June 25, 2019

June 25, 2019

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June 24, 2019

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5 Common Issues Multinational Employers May Encounter When Implementing Leave Policies

For the purposes of talent acquisition and retention, multinational employers with U.S. parental leave policies may wish to roll out the exact same policies at all locations. However, this can easily turn into a tale of “no good deed goes unpunished” because certain provisions may run afoul of local laws and customs or inadvertently grant additional benefits. Below are several common issues multinational employers may want to keep in mind when drafting parental leave policies, as well as steps they can take to harmonize policies globally.

1. Retaining Discretion Regarding How Much Leave to Provide

Policies allowing an employer to retain discretion as to how much leave to provide may run afoul of certain countries’ (such as Chile, Colombia, and Mexico) laws. For example, if a policy contains a provision for up to 18 weeks of leave, the “up to” language signifies that the employer has discretion. This can violate the some countries’ requirement that voluntary benefits not be subject to an employer’s discretion and have clear and objective criteria for eligibility.

The “up to 18 weeks” language also leaves open the possibility that similarly situated employees may receive different amounts of leave, which can violate local requirements that benefits be the same for all such employees. This discrepancy could create grounds for a discrimination claim. To address this pitfall, employers may want to consider removing the “up to” language or include a caveat that the policy is subject to applicable law.

2. Ambiguity Regarding the Interplay With Local Social Security or Government-Provided Leave

Many countries provide local social security or government-provided leave. Policies can address the interplay with social security and/or government insurance–paid leave and employer-paid leave. If a policy fails to do so, it could leave open questions such as whether the company will pay an employee during any social security or government insurance–paid leave, resulting in a double benefit, and whether the company will pay the employee during the remainder of the leave after the government-provided leave expires.

Employers may want to consider revising their policies to clarify whether paid leave is in addition to leave paid by local social security or insurance and whether the company will assume the payment after the expiration of the statutory period covered by social security or make up the difference between the amount provided by the government and the policy.

3. Ambiguity Regarding the Interplay With Local Prenatal Leave Requirements

Employers may want to keep in mind that some countries statutorily mandate not only postnatal leave, but also prenatal leave. As such, employers may need to revise some policies to account for the prenatal component of the statutory leave. For example, female employees in Argentina are statutorily entitled to a maternity leave of 90 days, which is divided into two equal periods of 45 days: one to be taken as prenatal leave and the other to be taken after the date of birth. Companies may want to clarify how the leave period will run concurrently with statutory leave when local law provides for both prenatal and postnatal leave.

4. Calculation of Leave Pay

Companies that calculate leave pay based only on salary may run afoul of local requirements. For example, in Brazil, the rate of pay during leave is based on the last total monthly remuneration, including, for salaried employees, any variable pay and, for non-salaried employees, any overtime and variable pay. Employers may want to consider either removing language reflecting that pay during leave is based only on salary, or including a caveat that the policy is subject to applicable law.

5. Local Language Requirements

Employers that provide English-language policies in other countries should be wary of local requirements. For example, many countries require that policies be in the local language in order to be enforceable.

© 2019, Ogletree, Deakins, Nash, Smoak & Stewart, P.C., All Rights Reserved.


About this Author

Diana Nehro, Employment Attorney, Global, Ogletree Deakins Law FIrm

Ms. Nehro is the Deputy to the Chair of the International Practice Group of Ogletree Deakins and is based in the firm’s Boston office. Ms. Nehro assists clients in efficiently and effectively managing international labor and employment issues in an ever-expanding global economy. Ms. Nehro has experience in advising multinational clients in connection with the establishment and management of international workforces, including the preparation and enforcement of personnel policies and employment agreements, compensation and benefits, litigation avoidance and strategy, as well as general...