Anna Beggan, a Partner and Head of the Employment Team at Tughans, Northern Ireland’s largest commercial law firm, begins a series of European business legal articles.

Highlighting everyday issues facing Northern Ireland firms engaged in trade and employment in other European Union member states Anna considers some of the matters which Northern Ireland businesses need to be alert to in order to negotiate their way safely through a web of 27 legal systems.

When developing their businesses across the European Union, companies frequently do not have the legal expertise to prudently implement employment contracts and correct policies and procedures, to manage disciplinary or grievance procedures and to ensure tax and pension contributions are paid at the correct time in the correct state.

Businesses will also need advice on the implications for personnel when mergers and acquisitions arise.

“When opening an office in another EU state, key personnel considerations will become evident. Though we now have the benefits of a single European market, the EU is far from having a single and coherent employment law system. Whilst in principle, EU law will overrule local legislation, it is apparent that each individual state has its own specific requirements and obligations.  There are particular requirements within each state with regard to general terms for employment, in relation to discrimination law and relating to the provision of staff handbooks and the issue of policies and procedures.

It will be important for businesses when developing their businesses across the European Union to recognise where the legal path deviates from the UK norm, at which point it will be necessary to draw on specific legal advice in the relevant jurisdiction.  Tughans Solicitors work closely with lawyers from an international network of independent law firms (of which Tughans is the sole Northern Ireland member) called Mackrell International.

Local businesses may be much more comfortable dealing with the laws with which they are familiar in this jurisdiction.  They may be concerned about dealing directly with a foreign legal system and about managing the risks inherent in so doing.  In this jurisdiction for example employers have a statutory obligation to provide employees with standard terms and conditions of employment and to ensure that disciplinary and grievance procedures are in place. Employers need to ensure that their practices and procedures are up to date, accord with their statutory obligations and are in line with best practice. 

Much of Northern Ireland employment legislation is directed from Brussels and we can expect that other member states will require employers to have similar type obligations, although they may take a different form. We understand for instance in France that French labour law is governed by the French Labour Code. Staff handbooks are mandatory whenever there are more than 11 people employed in a given place of work. In Germany there are specific laws which set out certain rights to include a new anti-discrimination law which is in place protecting employees from discrimination on particular grounds.

Other issues arise when hiring freelance consultants in EU states. In this jurisdiction the engagement of a consultant is that of a contract for services and not a contract of service.  A consultant is responsible for his own tax and national insurance, and is non-exclusive. In this jurisdiction should a contentious issue arise as to the status of an individual, namely whether that individual is an employee or a consultant, the courts will look beyond the terms of any written contract and consider what is actually happening in practice. Again, businesses need to be aware of the specific requirements when hiring consultants in each individual member state.

It is clear from information obtained from other European lawyers that there are differences in the legislative obligations and entitlements in the different European states. It will be important for businesses when hiring workers to ensure that they are adhering to their obligations and requirements in each individual member state, and dependent on the specific circumstances.

People are a fundamental part of any business and firms should be alert to their obligations regardless of where their business is located.

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