Chapter 6: International Employment Law, Labor Standards, and Ethics

Criminal Law

a system of law concerned with the punishment of those who commit crimes

Commercial Law

a system of law that applies to many countries. It's also the body of law that applies to the rights, relations, and conduct of persons and businesses engaged in commerce, merchandising, trade, and sales.

Nonbinding Recommendations

a written motion adopted by a deliberative body that cannot progress into a law

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 and Maynamar and Cambodia

Binding Conventions

an agreement between different countries that is legally binding to the contracting States

Anti-Corruption (UN Global Compact Principles)

*Principle 10*: Business should work against all forms of corruption, including extortion and bribery

EU Data Privacy and Protection Principles

- *Legitimacy*: the necessity of the data to execute a contract or comply with a legal obligation; employee consent - *Proportionality*: Relevant and not excessive - *Finality*: Cannot be used for other purposed than its stated use - *Notice*: Collection and use must be disclosed to employees - *Accuracy and Retention*: Data must be up-to-date and maintained only as long as its stated use - *Security*: Safeguards to prevent unauthorized access - *Access*: Employees have the right to access and are allowed to correct personal data

Human Rights (UN Global Compact Principles)

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

Labor (UN Global Compact Principles)

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

Environment (UN Global Compact Principles)

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

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 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

Anti-Discrimination and Harassment Issues

- 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 constitutes a sexual harassment and bullying varied 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

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 (e.g. tariff and non tariff trade barriers) -- Impact of policy on decision-making (e.g. business interests) -- Government regulations (e.g. affecting banking) -- Legislation (e.g. anti-trust/competition law) -- Standards (e.g. health, safety) -- Industrial subsidies (e.g. agricultural, R&D) -- Corporate conduct (e.g. corruption and bribery)

Application of National Law to Local Foreign-owned Enterprises

- Apply to local foreign-owned commercial enterprises - 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

Extraterritorial Laws

- Are laws that apply beyond the sovereign territory of the nation that enacted them - Apply only if they do not conflict with host country laws (foreign compulsion defense) - Examples: Title VII of the Civil Rights Act, Age Discrimination Act, Americans with Disabilities Act, Foreign Corrupt Practices Act, Sarbanes-Oxley Act

Immigration and Visas Issues

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

What IHR Managers Must Do

- Comply with the laws of the countries in which it operates (requires knowledge of local laws and regulations) - Comply with *international standards* and *supranational regulations* (requires knowledge of international labor standards and supranational binding regulations) - Comply with the *extraterritorial laws* of its own country (requires knowledge of extraterritorial laws)

National Laws and Regulations

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

Protection of Intellectual Property Issues

- Countries and cultures have different patents and copyrights for protection of intellectual property - 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

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

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

Example of Forced Labor (ILO)

- In 2012, nearly 21 million people are victims of forced labor across the world, trapped in jobs which they were coerced or deceived into and which they cannot leave - 3 out of every 1,000 people worldwide are in forced labor - 18.7 million (90%) are exploited in the private economy, by individuals or enterprises - Of these, 4.5 million (22%) are victims of forced sexual exploitation and 14.2 million (68%) are victims of forced labor exploitation in economic activities, such as agriculture, construction, domestic work or manufacturing - 2.2 million (10%) are in state-imposed forms of forced labor, for examples prisons, or in work imposed by the state military or by rebel armed forced - 5.5 million (26%) are below 18 years

Termination and Reduction in Force Issues

- 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 - Employers rights to terminate, lay off, reduce, restructure, move, outsource, or subcontract work is highly constrained - 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

Factors Determining Integration

- Interrelation of operations - Common management - Centralized control of labor relations - Common ownership or financial control

Supranational Laws

- Laws that are either directly binding on member states or indirectly binding on employers - Directives seek to harmonize (reduce the legal diversity of) legislation among member states

United Nations

- 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 Trade Organization (WTO)

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

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

European Union (EU)

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

Ethical Relativism

- Suggests that what is right is whatever a society defines as right - This definition may be at the individual (individual relativism) or at the societal (cultural relativism) level

The International Framework of Ethics and Labor Standards

- What is right and wrong in business conduct across borders and the impact of cultural 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

Data Privacy and Protection Issues

- 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, which will be 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

Community Charter of the Fundamental Social Rights of Workers

1. freedom of movement 2. free to choose and engage in an occupation and be fairly remunerated 3. improvement and working conditions 4. right to adequate social protection and enjoy an adequate level of social security benefits 5. right of association in order to constitute professional organizations or trade unions 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. vocational training, limited to certain light work, minimum employment age must not be lower than the minimum school-leaving age and , in any case, not lower than 15

Corporate Governance

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

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

Civil Code or Law

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

North American Free Trade Agreement (NAFTA)

Canada, Mexico, and the US

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

_________________ 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

Corporate Sustainability

Meeting the needs of the present without compromising the ability of future generations to meet their own - Is the decision *fair* to employees? - Is the decision *sustainable* in the long run? - Is the decision *green* in terms of the carbon footprint? - Is the decision-making process *transparent* and open for scrutiny?

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

Ethical Absolutism

Takes the view there is a single set of universal ethical standards or principles, which apply at all times, in all circumstances, in all cultures

Asia-Pacific Economic Cooperation (APEC)

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

The Andean Community

integration and economic and social cooperation between Bolivia, Columbia, Ecuador, Peru and Venezuela)

Civil Law

the system of law concerned with private relations between members of a community rather than criminal, military, or religious affairs