Managing Employment Law on a Global Scale

Managing Employment Law on a Global Scale

Carson Burnham is an equity shareholder at Ogletree Deakins, PC, an international Labour & Employment firm. She Chairs the International Practice, which consists of lawyers who specialise in assisting in-house counsel and their business-partners with labour & employment-law challenges outside the country in which they work. After starting the Practice in 2011 and growing it first in the US, she oversaw the expansion into the UK, France, Germany, Mexico and Canada.  Today, she assists clients worldwide with all manner of employment-related legal matters. This insightful article touches on managing employment matters on a broad, global scale.

What three things must you consider when you are managing employment litigation on a global scale?

First, we always want to know what the client’s desired end-game is, since it’s very rare that employment litigation is about “winning at all costs.”  Most employment-disputes arise from the breakdown in a relationship – we sometimes call it “industrial divorce,” recognizing that colleagues often spend more time together than they do with their spouses and kids.  So clients can become frustrated when their defense lawyers spend thousands in fees just going through procedural steps in a reactive-mode, rather than working to achieve their client’s pre-determined goal, which often takes into account the positive aspects of the former employment relationship, as well as the negative.  Even for those cases where winning a litigation is the key goal, such as defending a for-cause termination, winning often feels like losing, because it involves expending key resources just to maintain continuity.

Second, many jurisdictions do not litigate employment-law cases at the same level of procedural complexity as we have in the US, so there are many strategic ways our litigation experience can offer a fresh approach.  Years of practice advocating in a complex system where volumes of precedent govern (and constrain the parties) at every step give us an opportunity to advance new litigation strategies in a less-restrictive setting, such as a labour tribunal in a civil-law jurisdiction.

Last, it is important to prepare our US Headquartered clients very well, particularly in the ways they may be perceived outside the States:  US companies don’t enjoy a great reputation when it comes to showing respect for and deference to other countries’ laws, so it is important for us to educate our clients in how their predecessors’ behaviour will impact how they are likely to be perceived.

When planning compensation and company policies, what should companies involved all across the globe consider?

The key for both projects is to remember that employees outside the US have a contractual right to maintain the terms and conditions they have in place, so they must agree to anything that materially changes the terms and conditions of employment.  It sounds simple, but the reality is that most global organizations need to implement changes constantly, in order to remain competitive, obtain opportunities, invent and sell new products.  So the contractual right to remain in a static position conflicts with the organization’s need to constantly change, and it becomes difficult and frustrating when local law prevents an organization from imposing changes unilaterally.  This comes back to communication – when a workforce is given the information it needs to understand why it is being asked to agree to a change, it is far more likely to go over quickly and smoothly.  More often than not, our key work with clients on these projects is in developing and implementing the strategy to obtain global agreement and buy-in, to implement compensation and policy changes successfully.

Can you share more about your experience with labour and employment issues in cross-border M&A from a multidisciplinary perspective?

In my former in-house role for a technology company, I was responsible for negotiating the Labour/Employment aspects of many acquisitions and divestitures.  It became clear to me very quickly that these issues – which affect every individual at the business to be acquired — are highly-sensitive and usually the last to be resolved, since the buyer wants to keep costs down and the seller usually wants to preserve and reassure the workforce.  Add to that the uncertainty the incoming workforce is going through, knowing they are going to be “sold” to a new company about which they know little or nothing, and with whom they are unable to communicate – it’s a recipe for paranoia and fear.  Since the buyer can’t communicate directly with the onboarding workers, the way the lawyers negotiate becomes a proxy for those communications, and the deal lawyers’ behaviour has a huge impact on a transaction.  So many times I’ve seen lawyers’ strenuous and tough negotiations in earnest to obtain a “win” on an issue unwittingly end up signaling (wrongly) to one side that the seller’s employees are greedy, and to the other that the buyer is callous and ruthless.  By the time the deal is signed and the lawyers all move on, the seller and the on-boarding employees from the buyer already distrust and dislike one another – that’s a terrible way to begin a working relationship.

Handling this now for my own clients, it is important to me to remind them about what signals a seemingly-minor disagreement over employment terms might send, after being transmitted through intermediaries and ultimately to decisionmakers on both sides.  It is also important that my client anticipates the inevitable last-minute requests typically raised by a seller for additional compensation, incentives, and benefits-commitments for its onboarding workforce, so that when those requests do come up, my client is not caught off-guard or upset.  Just like dissolving an employment relationship is similar to a divorce, negotiating an acquisition is like negotiating a pre-nup; it’s so important to remember that the parties on the opposite sides of the table are going to be on the same side when the deal is complete.

Those issues arise in every transaction, no matter what country they are in.  On top of those issues, of course, are the laws of the countries in which acquired entities’ workers are located.  As with all cross-border Labour & Employment-law matters, it is important for my clients in the deal context to understand not just the legal rights of the employees joining through acquisition, but what those employees already know about those rights.  All too often these issues are not considered when researching, pricing and negotiating a transaction, and then the buyer is surprised to be presented with them as an impediment to bringing a new workforce on-board (often, to their embarrassment, by the employees themselves).  Some of these, like TUPE, works council obligations, or consultation requirements are obvious, but many others are not obvious.  For example, when acquiring a company for the purpose of adding a new business line to an existing portfolio, the leaders of the organization coming over inevitably will not have the exact same management duties, responsibilities, status or opportunities for advancement that they had in a stand-alone company, creating the potential for those leaders to dispute the terms of their “new” positions:  When they have a contractual right to continued employment, the unilateral change caused by the transaction itself can be challenged.  My responsibility is to help my clients understand these issues well and early, to avoid unwittingly triggering issues like these which undermine perceptions of their integrity and credibility, and the success of the transaction itself.

What are three things which are the key to being a top lawyer and gaining what is right for clients?

First, think like your client.  Anticipate their questions, their business challenges and their desired outcomes, and give them  work product that takes all of these into account.  People hire lawyers because they need help, and the worst thing a lawyer can do is fail to take the time to understand their clients well enough to know what “help” really means to them.

Second, be fast and efficient.  A good lawyer gives their clients the support they need quickly and in a manner they can use – clients are really busy people who do not have time to wade through memos or even open attachments.

Third, be kind.  Lawyers have a reputation for being arrogant, talking more than they listen, and being – well –rude.  Before any lawyer can be a trusted advisor, he/she needs to earn respect and trust.  That leaves no room for arrogance and rudeness, no matter how successful one has been in the past.  Empathy and kindness will make you a better advocate, a better advisor, and a better human being.

Carson G. Burnham

Chair, International Practice Group

Ogletree, Deakins, Nash, Smoak & Stewart, P.C.

One Boston Place, Suite 3500 | Boston, MA 02108

Telephone: +1-617-994-5733

carson.burnham@ogletree.com

www.ogletree.com

Carson Burnham Chairs the International Practice Group of Ogletree Deakins. She is a shareholder based in the Boston office. Carson and her global team manage worldwide labour and employment matters for clients and offer practical solutions to employment law issues in over 100 countries.

Carson’s expertise includes multijurisdictional investigations into employment law and compliance matters. Carson also specializes in a practical and efficient approach to sensitive, executive-level negotiations, assisting her clients with hiring, management, and terminations worldwide. Carson has unique experience with labour and employment issues in cross-border M&A from a multidisciplinary perspective, and is often called upon to partner with corporate firms to assist from the kickoff of a transaction through post-close integration.