Layoff compensation if you are an Intl. Transfer

16 posts in this topic

Hi Legal Aficionados,

 

So I was curious about what my rights are under a certain circumstance; I am in no such danger and don't plan to ever be; but would be useful to know the limits of my rights.

 

 

Here is my situation:

 

- I've been an employee by a global company in USA since 2000 January.

 

- In 2012 April, I transitioned to the Munich office.

 

- I did sign a new contract; with probezeit clause and what not,

(but I was assured it meant little, which I doubt but hey)

 

- Technically speaking the new contract is with a 'new' legal entity.

 

- But I kept my seniority, pay-grade, job title, compensation package, reporting structure, etc. identical with what I had in USA.

I mean its hard to argue that this is NOT a transfer but a NEW job.

 

- What got me suspicious was that while my HR contact in USA was ok in giving me a paper saying I am a ~13 year employee, the local HR was adamant in not doing so.

 

Anyhow so the question is:

 

IF the company decides to downsize in this new legal entity and lays me off. For lay-off compensation reasons am I

 

a ) new employee with very little benefit

b ) a ~13 year veteran with a significant severance package?

 

To draw a parallel, if I was still in USA I would get some non-ignorable sum in severance package.

 

I am trying to understand what it means to have this new contract. What kind of protections it does give the company, and what it does give to me.

 

Not sure if there is any previous court case where an international transfer had to fight for severance package. Anybody have a clue?

 

Thanks,

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Hi Legal Aficionados,

 

So I was curious about what my rights are under a certain circumstance; I am in no such danger and don't plan to ever be; but would be useful to know the limits of my rights.

 

Anyhow so the question is:

 

IF the company decides to downsize in this new legal entity and lays me off. For lay-off compensation reasons am I

 

a ) new employee with very little benefit

b ) a ~13 year veteran with a significant severance package?

 

To draw a parallel, if I was still in USA I would get some non-ignorable sum in severance package.

 

I am trying to understand what it means to have this new contract. What kind of protections it does give the company, and what it does give to me.

 

Not sure if there is any previous court case where an international transfer had to fight for severance package. Anybody have a clue?

 

Thanks,

 

 

Disclaimer: I'm neither an HR specialist nor, in any way, qualified to offer you (and this does not constitute) any legal advice or opinion.

 

You may however find some of the folowing random thoughts and ideas worth considering.

 

Multi national companies may operate locally in numerous different forms for a variety of reasons mostly related to profit maximization, tax minimisation and risk management. Personnel welfare matters tend to come further down the scale of their concerns as they're harder to justify to investors.

 

Your US parent company may be operating in Germany through a direct subsidiary (Niederlassung oder Tochtergesellschaft) or have established an independent stand alone entity as a sole representative (clues; the local company form is that of a GmbH or KG with only German directors). The latter relationship may ease the possibility to the MNC of a future sell-off of the overseas unit at any time.

 

I believe you are correct in thinking that in your present situation you are signatory of, and subject to the conditions of, an entirely new legal contract. Therefore I'd say that;

 

 

IF the company decides to downsize in this new legal entity and lays me off. For lay-off compensation reasons am I

 

a ) new employee with very little benefit

b ) a ~13 year veteran with a significant severance package?

 

a) Yes.

b ) No.

 

 

I am trying to understand what it means to have this new contract. What kind of protections it does give the company, and what it does give to me.

 

The company have all the legal protections offered to them under German law and are unlikely to be at risk under US employee protection legislation.

You have (assuming no non-standard contract conditions apply) all the protections offered employees under German legislation, but little hope of recourse to US law.

 

 

- I've been an employee by a global company in USA since 2000 January.

 

- In 2012 April, I transitioned to the Munich office. So your (6 month?) probezeit should expire soon.

 

- I did sign a new contract; with probezeit clause and what not,

(but I was assured it meant little, which I doubt but hey)

 

- Technically speaking the new contract is with a 'new' legal entity. Indeed.

- But I kept my seniority, pay-grade, job title, compensation package, reporting structure, etc. identical with what I had in USA.

I mean its hard to argue that this is NOT a transfer but a NEW job. I'd say that is a correct assumption.

- What got me suspicious was that while my HR contact in USA was ok in giving me a paper saying I am a ~13 year employee, the local HR was adamant in not doing so.

 

The German HR dept. (depending on the actual international corporate structure) may have no access to your seniority record from the US and, if the companies are separate legal entities, could possibly, by the very attempt to research that, run foul of German data protection law.

 

2B

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Did you have your 13 years seniority put explicitly in your contract? This is something everyone should do when being transferred to Germany. It doesn't mean you couldn't legally argue for it in court but it is cut and dry when it is in the contract. You also should have refused a probation period in your contract. They bullshitted you in saying it is nothing really. It is a big thing and they can fire you without giving a reason within those 6 months. HR people will do everything possible to put these contracts in their favor - always have them remove any and all clauses that are not to your advantage when transferring. In any case, legal insurance is a good thing to have even if you never plan to use it. Employment law and suing your employer is always covered.

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You say you kept your seniority, but what is the start date on your payroll slip? It refers to the start date you joined the company. If it's a transfer to another legal entity within a multinational, I would expect it's your initial start date with the company in the US.

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As others have said, what counts is what's written in your contract.

Should the worst happen, which I hope for you it doesn't, you can guarantee that you'll be treated only within the realms of your contract.

 

When I transferred to Germany within the same company some years ago, one thing I insisted upon was the formal and contractual recognition of my previous service within the company in the UK.

 

Thankfully this was accepted and sadly the worst did happen for me, but I received compensation for my full service.

Also, you should consider things like any pension entitlements within the company and have them transferred or recognised within the German company too.

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The seniority is not explicitly in the contract; let me see if anything implicitly refers to it.

 

The company has a central Database that indicates seniority, hiring date, etc. Those are kept as is, and has not changed to a newer date. Of course this DB, while tracks EVERYONE in the company, is in USA, and not sure if it means anything locally.

 

I got someone in USA HR to issue a "employment verification letter" that the locals have stamped; but ultimately is signed by someone in HQ; not sure how legal that doc is locally in a court of law.

 

I am fairly certain, if I check the local payroll data, my start date would be April 2012.

 

For all the various tax implications, I pretty much had accepted that having a start date of April 2012 makes sense in payroll; Otherwise the FinanzAmt would be on my ass for all the tax back pay.

 

What I can't make out is whether this legal and tax firewalls carries on to any severance package. I am also relatively sure that when push comes to shove, rather than end up in court, the issue would be resolved amicably.

 

PS: I do have rechtshutz-versicherung.

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Ok I dug up some historic e-mail exchanges during the transfer; I redacted sections that identify the company or people:

 

This is what the recruiting HR person wrote in e-mail.

 

Effective start date with Xxxx GmbH will be the 1st April, first working daythe 2nd.

Your services history will be uninterrupted and your personal number will remain the same.

Please make sure to quit your Xxxx Corp employment contract with effective date March 31st 2012.

 

During the transition, the USA HR ensured me that I don't need to quit my existing contract as following:

 

 

AiHal, Congratulations on your new role! The HR team from Xxx Germany should submit a request in <<CORP DATABASE>> to transfer you to your new position in Xxx Germany effective 4/1/12. There is no need to terminate you from Xxx USA, your move is considered a Corp to Sub Transfer, this will ensure no break in service. Please let me know if you have any other questions and congratulations again on your new role!

 

 

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Under German law there is nothing that says you have to be compensated at all. If it's a small company, they can fire you and that's it. If it's a larger one, they might have to lay off certain people in a "socially responsible" way, but even then you are not entitled to compensation.

 

You could then sue them in court for unfair dismissal and try to get some redundancy payment there. The general rule of thumb is that they will award you 0.5 months pay per year of service.

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Let me change tack than.. Since its a mental exercise.

 

Say there is a (sub) company specific policy that the law does NOT mandate. Like giving a special parking place after 12 years.

 

Say, a pencil pusher in HR decided that I actually don't match based on my contract and (sub's) payroll data.

 

Would I have a recourse?

 

While not in contract, at least in e-mail, I was promised continuation of "service history"; and clearly I signed the contract with this promise in mind.

 

Of course I am also not entirely sure of any semantic differences between what "continued service history" and "fresh payroll data" has; or how applicable any e-mail promises are.

 

Morally, I clearly see that I should be the beneficiary of any company policy towards similarly senior employees... Not sure if this applies to the legal domain; or can be defended easily in a court.

 

Has anyone heard a similar or relevant case that can shed some light on this topic?

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I'm going to go out on a limb here and suggest that you do what your USA HR contact said and

 

 

Please let me know if you have any other questions

I appreciate your need to solicit information, but since we don't even know what company you're talking about it, it's highly unlikely that you'll find someone with specific experience relating to your situation.

 

Toytown is a great resource, but sometimes you have to get things straight from the horse's mouth.

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As you can imagine, I am not feeling comfortable asking them such an awkward question: "hey would you pay me anything if you lay me off ?" isn't the most inspiring message echoing through the corridors. ;-)

 

I was hoping to pose the question in generic enough form that others with parallel information may step forward.

 

Anyhow, if I learn more I'll update the thread accordingly.

 

 

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I agree with El Jeffo, that it really would be best if you get in touch with your HR. However, I don't see the need to have any kind of awkward conversation about, "Hey, would you pay me if you laid me off?" - but just mention that you are concerned because what was agreed beforehand:

 

 

While not in contract, at least in e-mail, I was promised continuation of "service history"; and clearly I signed the contract with this promise in mind.

 

... doesn't seem to actually have happened and you are wondering how this will impact you personally.

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I think El Jeffo meant that you should address this to your Betriebsrat (workers' council) who represent the employees. They have a confidentiality agreement, so your manager will not be informed about your inquiries.

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The Force is strong in this one.. Thanks LukeSkywalker that's actually a good idea I think.

 

Betriebsrat concept is still a foreign concept to me; we didn't have something like that anywhere in the States.

Once here, I did hear about them, loosely, Let me figure out what they are; and what kind of guidance they provide; and what powers they possess.

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It would be good if you share any new info you have reached regarding this topic. What should be stated in contract to guarantee that your seniority is kept in such compensation. Should they only mention that "your seniority in the company is considered including outside of Germany service years"?

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Just an update, the layoffs eventually happened around end of 2016.

 

The company didn’t even bother arguing or distinguish years of service in Germany or outside. 
 

so the original posts points never came to be exercised.

 

i’d say to be cautious just have a sentence added to your contracts that reflects your full service history is calculated for any benefits in the New company.

 

 

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