and the effective recognition of the right to collective bargaining 2. the elimination of all forms of forced or compulsory labor 3. the effective abolition of child labor 4. the elimination of discrimination in respect of employment

The Institutional Legal Context of International Business

~ Common law ~ Civil code or law ~ Religious law ~ Other laws

The Organization of Economic Cooperation and Development(OECD)

~ Focus is broader than that of the ILO ~ Coordinates economic policy to address globalization issues through the promotion of economic, environmental, and social policy among its members

UN Global Compact Principles

~ Human Rights (Principle 1-2) ~ Labor (Principle 3-6) ~ Environment (Principle 7-9) ~ Anti-corruption (Principle 10)

United Nations (UN)

~ Plays a relatively insignificant role in establishing employment laws or standards ~ Until recently, the UN only operated in this domain through agencies such as the International Labor Organization ~ Statement of Universal Human Rights ~ UN-Global Compact: the general assembly adopted ten principles in areas of human rights, labor standards, the environment and anti-corruption

International Labor Organization (ILO)

~ Primary goal is to improve working conditions, living standards, and the fair and equitable treatment of workers in all countries ~ Two type of labor standards: binding conventions and nonbinding recommendations

World Bank and International Monetary Fund (IMF)

~ Research on the relation between trade policy reform and labor markets (wages, unemployment, etc.) ~ Protection of "social safety nets" during structural reforms of economies

International Organizations

~ United Nations (UN) ~ International Labor Organization (ILO) ~ The Organization of Economic Cooperation and Development (OECD) ~ World Bank and International Monetary Fund (IMF)