What are labour laws?

Labour laws refer to the extensive set of regulations that govern various aspects of the employer-employee relationship, such as working conditions, minimum wages, breaks, leave, hiring and termination processes, as well as health and safety policies. These laws are essential in ensuring the fair and ethical treatment of employees across different industries.

At their core, labour laws aim to establish baseline standards, rights and protections for all working individuals. They mediate the balance of power between businesses (employers), and workers (employees).

Ultimately, these employment, workplace relations, and occupational health and safety laws shape the landscape of roles, responsibilities, and acceptable practices for both employers and staff members.

Employers with staff across borders face the complex task of understanding significant variations in labour laws across countries and jurisdictions. What is considered standard, legal, and compliant employment procedures in one country or region can be vastly different in another. This is true even within geopolitical unions, such as the EU, or states and provinces within countries, such as the US or Canada.

As companies expand and conduct business globally, they take on more significant risks and obligations to remain legally compliant, culturally informed, and ethically rooted in their employment practices. The diverse landscape of international labour legislation, though complicated, provides a framework to balance employer interests and responsibilities with employee rights and protections.

Navigating this diverse terrain is crucial to avoid legal issues or regulatory fines, which can vary in size and scope depending on the territory. Doing the necessary work here not only spares companies from getting in trouble with the law but ultimately makes them better global employers, able to attract and retain top international talent.

Given these complexities, companies may benefit from seeking expert guidance to manage international employment effectively. Utilising outsourced employer solutions, such as partnering with an Employer of Record, can provide invaluable support.

These services handle compliance, administrative tasks, and legal obligations on behalf of the company, allowing businesses to focus on their core operations while ensuring they remain compliant.

Labour laws typically address several core areas:

Minimum wage: The lowest legal hourly, daily, or monthly pay rate employers must pay workers on. These minimums are often set relative to the cost of living in a given country or economy. For example, the minimum wage in Ireland is significantly higher than in Romania or Poland. Some countries, such as Norway and Iceland, do not impose a general minimum wage. Instead, industry standards are set through collective bargaining agreements.

Overtime pay: Many labour laws require employers to pay overtime rates – often higher than the regular hourly wage – for any hours worked beyond the standard workweek.

The defined regular full-time working hours before overtime applies can vary significantly by country. For example, in France, it’s typically 35 hours a week, whereas in Bhutan, the average work week is more than 54 hours.

Rest breaks: Labour law usually mandates minimum daily rest and meal breaks as employee rights, with some jurisdictions requiring additional rest periods for shift workers. Weekends and public holidays are also usually guaranteed time off (but not always).

Paid time off and leave: Various forms of leave must be granted to employees, including paid vacation days, sick days, parental leave, compassionate leave (e.g. bereavement), and public holidays unique to the country. Many regions also guarantee additional protections for family and medical-related leaves of absence.

Labour laws set standards for occupational safety and minimum working conditions that apply to both on-site and remote work environments. Employers have a responsibility to ensure safe working conditions, even when employees are working from home or remotely.

In some countries, like those in the EU, specific regulations place varying levels of obligation on employers to ensure remote workers have a safe and suitable work environment.

Protective equipment and training: For hazardous jobs, employers are typically required to provide safety gear and implement procedures to minimise injury or harm. This is usually accompanied by necessary training and guidance to ensure employee safety.

Different countries and regions have their own safety standards and regulations. Some, like OSHA (Occupational Safety and Health Administration) in the US, impose strict guidelines that employers must follow to remain compliant. In contrast, other countries may have less stringent or differently structured oversight. It’s essential for international employers to understand the local health and safety requirements for each jurisdiction where their employees are based, whether in traditional workplaces or remote settings.

Labour laws often prohibit unfair discrimination, harassment, or dismissal based on innate characteristics like race, gender, religion, age, disability, sexual orientation, or pregnancy status.

Pay equity and transparency: Regulations are increasingly mandating that workers receive equal pay for equal work, along with requirements for salary transparency and reporting on gender pay gaps. Many countries have implemented laws aimed at reducing wage disparities, such as the UK’s Gender Pay Gap Reporting Regulations and the Pay Equity Act in Canada.

How these regulations are policed varies by jurisdiction, and enforcement mechanisms can differ. In some regions, authorities rely on employee complaints or whistleblowing to uncover violations, while in others, there are proactive audits and mandatory disclosures.

Nevertheless, failure to comply with pay equity and transparency laws can result in significant fines or legal action. For example, in the UK, companies with over 250 employees must publish gender pay gap data annually, and failure to do so can lead to reputational damage and enforcement actions from the Equality and Human Rights Commission (EHRC). Similarly, the U.S. Equal Employment Opportunity Commission (EEOC) monitors compliance with pay equity through audits and investigations.

Reasonable accommodations: Employers must often provide reasonable accommodations to allow people with disabilities or religious considerations to participate equitably in the workforce.

Termination laws vary significantly globally in terms of allowable reasons and processes employers must follow before ending employment contracts.

For example, most private sector roles in the United States fall under at-will employment, which permits terminating employees for any reason not deemed discriminatory, with no notice required. Essentially, outside of protected classes or attributes like race or disability status, US-based staff can be dismissed without cause if business needs change.

By contrast, many European and other developed nations have far stricter job protections. Employees in countries like the Netherlands can only be terminated for specific, limited causes, usually related to employee performance or conduct issues. Dutch employers must also receive court approval confirming valid grounds before proceeding with dismissal.

Severance and redundancy pay: If dismissal is due to redundancy rather than cause, labour laws often mandate that employers provide compensation packages to affected employees calculated based on years of service.

Expanding into new countries introduces major complexities around labour law obligations. Here are some best practices for managing compliance:

• Research thoroughly: Before staffing foreign regions, comprehensively review workplace legislation by seeking translated laws, policy guides and legal counsel. Areas like hiring/terminating, payroll, safety, leave, contracts, and visas require local knowledge.
• Consult experts: Work closely with in-country HR and legal partners who understand nuanced implementation. They can advise on regulations and implications unique to the jurisdiction while tailoring employment contracts and handbooks accordingly.
• Implement standard policies: Balance adapting to local labour norms and statutes with maintaining consistent company values, ethics, and best practices globally. This could mean standardising codes of conduct, harassment policies and onboarding processes across borders.
• Educate your team: Ensure managers and HR staff in each country are fluent in labour laws governing their responsibilities to avoid compliance gaps. Also, confirm they know when to seek guidance on more complex situations.
• Track legal changes: Subscribe to local employment law update services where possible. Websites like Lexology or Thomson Reuters Practical Law can prove useful for staying on top of changes. If possible, conduct periodic refresher training to catch teams up on relevant amendments in the countries where they operate. For example, if new remote work or health and safety guidelines are introduced, training sessions can ensure that HR, management, and employees are aligned with the updated regulations.