HR globaly - legal aspects

Are you planning an international expansion or already managing global teams? Differences in employment law, for example between the UK and the Czech Republic, can cost your company millions in fines and litigation. In this article, you will find a clear guide on how to set up functional global HR policies, mitigate risks, and effectively manage employees in compliance with local Czech and international laws.

Do you need professional advice on this topic? Contact our law firm in Prague, ARROWS, via email at office@arws.cz or by phone at +420 245 007 740. Your inquiry will be handled by "Mgr. Vojtěch Sucharda", our expert on the Czech legal system and international HR.

Global Ambitions, Local Rules: Why a Unified HR Strategy Fails

For international corporations, the drive toward process standardization is natural. Creating a unified, efficient HR strategy that applies to all branches from London to Prague seems like a logical step toward optimizing costs and corporate culture. However, this strategy encounters an insurmountable obstacle: the principle of territoriality. As soon as your employee performs work within a specific country, they are subject to local employment regulations, regardless of the employer's country of origin.

International labor law is a complex web consisting of global standards, such as International Labour Organization (ILO) conventions, and, above all, strict local regulations. Companies must address everything at the national level, from minimum wage, working hours, and statutory benefits to extremely sensitive termination processes. Ignoring these specifics is not just an administrative oversight; it is a strategic risk.

The consequences of failing to respect local Czech laws are severe and include high financial penalties, costly litigation in Czech courts, damage to brand reputation, and, last but not least, the departure of key employees. Differences in legislation are not merely cosmetic; they reflect deep-seated differences in legal cultures and philosophy. While the Anglo-Saxon common law system in the UK places greater emphasis on contractual freedom and the principle of "reasonableness," the continental system in the Czech Republic is built on detailed, codified employee protection.

Treating international HR solely as an administrative task is therefore a fundamental error that leads to an underestimation of risks and insufficient investment in local legal expertise. At ARROWS, our Prague-based attorneys deal with these issues daily and help companies transform legal chaos into a clear and functional system. For an immediate solution to your situation, contact us at office@arws.cz.

Case Study: Employment Law in the UK vs. the Czech Republic

To demonstrate how dramatically rules can differ even within Europe, let us compare two developed markets: the United Kingdom and the Czech Republic. At first glance, these similar economies have fundamental differences in employment law that every international firm must know and respect.

Termination of Employment – Flexibility vs. Protection

The method by which an employment relationship can be terminated is one of the highest-risk areas. In the UK, the key concept is protection against "unfair dismissal." An employee generally has the right to file a claim for unfair dismissal only after two years of continuous employment. The employer must have one of five legally recognized fair reasons (e.g., conduct, capability, redundancy) and follow a fair process.

In contrast, the Czech Labour Code provides employees with much stronger protection from day one. An employer may only give notice to an employee for reasons specifically enumerated in the Act. Furthermore, there are "protection periods" (e.g., pregnancy, sick leave) during which termination by the employer is prohibited, with very few exceptions. The standard notice period under Czech law is two months.

Non-compete Clauses – Protecting Business Across Borders

Protecting know-how after the departure of a key employee is vital for companies. In the UK, non-compete clauses are in principle considered void as they restrain trade. To be enforceable, an employer must prove in court that the clause protects a "legitimate business interest" (e.g., trade secrets, client relationships) and that its scope, duration, and geographical area are no wider than absolutely necessary.

A duration longer than 6–12 months is very difficult to defend, and the British government has even proposed a statutory limit of just 3 months. Importantly, UK law does not require the employee to be paid for this restriction.

The Czech Republic, on the other hand, has non-compete clauses clearly regulated in Section 310 of the Czech Labour Code. It can be agreed upon for a maximum of one year, and only in cases where it can be reasonably required of the employee given the information they acquired during employment. The key difference is that the employer is obliged to pay the former employee monetary compensation of at least one-half of their average monthly earnings for each month of the commitment. Without this financial compensation, the clause is invalid under Czech legislation.

Other Key Differences

Differences permeate the entire employment relationship:

• Fixed-term contracts: In the Czech Republic, a contract can be extended a maximum of two times, and the total duration must not exceed 9 years (3x3 years). In the UK, there is no such statutory limit on the number of extensions.
• Probationary period: Under Czech law, this is a maximum of 3 months (6 months for management positions). In the UK, the length is at the company's discretion, typically 3–6 months.
• Vacation: The statutory minimum in the Czech Republic is 4 weeks (20 days). In the UK, it is 5.6 weeks (28 days), which may include bank holidays.

These differences clearly demonstrate that even basic HR processes require local legal expertise. Our Prague-based attorneys are ready to assist you – contact us at office@arws.cz.

FAQ – Legal tips for employment contracts

• Can I use the same employment contract template for employees in London and Prague?

Absolutely not. As our comparison shows, key elements such as probationary periods, termination conditions, and non-compete clauses are governed by entirely different laws. Using a single template would lead to the invalidity of key provisions and expose your company to significant legal risks. Do you need to prepare legally sound contracts for your international teams? Contact our Czech legal team at office@arws.cz.

• What is the biggest financial difference regarding non-compete clauses between the UK and the Czech Republic?

In the Czech Republic, you are legally required to pay a former employee financial compensation for the entire duration of the non-compete restriction. In the UK, no such statutory obligation exists. Failure to meet this obligation in the Czech Republic renders the clause invalid. Our attorneys at ARROWS can help you set up enforceable clauses in any jurisdiction – write to us at office@arws.cz.

The greatest vulnerability for international companies is often their local managers. Without specific training, they will naturally apply procedures they are used to from their home country, unknowingly creating massive legal risks for the firm. Effective protection, therefore, lies not only in preparing contracts but also in professional training for management, which we regularly provide at ARROWS.

Critical mistakes in international employment

The following table summarizes the most common and expensive mistakes companies make and shows how we at ARROWS can help you avoid them.

Risks and Sanctions	How ARROWS helps
Incorrect worker classification (contractor vs. employee) leading to back-taxes, social security contributions, and fines (known as the "Švarc systém" in the Czech Republic).	We perform legal analysis and set up contractual relationships so they correspond to the actual nature of the work and minimize the risk of reclassification.
Invalid termination of employment and subsequent litigation in Czech courts regarding compensation and damage to the employer's reputation.	We represent you in employment disputes and prepare procedurally correct documentation for termination of employment in accordance with local Czech law. Do you need legal assistance in this matter? Contact us at office@arws.cz.
Unenforceable non-compete clause, which fails to protect your trade secrets and know-how from competition.	We prepare tailored non-compete clauses that will be enforceable in the given jurisdiction and effectively protect your legitimate business interests.
Violation of working hours and overtime rules, leading to high fines from the Czech Labour Inspection Authority and employee dissatisfaction.	We review your internal policies and working hours to ensure compliance with local regulations and protect you from sanctions. Connect with us at office@arws.cz for a review of your documentation.
Illegal transfer of employee personal data outside the EU in violation of GDPR, risking fines up to 4% of global turnover.	We draft legal opinions and prepare necessary documentation (e.g., Standard Contractual Clauses) for legal data transfer.

Creating global policies that work: From Code of Conduct to Data Protection

Once we understand the necessity of a local approach, we can proceed to create a strategic framework that combines global corporate values with local legislation. The goal is not to have dozens of different systems, but one flexible model: "global framework, local adaptation."

Global Code of Conduct and Anti-Discrimination Policies

The foundation of a unified corporate culture is a global Code of Conduct. This document must lead by example from top management, be written in clear language, and be easily accessible to all employees. It should clearly define the company's stance on key risks such as conflicts of interest, corruption, discrimination, and harassment. While values like respect and integrity are universal, their application must be adapted to local laws and cultural norms, for example, in the definition of harassment or in grievance procedures.

Implementation of Whistleblowing Policy in accordance with the EU Directive

An effective whistleblowing system is key to risk management. For employees to use the system, they must overcome three main barriers: fear of retaliation, the feeling that nothing will change, and uncertainty about how and to whom to report the problem.

A successful policy must therefore guarantee anonymity, protection against retaliatory measures, and a transparent investigation process. For companies operating in the EU, it is also crucial that their system is in full compliance with the Whistleblower Protection Act under Czech legislation. ARROWS can help you draft internal guidelines and implement a secure reporting channel in accordance with the law. Do not hesitate to contact our law firm in Prague at office@arws.cz.

Employee Data Protection (GDPR) and Cross-Border Transfers

The General Data Protection Regulation (GDPR) applies to every organization processing data of individuals within the EU, regardless of where the organization itself is based. The transfer of employee personal data outside the European Economic Area (EEA) is prohibited unless specific conditions are met. Most commonly, these include:

1. Adequacy Decisions: The European Commission has recognized that a given country provides a comparable level of data protection (e.g., the UK, Canada).

2. Appropriate Safeguards: For countries without such a decision (e.g., USA, China), additional safeguards must be adopted, most often in the form of Standard Contractual Clauses (SCCs) or Binding Corporate Rules (BCRs).

Implementing a global data protection policy requires robust measures such as encryption, access control, definition of data retention periods, and regular employee training. The process of creating and implementing these global policies is a valuable tool in itself. When the legal department from headquarters collaborates with local HR to create a local addendum to the policy, a valuable exchange of information occurs, revealing hidden risks and building shared responsibility for compliance across the entire company.

The Power of an International Network: How ARROWS Solves Your Cross-Border Challenges

Addressing this complex agenda requires a partner who has not only deep knowledge of Czech law but also verified and reliable contacts abroad. That is why at ARROWS, we have spent over ten years building our international network, ARROWS International. This network is not just a list of random contacts, but a strategic alliance of proven law firms that share our values: speed, quality, and a commercial approach.

Through ARROWS International, you gain:

• Immediate access to local expertise: Our partners know the local laws, regulations, unwritten rules, and cultural customs that are crucial for success.
• Coordinated and efficient solutions: For you as a client, we remain the single point of contact. We coordinate all steps with our foreign colleagues and deliver a unified, clear, and strategic solution.
• Cost efficiency: You benefit from global reach without the enormous costs associated with large international corporate firms.
• Certainty and risk reduction: The greatest value of our network is trust. Choosing a foreign legal advisor is virtually risk-free for you, as we have already verified their quality and reliability through long-term cooperation.

Our Prague-based attorneys handle cases with international elements on a daily basis. This experience, gained while working for our portfolio of more than 150 joint-stock companies and 250 limited liability companies, guarantees that your cross-border activities will be in safe hands. Need legal assistance? Contact us at office@arws.cz.

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Conclusion: Your Strategic Partner for Secure Global Growth

Managing employment relationships on an international scale is not merely an administrative task, but a strategic necessity for any company with global ambitions. A proactive approach and investment in professional legal advice are not costs, but investments in protecting your reputation, minimizing risks, and ensuring sustainable growth.

At ARROWS, we combine deep knowledge of the local environment with a decade of experience building the ARROWS International network. We pride ourselves on speed and high-quality service. Furthermore, thanks to our broad client base, we can connect companies with interesting business or investment opportunities and are happy to hear your business ideas as well.

Whether you are dealing with your first employment contract abroad or revising a global compliance program for thousands of employees, our Czech legal team is ready to help. Get in touch with us at office@arws.cz and take the first step toward secure and successful international expansion.

FAQ – Frequently Asked Legal Questions on International Employment Law

1. What is "garden leave" and how is it used in the UK?
"Garden leave" is a period where an employee, after giving or receiving notice, no longer reports to work but remains formally employed and receives their salary. Employers use this to protect business interests – the employee is kept out of the market, their knowledge becomes outdated, and their successor has time to take over the agenda and client relationships.

2. What are the biggest risks when hiring contractors abroad?
The main risk is misclassification, where local authorities may reclassify a contractor as an employee. This leads to the obligation to retroactively pay taxes, social security, and health insurance, along with high penalties. It is crucial that the contract and the actual performance of work correspond to the status of an independent contractor. To assess your contracts and minimize risks, please contact our Prague-based law firm at office@arws.cz.

3. Must an employment contract be in the local language?
In many countries, it is a legal requirement for the contract to be valid and enforceable. Even where it is not strictly mandatory, it is strongly recommended to ensure clarity and prevent future disputes. It is always necessary to verify local legislation. ARROWS International ensures the preparation of contracts in accordance with local laws and language requirements. 

4. What does "at-will employment" mean in the USA and does it apply in Europe?
"At-will employment" is an American legal doctrine that allows both the employer and the employee to terminate employment at any time, for any reason (that is not illegal, e.g., discriminatory), and often without a notice period. This principle does not apply in Europe, including the Czech Republic and the UK. European law requires a fair reason for termination by the employer and compliance with the statutory notice period. Do you need legal assistance with international employment relations? Our Czech legal team is here for you at office@arws.cz.

5. What is the difference between a "non-solicitation" and a "non-dealing" clause in British law?
"Non-solicitation" prohibits a former employee from actively approaching clients with the aim of poaching them for a new employer. "Non-dealing" is broader and prohibits any business contact with these clients, even if the client approaches the employee first. The correct choice depends on the employee's position and the nature of the protected interests.

6. What are the basic steps for the legal transfer of employee data from the EU to the USA?
Since the USA does not have a general adequacy decision for data protection from the EU, it is necessary to use so-called "appropriate safeguards." Most commonly, this involves entering into Standard Contractual Clauses (SCCs) between the European data exporter and the American importer. Furthermore, a Transfer Impact Assessment must be conducted to evaluate the risks associated with the law of the third country. We will ensure complete GDPR compliance for your international data transfers. Write to us at office@arws. 

Disclaimer: The information contained in this article is for general informative purposes only and serves as a basic orientation on the subject. Although we ensure maximum accuracy of the content, legal regulations and their interpretation evolve over time. To verify the current wording of regulations and their application to your specific situation, it is essential to contact ARROWS law firm in Prague directly (office@arws.cz). We bear no responsibility for any damages or complications arising from the independent use of information from this article without our prior individual legal consultation and professional assessment. Every case requires a tailored solution; therefore, do not hesitate to contact us.

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