What are the main differences between US and UK employment law?
Lawyers dealing with US companies with workplaces in the UK, or liaising with those organisations’ US attorneys, are often struck (as the organisations themselves are) by the differences in employment law ‘across the pond’. It’s not just that the US spell ‘labor’ differently to the UK and prefer Zs to Ss. There are many others.
Take contracts of employment. The UK concepts of fair dismissal and statutory minimum notice periods have no place in the US where employment is presumed to be ‘at will’. This means it can be terminated for any lawful reason, without either cause or notice. The same goes for amending contracts of employment. The UK requires consultation (sometimes with employee representatives) and agreement, whereas a US employer can pretty much change the terms and conditions of an ‘at will’ employee at any time.
If employment is not to be ‘at will’, a US written contract of employment should set out the terms that apply to the agreement. But written employment contracts are not usual, other than for senior management - basic job offer letters are the norm.
In the UK, working time restrictions are derived from the EU working time directive which sets limits on average weekly working hours (unless employees are opted-out), and there are requirements for work breaks and rest days. In the US, employment law varies from state to state, but many states require rest breaks after a certain length of shift and almost all employees are entitled to be paid at time and a half after they have worked 40 hours in a week.
Annual holiday entitlement in the UK is also derived from the EU law, although the government has enhanced the directive’s requirement for 20 days’ leave to 28 days in the UK, inclusive of public holidays. There is no such set minimum in the US, although most employers give staff between 10 and 20 days’ paid time off a year (inclusive of paid sick leave), together with 11 federal holidays, and possibly some state holidays, too. In some US states, an employee might be entitled to pay in lieu of accrued untaken paid time off when their employment comes to an end, like untaken holiday in the UK. In other states, there’s no such entitlement.
US law, like UK law, prohibits discrimination because of sex, pregnancy, race, colour, national origin, religion, disability and age. Victimisation for whistleblowing is also prohibited in both jurisdictions. However, whereas the UK protected characteristic of age protects staff of any age, employees are only protected in the US if they are aged 40 or older, unless their local state government has lowered this age limit (for example, in New York, the protection starts at age 18).
US employers of 100 or more staff are usually required to give their employees at least 60 days’ notice when considering mass redundancies and plant closures, involving 500 or more dismissals at one site, or a third of the total site workforce if fewer staff are involved. Some states impose more onerous obligations on employers. This compares to the collective redundancy consultation obligations in the UK, which require consultation with employee representatives to start not less than 30 days ahead of the first redundancy where 20 or more redundancies are proposed within a period of 90 days at one establishment (45 days ahead where 100 or more redundancies proposed).
When US employers make severance payments, they will often do so under a waiver and release agreement (this is similar to a settlement agreement in the UK), although various states impose particular requirements on such agreements. In practice, this means that where an employee has worked in both the US and the UK for one employer, or an associated company, the employer’s representatives in each jurisdiction should work together to ensure that all possible claims from that employee, in each country he or she has worked in, are settled under the terms of the appropriate agreements.
As in the UK, US employers will often wish to tie their senior management into post-termination restrictions. However, the enforceability of such restrictions, or even their prohibition, varies from state to state. Where they are allowed, US courts will apply a similar rule to UK courts in judging the fairness of those restrictions, especially whether they go no further than protecting the employer’s legitimate business interests.
Andrew Knorpel is a partner and head of employment at Mundays LLP
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