How labour laws differ across countries (and why it matters)

One of the main challenges when expanding across countries is navigating labour laws. Fire someone in California, and you can do it today, for almost any reason, with no notice. Try that in Germany, and you’ll find yourself in court.
Offer two weeks of annual leave in the US, and you’re competitive. Offer the same in France, and you’re breaking the law.

The problem is that these are much more than just technical details. Getting them wrong can mean fines, lawsuits, or damaged relationships with the very people you’re trying to bring on board. Getting it right means you can hire with confidence and build a global team that actually runs without the added risk. Here’s what you need to know.

While every country has its own approach, most labour laws cover the same fundamental areas:

• Wages and compensation: Minimum wage requirements, pay frequency, overtime rates, and rules around deductions.
• Working hours: Maximum weekly hours, rest periods, and how overtime is calculated and compensated.
• Termination: Notice periods, severance pay, and the grounds on which you can (and can’t) end employment.
• Benefits: Statutory entitlements like paid leave, sick pay, parental leave, and pension contributions.
• Employee protections: Anti-discrimination rules, health and safety requirements, and protections for whistleblowers or union members.

The challenge is that each of these areas can look completely different depending on where your employee is based.

Countries differ on when written contracts must be provided, how detailed they need to be, and whether they’re legally required at all. Germany expects comprehensive written contracts before employment begins.
The EU’s Transparent Working Conditions Directive requires key terms within one to two months, though Denmark moves faster at seven days. The US has no federal requirement for written contracts, and employment is typically at-will, often confirmed with little more than an offer letter.

In France, a standard working week 35 hours. In the US, this is typically 40. Some countries mandate overtime pay at premium rates for anything over the standard. Others compensate overtime with time off instead of money, or apply different rules based on the employee’s role or seniority.

Rest periods are also another important factor. The EU requires at least 11 consecutive hours of rest between working days. The US has no federal equivalent.

This is where differences become much more obvious. In the US, most employment is “at-will,” meaning either party can end the relationship at any time, for any reason (with some exceptions).

In much of Europe, termination requires a valid reason, a formal process, and notice periods that can stretch to several months depending on tenure.

Getting termination wrong in a country with strong employee protections can result in unfair dismissal claims, mandatory reinstatement, or significant compensation payouts.

Statutory benefits are non-negotiable minimums set by law. This includes paid annual leave, sick pay, parental leave, and employer contributions to social security or pension systems.

The variation is enormous. Employees in the EU are entitled to at least four weeks of paid annual leave. In the US, there’s no federal requirement for paid leave at all. Parental leave ranges from a few weeks in some countries to over a year in others.

Social security contributions also differ wildly. In some countries, employers pay a significant percentage of salary into state systems covering healthcare, pensions, and unemployment insurance. In others, these costs are lower, but employees may expect private benefits to fill the gap.

Want to know the real cost of a hire? Our employment cost calculator breaks it down for any salary level.

The distinction between an employee and an independent contractor varies by jurisdiction. Each country has its own tests for determining worker status, and misclassification can trigger back taxes, penalties, and mandatory benefits payments.

What qualifies as a legitimate contractor arrangement in one jurisdiction might be deemed disguised employment in another. This is an area where assumptions can be expensive.

Most EU employment law comes through directives. The Working Time Directive, for example, establishes minimum requirements for rest periods, maximum weekly working hours, and paid annual leave. But how each country implements these minimums differs. Some go beyond the minimum requirements, while others interpret provisions differently.

This is why you can’t assume that employment rules are identical across EU countries. The direction is the same, but the details vary.

Asia-Pacific and Latin America differ quite drastically in their employment laws.

In APAC, countries like Australia and Japan have well-established statutory frameworks with strong protections, while others have less developed systems or different enforcement priorities. Cultural factors also influence expectations around working hours, hierarchy, and employer-employee relationships in ways that written law doesn’t always capture.

In LATAM, many countries have detailed labour codes with strong employee protections, mandatory profit-sharing arrangements, and specific rules around termination and severance. Brazil’s Consolidação das Leis do Trabalho (CLT) is one of the most comprehensive labour codes globally. Mexico requires significant severance payments and has strict rules around justified vs unjustified dismissal.

Both regions require careful, country-specific research. Regional generalisations won’t keep you compliant.

Non-compliance creates real financial exposure, including back pay, tax liabilities, penalties, and legal fees. In some jurisdictions, directors can face personal liability for certain employment law breaches.

The cost of getting it wrong almost always exceeds the cost of getting it right from the start.

Employment tribunals and labour courts exist specifically to address workplace disputes. Employees who feel they’ve been treated unfairly, dismissed without cause, or denied their statutory entitlements have clear routes to seek redress.

Penalties vary by jurisdiction but may include compensation awards, fines, and reinstatement orders. In some countries, repeated or serious violations can result in restrictions on your ability to hire.

How you treat employees doesn’t stay private. Review sites, social media, and word of mouth mean that a reputation for poor employment practices spreads. This affects your ability to attract talent, both in the country where problems occurred and more broadly.

The reverse is also true. Companies known for treating their people well, wherever they’re based, have a genuine competitive advantage in hiring.

Every country you hire in adds complexity. Different payroll cycles, tax obligations, benefits requirements, and termination procedures. Different languages, time zones, and cultural expectations.

This complexity is manageable with the right systems, expertise, and attention. Treating global hiring as an extension of your domestic processes is a recipe for problems.

An Employer of Record is a third-party organisation that becomes the legal employer of your international hires. You maintain day-to-day management of the employee, but the EOR handles employment contracts, payroll, tax compliance, and statutory benefits.

EORs maintain expertise in the specific employment laws of each country in which they operate. This means contracts, processes, and payments are set up correctly from the start, based on current local requirements rather than assumptions or outdated information.

Rather than adapting a template, an EOR provides contracts drafted for each jurisdiction that cover the specific terms and protections required by local law. This protects both you and your employee.

Because the EOR is the legal employer, they assume the compliance risks and liabilities associated with employment. You still need to understand the basics of employment law, but you have a partner whose core business is getting the details right.
For companies hiring internationally, particularly those without existing legal entities or HR infrastructure in their target countries, an EOR offers a way to move quickly while staying compliant.