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December 1, 2015

“Be mindful of foreign laws governing overseas employees"

We came across this 2012 article in the Denver Business Journal with the above headline.  The article extensively quotes Martin Pocs, “vice chairman and managing director for DHR International” and shows a contemplative picture of him sitting next to a globe.

Some extracts from the article:

Companies that open offices overseas should be aware that other countries’ labor laws often differ from those in the United States.”

One common scenario: U.S. companies find that in most foreign countries, employment is not at will, and they must have a concrete reason to fire someone. They’re also required to work with underperforming employees to try to correct their work habits. Otherwise, the U.S. companies can expect large fines.

Martin Pocs knows the international market well. He’s vice chairman and managing director for DHR International, a staffing firm with about 30 U.S. offices and 34 overseas, including in European countries such as Germany and the United Kingdom, Japan, China, Australia and India. [On or about the date the article was published, DHR only showed 22 overseas offices on its web site].

“We’re growing faster internationally than domestically,” Pocs said, ticking off a list of soon-to-open international offices. [Six months later, the number of overseas offices shown on the DHR web site actually declined, leaving us wondering what happened to the “soon-to-open international offices”.]

 “Each country has its own issues. … In certain places in China or Japan, people have to give six to 12 months’ notice.

Pocs also discussed [other issues], referring to what’s commonly called the “social contract,” in which European workers have far more vacation than Americans, and companies must guarantee employment — if a job doesn’t work out, they must pay severance to the departing worker.

It is comforting to know that a senior leader of DHR International—no less, a vice chairman—is aware of the importance of adhering to labor laws in other jurisdictions. However, we think it is interesting to contrast this awareness with DHR International’s apparent track record, including in the following places.

In Australia, former employees of DHR International’s Australian subsidiary lodged A$850,000 in proofs of debt with the subsidiary’s administrators/liquidators. Before David Hoffmann appointed the administrators, DHR removed and sent offshore hundreds of thousands of dollars in cash and the physical assets of the subsidiary. Fortunately, some of the Australian employees were paid some of their entitlements but not by DHR itself but by a taxpayer-funded Australian Government scheme that provides that “Employees who are owed certain employee entitlements after losing their job because their employer went bankrupt or into liquidation may be able to get financial help from the Australian Government”.

At least one Australian employee, a Principal, commenced an action with the Australian employment regulator for unfair dismissal. Despite receiving a notice of listing, neither David Hoffmann nor any of his team turned up to two scheduled conciliations. Instead, Hoffmann eventually claimed to have appointed administrators to the subsidiary some time before he actually did.  The fact that he appointed administrators ultimately stymied the action. That is because the creditors of the subsidiary passed a resolution to wind up the company and appoint a liquidator and the employment regulator decided that, in those circumstances, the action could not continue.  DHR therefore avoided any need to “pay severance to the departing worker”.

In the United Kingdom, it has come to light that one of the CTPartners’ transferring Partners left DHR because she believes (among other things) “that the UK government employment agency were [sic] considering suing DHR at an industrial tribunal for not having paid redundancy costs to CT Partners who were offered to join DHR (and that this could ultimately impact DHR’s ability to trade in the UK)”.

And—closer to DHR’s Chicago home—in California, multiple former DHR employees sued DHR for alleged violation of the California Labor Code, including for DHR’s alleged “wilful failure to pay wages upon separation”. Unlike in Illinois, employment in California is not at will.

DHR love PR and this article is another example of them opining on whatever topic will get them into the media.  On the basis of the information referred to above, we think that prospective employees may want to beware: DHR International don’t always practice what they preach. It is reminiscent of David Hoffmann (and many of his team) squawking about the importance of not embellishing one’s résumé and then Hoffmann doing the same thing.

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