Terminating an employee is never an easy task but it is sometimes necessary for companies to let go of employees, whether it be for performance-related reasons or economic conditions.
For multinational companies (MNCs), navigating the complex web of regulations and practices related to termination in different countries can make the process even more challenging.
In this blog post, we’ll explore some of the varying regulations MNCs need to be aware of when it comes to the termination of employees in different countries, offering a snapshot of how requirements differ in select countries around the world. We’ll also explore how hiring through an Employer of Record (EOR) can help mitigate legal risks when it comes to cross-border termination.
Unique regulations for termination
Notice periods: In some countries, employers are required to provide notice to employees prior to termination. The length of the notice period can vary depending on the length of employment or other factors. For example, in China, notice periods can range from one to six months, depending on the employee’s seniority and length of service.
Severance pay: Some countries require employers to provide severance pay to employees who are terminated. The amount of severance pay can vary depending on the length of employment or other factors. For example, in Mexico, employers are required to provide severance pay of at least three months’ salary to employees who are terminated without cause.
Protected categories of workers: In many countries, certain categories of employees are protected from termination under specific circumstances. For example, pregnant employees, employees on medical leave and employees involved in union activities may be protected from termination in some countries.
Redundancies: When terminating employees due to redundancy, companies must follow specific procedures in many countries. For example, in Belgium, employers are required to notify government authorities, consult with employee representatives and provide justification for redundancy.
Processes: The process for terminating employees can vary widely between countries. In some countries, employers must provide a written notice of termination to the employee, while in others, a verbal notification may suffice. In some cases, employers may be required to provide evidence of misconduct or poor performance in order to terminate an employee.
Termination around the world
To help shed light on the intricacies of termination regulations, we have looked into the requirements across a range of markets in Africa, Asia, Europe, Latin America, North Africa and the Middle East. It is important to note that there may be variations within a jurisdiction’s regulatory framework for termination, including notice periods, severance pay, protected categories of employees and specifications for redundancies. Many countries also maintain additional guidelines for terminating an employee. The table below is not exhaustive and MNCs should always seek expert consultation before terminating an employee in an unfamiliar jurisdiction.
By taking the time to understand and comply with these laws, MNCs can ensure success both legally and ethically – while also benefiting their business through improved risk management, stronger reputation, enhanced employee satisfaction and higher levels of retention.
Africa
| Country | Notice Period | Severance Pay | Protected Categories | Redundancy Requirements | Additional Considerations |
| Kenya | 28 days (for employees paid at intervals of one month or more) | 15 days’ pay for each year worked | Pregnant employees and those on maternity leave, employees with a disability | None specified | Termination must be in writing |
| Mauritius | 30 days | 3 months’ pay for each year worked | Pregnant employees, employees with a disability | None specified | Employee must be informed in writing of reasons for termination |
| South Africa | 1 – 4 weeks | Minimum of one week’s pay per year worked | Pregnant employees, employees on family responsibility leave, employees with a disability, employees involved in union activities | A fair procedure must be followed, and employees must be consulted before redundancy | Termination may be automatically unfair if the employee was dismissed for exercising a legal right |
Asia
| Country | Notice Period | Severance Pay | Protected Categories | Redundancy Requirements | Additional Considerations |
| China | 30 days (or more based on employment contract) | 1 month’s salary for each year worked | Pregnant employees, employees with work-related injuries or illnesses, union members, employees who file complaints against employer | Employers must give priority to redeploying employees in other positions within the company | Employers must provide written explanation for termination; if employee refuses to sign, a witness can be present |
| Indonesia | 14 days (30 days recommended) | Severance pay based on length of service and reason for termination (up to 10 months’ pay) | Pregnant employees, employees on medical leave, employees with work-related injuries, union members | None specified | Employers must notify the employee in writing at least 30 days in advance of termination |
| India | 30 days (or as specified in employment contract) | 15 days’ wages payable multiplied by the number of years of service | Pregnant employees, employees on maternity leave, employees who have filed complaints or participated in union activities | None specified | Employers must follow the due process of law and ensure that the reasons for termination are justified |
| Japan | 30 days (or as specified in employment contract) | Severance pay is not statutory (but typically 1 month’s pay for each year of service) | Pregnant employees, employees on maternity leave, employees on medical leave, union members | Employers must make efforts to reassign or relocate employees to avoid termination | Employers must follow the due process of law and ensure that the reasons for termination are justified |
| South Korea | 30 days (or as specified in employment contract) | Requirements for defined benefit (DB) plan, defined contribution (DC) plan or Severance Pay System | Pregnant employees, employees on maternity leave, employees on medical leave, union members | Employers must provide notice to the employee and the labor union, if applicable, and seek their opinions before making a decision to terminate | Employers must follow the due process of law and ensure that the reasons for termination are justified |
| Taiwan | Up to 30 days | Up to 6 months’ pay | Pregnant employees, employees on maternity leave, employees on medical leave, union members | Employers must make efforts to reassign or relocate employees to avoid termination; severance required | Employers must provide written notice to the employee at least |
| Thailand | Up to 30 days (or as specified in employment contract) | Severance pay based on length of service and reason for termination (up to 400 days’ pay) | Pregnant employees, employees on maternity leave, employees on medical leave, union members | None specified | Employers must follow the due process of law and ensure that the reasons for termination are justified |
| Vietnam | 45 days (or as specified in employment contract) | Half a month’s salary is payable for each year of work | Pregnant employees, employees on maternity leave, employees on medical leave, union members | Employers must provide notice to the employee and the labor union, if applicable, and seek their opinions before making a decision to terminate | Employers must follow the due process of law and ensure that the reasons for termination are justified |
Europe
| Country | Notice Period | Severance Pay | Protected Categories of Employees | Redundancy Requirements | Additional Considerations |
| Belgium | Up to 65 weeks (depending on the length of service) | No statutory entitlement (except in some collective bargaining agreements) | Pregnant employees, employees on leave due to illness or accident, and employees who filed a complaint for discrimination | Notification of government authorities, consultation with employee representatives, and justification for redundancy | Redundancy is only allowed in certain situations, such as economic or technical reasons, and the employer must first consider alternatives |
| Denmark | 1-12 months, depending on seniority | Ranging from 1/3 to 3 times monthly salary, based on length of service and reason for termination | Pregnant employees, employees on leave due to illness or accident, and employees who filed a complaint for discrimination | Employer must have a “reasonable” basis for the redundancy and must first consult with employee representatives | No specific requirements |
| Italy | Notice period ranges from 1 to 6 months (depending on length of service) | Severance pay ranges from 1 to 3 month’s salary (depending on length of service) | Pregnant employees, employees on leave due to illness or accident, and employees who filed a complaint for discrimination | Notification of government authorities, consultation with employee representatives, and justification for redundancy | Redundancy is only allowed in certain situations, such as economic or technical reasons, and the employer must first consider alternatives |
| Germany | 4 weeks to 7 months (depending on length of service) | No statutory requirement (except in some collective bargaining agreements) | Pregnant employees, employees on leave due to illness or accident, and employees who filed a complaint for discrimination | Notification of government authorities, consultation with employee representatives, and justification for redundancy | Redundancy is only allowed in certain situations, such as economic or technical reasons, and the employer must first consider alternatives |
| Spain | 15 days | 20 days’ pay per year of service (up to 12 months’ pay) | Pregnant employees, employees on leave due to illness or accident, and employees who filed a complaint for discrimination | Notification of government authorities, consultation with employee representatives, and justification for redundancy | Redundancy is only allowed in certain situations, such as economic or technical reasons, and the employer must first consider alternatives |
| Sweden | 1-6 months (depending on length of service and seniority) | No statutory requirement (except in some collective bargaining agreements) | Pregnant employees, employees on leave due to illness or accident, and employees who filed a complaint for discrimination | Notification of government authorities, consultation with employee representatives, and justification for redundancy | Redundancy is only allowed in certain situations, such as economic or technical reasons, and the employer must first consider alternatives |
Latin America
| Country | Notice Period | Severance Pay | Protected Categories | Redundancy Requirements | Additional Considerations |
| Brazil | 30 days (minimum) up to 90 days | Depends on type of termination | Pregnant women, union representatives, work accident victims, and employees on medical leave | Companies with 100 or more employees must provide a collective bargaining agreement or union negotiation before terminating employees for economic reasons. | Termination is only valid with written justification that is reasonable, objective, and supported by evidence. |
| Colombia | 15 days (minimum) | 30 days’ salary for the first year of service and 20 days’ salary for each additional year of service | Pregnant women, employees on medical leave, union representatives, and members of workers’ committees | Employers must first try to relocate employees within the company before termination for economic reasons. | Termination for discriminatory reasons is prohibited and can result in up to 180 days’ salary in compensation for the employee. |
| Mexico | 30 days (minimum) | Depends on type of termination (calculated based on years of service) | Pregnant women, union representatives, and members of workers’ committees | Employers must first attempt to relocate employees within the company before termination for economic reasons. | Termination for discriminatory reasons is prohibited and can result in reinstatement of the employee with back pay and damages. |
Middle East and North Africa
| Country | Notice Period | Severance Pay | Protected Categories | Redundancy Requirements | Additional Considerations |
| Egypt | 2-3 months (depending on years of service) | 2 months’ pay (minimum) | Pregnant employees, employees on sick leave | Employer must prove economic necessity | Termination for cause does not require notice or severance pay |
| Saudi Arabia | 30-60 days (depends on payment schedule) | 15-30 days’ pay for each year of service (depends on years of service) | None specified | Redundancy due to economic necessity only, requires employer to consult with employee and government authorities | Termination for cause does not require notice or severance pay |
| United Arab Emirates | 30-90 days | 21-30 days’ paid wages (depending on length of service); up to 3 months’ paid wages for unlawful termination | Pregnant employees, employees on sick leave, employees involved in union activities | None specified | Termination for cause does not require notice or severance pay; Employers must provide a certificate to an employee (if requested) |
North America
| Country | Notice Period | Severance Pay | Protected Categories of Employees | Redundancy Requirements | Additional Requirements |
| Canada | Varies by province and length of service (typically 1-8 weeks) | Required in some provinces for mass terminations or plant closures | Pregnant employees, employees on leave, unionized employees | Must prove legitimate business reasons for termination, notice and severance requirements may increase with length of service and number of terminated employees | Employers may have a duty to accommodate employees before termination if they have a disability or other protected characteristic |
| United States of America | Varies by state and employment contract (typically 0-2 weeks) | Not required by federal law, but may be required by state or local law or employment contract | Pregnant employees, employees with disabilities, unionized employees | Must not violate anti-discrimination laws, notice and severance requirements may increase with length of service and number of terminated employees | Employers may not terminate employees for reasons that violate public policy, such as reporting illegal activities or refusing to participate in illegal activities |
Avoid termination risks with Employer of Record hiring
Employing workers in foreign countries can be a challenging and risky endeavor for MNCs. However, hiring through an EOR can provide a reliable solution to ensure compliance with local regulations and minimize legal risks when it comes to terminating employees.
With their extensive knowledge of local employment law and expertise in navigating the intricacies of cross-border hiring, EORs can guide MNCs through the maze of requirements for notice periods, severance pay, protected categories of employees and other guidelines.
By partnering with a reputable and experienced EOR, MNCs can safeguard the cross-border hiring process – from start to finish.
Check out our ‘What is an EOR?’ guide, view our HR at a Glance guides for countries around the world or contact us to talk with an international HR expert