Lawyers International Network for Employees and Executives (LINEE)

Employment Contracts

Dismissal of a Senior Manager in Spain

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Senior executives have a special employment relationship with their employer that is governed by the specific provisions of Royal Decree 1382/1985, of August 1, 1985, which regulates the special employment relationship of senior management executives.

As stated in the regulation’s preamble, the nature of this relationship is characterized by the mutual trust that must exist between the two parties, arising from the unique position that the senior executive accepts within the company in terms of powers, authority, and responsibilities.

This is why the main element that shapes the content of this specific relationship is the idea of agreement; nonetheless, the regulation has made a point of defining the causes and effects of terminating this type of contract. Read more.

The Prohibition of Employment Dismissals in Italy Following the August Decree

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The severe economic crisis caused by the coronavirus emergency has placed national governments at a crossroad, forcing them to determine whether it is more appropriate to protect the needs of entrepreneurs or workers. The first choice would allow employers to exercise provisions in Italy regarding an employee’s dismissal if a company is in economic difficulty. In the second scenario, the government could defend employees by adopting measures to stem what, in times of economic hardship, can be considered a natural increase in the unemployment rate.

Faced with this issue, the major industrialized countries have not moved in a single direction. Within Europe, it is possible to distinguish between countries such as Germany and the United Kingdom that have decided not to impose any prohibition on dismissal, and nations with a more “socialist” tradition such as France and Spain that have instead placed limitations on firing employees (without, however, providing any ban on redundancies in the strict sense).

Considered in this framework, Italy appears isolated. Since the beginning of the pandemic, the Italian government has chosen to proceed with freezing layoffs for economic reasons until 17 August 2020, with the enactment of the “Cura Italia Decree.” Read more.

Labor & Employment Considerations in Italy Post-Brexit

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On 31 January 2020, the UK officially left the European Union. In the next year, some of the UK’s labor and employment policies will change, posing new considerations for employers and employees alike. Until 31 December 2020, the UK will be in a “transition period” where current EU legislation will still apply until the UK has negotiated new agreements with the EU. This document outlines how employment rights for UK citizens living in Italy will be impacted both during and after the transition period.

Italian Immigration and Visa Requirements

British citizens wanting to work in Italy should be aware of the imminent changes to immigration and visa processes that will soon occur. During the Brexit transition period, it is suggested by the UK government that UK citizens living in Italy make sure their passports are valid and registered with their local Italian municipality.

Different registration documents exist depending on one’s status within Italy, and British citizens should obtain the documents that best define their status in Italy. These types of documents are below: Read more.

Non-Competition Clauses and Preliminary Contracts in Germany

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High-level performers significantly contribute to their employer’s business. Because of this, employers frequently include non-competition clauses in employees’ preliminary employment contracts to control their behavior and activities after they leave the company.

With post-contractual non-competition clauses, companies aim to protect themselves against the risk that departing employees who later work for competitors might use valuable knowledge about operations, trade secrets, financial information, or important business contacts to gain an advantage.

Enforceability of Non-Competition Agreements in German Labor Courts

In Germany, labor tribunals carefully check preliminary contracts to determine whether non-competition clauses overly restrict employees from pursuing their careers or professional activities, but that doesn’t mean such agreements are unenforceable. Read more.

In France, Is a Driver or a Delivery Person Paid Via a Digital Platform Considered an Employee of That Company?

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As the “gig economy” spans the globe and more people earn money through online services and app-based enterprises, the distinction between independent contractor and employee is becoming less clear. We look at cases in France that spotlight the issue.

Act I – Take Eat Easy

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Photo Credit: LP/Jean Nicholas Guillo

In November 2018, the French Supreme Court (Cour de Cassation) determined for the first time whether an employment contract existed between a deliveryman and Take Eat Easy, a company with a web platform and smartphone application that connects restaurants and customers. Bicycle couriers pick up the meals from local restaurants and deliver them to the customers that ordered them online. A delivery person alleged he was an employee of Take Eat Easy and brought an action before the French Labor Court (Conseil de Prud’hommes) to claim employment benefits.

The French Labor Court and later the French Appeals Court (Cour d’Appel) ruled that no employment contract existed and that the delivery person was not an employee. The case was then appealed to the FrenchSupreme Court, which looked at two important factors. Read more.

Freedom of Dismissals Under Italian Statutory Law

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Due to their role as alter ego of the employer, in Italy, executives are subject to different and less protective statutory rules compared to regular employees. This difference is quite evident in the legislation about dismissals.

In fact, while Italian statutory law generally provides that in order to dismiss an employee the employers must prove that they have fair reason to dismiss them, – when it comes to executives the employer is not obliged to provide proof of just cause. This means that, as a rule, executives can be dismissed freely (otherwise referred to as an ad nutum dismissal).

Moreover, if the dismissal is based on a very serious reason which is able to break the “bond of trust” between the employer and the executive (in Italian this concept is referred to as ‘giusta causa’ or ‘just cause’) then the employer is exempt from giving the executive a period of notice and is also exempt with paying the executive a sum in lieu of notice. Read more.

A Clarification on the Termination of Agency Contracts for Sales Agents in Italy

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Currently, Italian Law provides for two very different ways of calculating severance payments for agents. The first method is governed by the Italian Civil Code and the second method is regulated by National Italian Economic Collective Agreements.

The first calculation method, which is governed by the Italian Civil Code, is outlined in Article 1751 – which has been modified by EU Directive 653/1968. This article stipulates that at the moment the employment/agency relation is terminated – the employer must pay the agent/sales representative an indemnity if the following circumstances exist:

  • the agent has provided new customers to the employer or has noticeably developed business with already existing customers in a way that the employer will continue to profit or take advantage of this business after the employment relationship is terminated
  • the payment should be fair, considering the loss of commissions the agent will suffer.

Paragraph 3 of Article 1751 also requires that a Judge will quantify the severance payment, considering the maximum amount possible established by the present article: Read more.

Compromise Agreements for International Executives in the UK

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Many international executives will be asked to sign settlement or release agreements when their employment terminates in order to receive any enhanced severance pay. Even if you are not based in the UK, you may be asked to sign a compromise agreement waiving any claims in the UK, and you will, therefore, need to take advice from a UK lawyer.

This information will assist you if you are leaving or have left employment and you have been asked to sign an agreement to cover the terms of your departure.

What is a Compromise Agreement?

A compromise agreement is a legally binding settlement agreement between an employer and an employee. Usually, the employee accepts a sum of money in return for agreeing not to bring certain legal claims against the employer. In this way, the employees’ rights are ‘compromised.’ Read more.

Post Termination for International Executives – Restrictive Covenants

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International executives frequently seek our assistance in circumstances where they are
negotiating the terms of their contract or where their employment is about to terminate
or has terminated. Many of the contracts we see contain post-termination restrictive
covenants. Restrictive covenants often restrict your right to conduct activities in
competition with your former employer after the employment relationship has ended.
Such clauses may also be contained in other contractual documents, such as a
shareholders agreement or collateral contracts.

Post-termination restrictive covenants are particularly important in the contracts of
employment of senior employees, who will be in possession of confidential information,
have good relationships with key customers and will have influence over other members of
staff. As a senior employee, you would potentially be able to use that knowledge and
customer loyalty for the benefit of a competing employer.

It is, therefore, important that you are aware of the effect of any post-termination
restrictions affecting your employment. Advice should be sought either when negotiating
a new contract, when you are thinking of moving on, or upon the termination of your
employment. Read more.

Dismissal of International Executives (UK) – Wrongful Dismissal, Unfair Dismissal, Discrimination & Redundancy

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International executives frequently seek our assistance in circumstances where their employment has terminated or is about to terminate. For executives who have a sufficient connection with the UK, you may have rights which you can pursue under UK law.

Dismissal from your job as a Director or Executive can be a distressing experience. What rights do you have to compensation if this happens? It is important to note that in general terms any employment rights you have will derive from your contract of employment (sometimes called a ‘service agreement’) not from being a director or shareholder per se.

Wrongful Dismissal & Breach of Contract

Wrongful dismissal is a contractual claim. This arises where you have been dismissed and your employer has failed to fulfill their contractual obligations. For example, if you are not guilty of gross misconduct, but your employer has failed either to allow you to work out your notice or make a payment in lieu of notice (usually to include all benefits due like pension payments, company car benefits etc). Read more.

Statutory Claims by Executives in Great Britain

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There are two key questions to answer to establish if an executive has the right to bring a claim for breach of employment legislation: 1) Does the individual have rights under British legislation? 2) Can she enforce the rights in an Employment Tribunal?

This is not as simple as it sounds. Whether the Employment Tribunal has jurisdiction to hear a claim depends on the statute in question and whether the right comes from English or European Union (EU) law. The following sections cover the position on some of the key claims within Great Britain.

Unfair Dismissal Claims in Great Britain

Unfair dismissal law generally provides that in order to dismiss an employee fairly, an employer must have a potentially fair reason to dismiss and provided they do, the dismissal must still be fair in the circumstances of the case. Potentially fair reasons to dismiss include redundancy, capability and conduct. Read more.

Employment Contract Rights of International Executives in Great Britain

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If you are an expat executive working in Great Britain, at some point you will want to know the answers to two questions: When will the laws of England and Wales govern my contract, and when will the English courts have the power to hear my claim?

The first issue is to consider what the applicable law of your contract is. This is often set out in your contract.

Generally, the parties to a contract have the freedom to choose the applicable law, but in reality it is often the employer that chooses. That choice will often be the country’s laws that are most favourable and convenient to them. Read more.

Contract Reviews for Internationally Mobile Executives in the UK

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For international executives who work in or have connections with a number of different countries, it can be difficult to work out which country’s laws and Courts offer you protection in an employment matter. In some cases, you may even have a choice between a number of different legal jurisdictions. If you are looking to take up employment, working wholly or partly in Great Britain, we can help you check your proposed new contract and ensure that the deal you strike is a sensible one.

Example issues to consider are:

  • Does the contractual notice period give you adequate protection?
  • Are the place of work and duties clauses suitably defined?
  • Are the bonus or share right clauses adequately worded?
  • Is the summary dismissal clause reasonable?
  • Are the post-termination restrictions reasonable and enforceable?
  • Can you accept this offer without acting in breach of any current contractual restrictions?

What Are Your Rights During Employment?

Before you engage in any discussions with your employer it is helpful to get a basic understanding of your legal rights. These rights could exist under one or a number of legal jurisdictions. In Great Britain, your rights can come from a number of different sources. Read more.