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29 (124) 2017
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Interviews

Labour law in the age of globalisation

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An interview with Aleksandra Minkowicz-Flanek, partner, head of Employment and Labour, Dentons.

Changes in business models, globalisation and international networks all affect the way legal counsels specialising in employment law work with clients. Their services increasingly involve putting together comprehensive solutions across many jurisdictions to help multinationals manage human resources efficiently.

How has international expansion affected the work of legal counsel specialising in employment law?

HR directors admit that managing globally dispersed teams can get tough. For this reason, they need effective advice and assistance. Demand for cross-border advice has grown considerably. Management teams and HR managers want their questions concerning multiple jurisdictions answered by one professional, all at once. Their role in global corporations is to manage change and coordinate the implementation of efficient solutions across entire regions rather than individual countries. Legal counsels are expected to keep pace with their clients’ management teams, understand their needs and provide added value.

Many corporations have had dispersed organisational structures for a long time now. So why in your opinion has the scope of services needed by corporations changed?

Globalisation is a process. Just a few years ago corporations would have a head office and branches in several countries, but the current trend is to have a presence in anywhere from 10 to upwards of 50 jurisdictions. This means that HR specialists in international companies who started off as HR heads for five countries have now been assigned, say, 20 branches within the space of a year. This means they're expected to coordinate employment-related matters not only in Europe but also across Asia and South America.

In a global company, contracts and employment files used throughout the corporation must be reviewed for compliance with the local laws of every single country where it employs staff. Naturally, the costs of employment and termination or lay-offs will also vary from country to country. A global corporation must visualise and take all of the above into account in its organisational and financial plans. The recent changes in the scope of duties of HR departments have a direct bearing on the way that we as legal counsel react to client needs. For example, we recently worked for an international client who required urgent legal advice in Singapore. The issue referred to us was straightforward, but it had to be dealt with in less than 24 hours. The client expressly reserved the right to seek a different counsel if we failed to deliver on time!

What happened?

We sorted it out, and retained the client!

Will law firms without a well-developed international network be up to such challenges?

That could be difficult. On the market, there are many networks of independent law firms whose partners give mutual support in situations of this sort. However, this type of networking is based merely on the goodwill of all the parties involved. Global or globally expanding corporations require a consistently high standard of service, which isn't easy to deliver when it involves several independent counsel based in different markets who are working in line with their own standards. And when assuming this mode of legal advice, it may be difficult to choose one lawyer from among several different law firms to coordinate work performed in, say, ten jurisdictions.

Are there sectors where demand for coordinated multi-jurisdictional legal services is on the rise?

We haven't noticed any substantial difference between sectors; globalisation involves every sector of the economy. What matters most is the client’s organisational structure. That said, there's one very perceptible shift on the market, namely one towards eastern markets in the area stretching from China to the Pacific rim.

Which labour regulations do global firms find the most taxing?

Let’s take local regulations concerning overtime for example. There are vast differences in this area. Polish regulations tend to be rigid and stringent, which is a problem for our Japanese, UK or even German clients who are used to certain mechanisms whereby the working hours of managerial staff can be made more flexible. They are surprised to hear that managers in Poland could be eligible for overtime pay despite the express regulations of the Labour Code stating the opposite; corporations run the risk of being sued if their working hours are not properly organised, with the courts likely to uphold management staff claims.

Are Polish labour laws less flexible than employment laws in other countries?

Currently, Polish labour law is quite flexible as regards the forms of employment. Despite widespread complaints that labour costs in Poland are allegedly high, there are countries in Europe where costs are significantly higher and the relevant regulations tend to be even less flexible. Foreign investors find it surprising that group lay-off costs are not as high as in other jurisdictions. That said, US corporations tend not to understand the numerous restrictions concerning the gathering and processing of personal data of employees in Europe, or the obligation to keep all employee files in hard-copy form.

Are Polish managers hired as salaried employees?

Not necessarily, but that's very frequently the case in Poland. You may find it surprising from the practical point of view that a Polish labour court issued a ruling whereby a discharged board member may claim reinstatement at work if the dismissal was defectively made. Not damages but reinstatement – and reinstatement even if someone else has been hired in place of the dismissed employee. When we warn our clients of this risk, they find it perplexing and hard to believe.

What kind of employment-law support do international corporations typically expect from their legal counsel?

We very often advise clients on restructuring related issues, eg where a company is reorganising its business and intends to lay off some of its staff in different parts of Europe or even outside our continent. HR departments need well-structured action plans complete with succinct descriptions of procedures, costs and risks, presented in clear, easy-to-follow ways. Depending on how well-defined the organisation’s assumptions and expectations are, a restructuring project may take anything from two weeks to several months, especially if the project priorities or business assumptions change in the course of the restructuring. Smaller organisations want us to tackle problems connected with their key members of staff being employed simultaneously in several countries on a split-contract basis.

Nowadays, practising employment law is much more complex than it used to be. In addition to typical legal advice on Labour Code regulations, we add extra value by advising on related tax, social security, and corporate issues. We're always prepared to keep pace with our clients across geographical borders and keep our eyes on the wider perspective, be it regional or even global.

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