How to ensure your global startup remains compliant with Europe’s various labour laws?

Despite on-going efforts by Brussels to consolidate laws across the European Union, local labour laws vary significantly across Europe due to their unique legal, cultural and economic contexts. Navigating this fragmented, and constantly evolving environment, can feel daunting for any global company, but especially early stage startups that lack the resources and as a result may cut corners when it comes to compliance. Staying informed and up-to-date with local labour laws is crucial for ensuring compliance.

Let’s dive into the various employment regulations in Europe and analyse how they compare between countries.

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Working Hours and Overtime: European countries have different regulations regarding working hours. For example, the UK typically allows a 48-hour work week (including overtime), whereas France is known for its 35-hour work week. Overtime regulations and compensation also vary, with some countries like France and Switzerland having strict limits and high overtime pay rates.

Since its addition to the French labour code in 2017, the “Right to Disconnect” prohibits business owners and managers in companies of 50 employees or more from emailing their employees after typical work hours. Arguably possessing Europe’s strictest employment laws, France has a history of enforcing such laws with fines that can exceed €100,000. The Right to Disconnect can be a particularly difficult law to comply with, especially for remote-first technology businesses that might need to manage development teams across multiple time zones.

Minimum Wage: The minimum wage across Europe varies widely. Some countries like Denmark and Sweden, perhaps surprisingly, do not have a statutory minimum wage, relying instead on collective bargaining agreements. Countries like Luxembourg, on the other hand, have a relatively high minimum wage, of €3,085 / month (2023.

Vacation and Annual Leave: Vacation entitlements can range from a minimum of 20 days in countries like Germany and the UK, to up to 30 days in France. Maternity and paternity leave policies also vary, with countries like Sweden and Bulgaria offering the most generous maternity leave of 240 and 410 days respectively, and others, like Switzerland, just providing the current EU legislation’s minimum maternity leave of 98 days.

Employment Contracts and Termination: The terms for employment contracts and termination of employment differ. In countries like France, Germany and Romania, employment protection laws are very strong, making it challenging for employers to terminate full time employee contracts without significant cause. In contrast, the UK’s stance on employment contract termination is relatively more flexible, although not nearly as lax as the “At-Will Employment” in the US, where employers may terminate their employees for any reason or no reason, providing no notice period.

Social Security and Benefits:

In almost all European countries, with the exception of Denmark, both employers and employees contribute to social security funds. These contributions cover various benefits such as pension, unemployment, sickness, and family benefits. Whilst some key principles are widely shared across European countries due to the influence of EU directives and the European Social Charter, labour laws surrounding social security vary significantly between countries, as each nation has its own systems and regulations.

Nordic countries, for instance, have extensive social welfare systems, while others like Bulgaria, Romania and Greece may have less comprehensive systems. Generally speaking, the greater the degree of social security and benefits provided in a country, the higher the social security tax rates are needed to cover it - with the exception of Norway and Iceland which rely more heavily on general taxation to fund their social security systems.

Below is a table of varying social security tax rates in Europe (2023):

*Tax rates were checked regularly in 2023. Please confirm tax rates with the country's tax authority before using them to make business decisions.

As seen above, Western and Northern Europe, have relatively higher social security tax rates than Eastern European countries - with the exception of the Czech Republic.

Worker Representation and Collective Bargaining: The presence and influence of unions and collective bargaining vary. In some countries, like the Scandinavian nations and France, unions play a significant role in determining working conditions, while in others, such as the UK, union influence has waned over time.

The strong presence of unions may have the effect of further enforcing local labour laws, through compliance monitoring and legal support. Countries with strong labour unions typically see a relatively larger number of employment lawsuits than countries with diminished union activity.

Health and Safety Regulations: Despite there being a broad EU framework for health and safety standards, specific implementations and additional regulations for those office-based work, can vary from country to country. These regulations cover several key areas, from office ergonomics, to proper lighting and good indoor air quality, but also psychosocial factors like mental health and workplace stress. Sweden, Germany and the Netherlands are particularly strict in enforcing these regulations.

Temporary and Part-Time Work: Regulations around part-time, fixed-term, and temporary work contracts differ, with some countries having strict rules about the use of such contracts. To prevent possible discrimination between full-time and part-time employees, countries like Germany, France and the Netherlands have strong rules in place to ensure equal pay and leave entitlements. To prevent the use of very short ‘part-time’ contracts, in France, part-time workers must work a minimum of 24 hours per week, ensuring that part-time work provides a decent living.

Anti-Discrimination Laws: While all EU countries are subject to EU anti-discrimination laws, the way these are implemented and enforced can vary, influencing workplace diversity and inclusion policies. Generally speaking, Belgium, Germany and the Nordics, have historically been the strictest countries in Europe in enforcing Anti-Discrimination laws in the workplace.

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Whilst strong labour laws exist across the European Union and are set by EU-wide directives, country-specific differences remain due to diverse economic policies, cultural norms and historical developments. Crucially, it is the degree of enforceability of these employment laws, and how it differs between each country, that ultimately determines the level of compliance to those laws, as well as the possible repercussions for non-compliance.

With all these factors to consider, navigating local labour laws for global or remote-first startups can be evidently challenging. Knowing local employment laws, how they change in time and the degree of enforceability in each country you choose to hire employees in is paramount in staying on top of compliance. Consulting with a local hiring specialist and law firm that deeply understands the nuances of a particular market and its changing labour laws can help. In some regions, like Eastern Europe, where full-time contracting - rather than typical employment - has become the preferred method of hiring, companies can mitigate considerable employment compliance risks if these contracts are managed correctly.

Carbon is the go-to staffing specialist for Eastern European and North African technical talent. Trusted by the biggest names in technology and venture capital, Carbon’s hyperlocal expertise makes entering new talent markets for value-seeking global companies possible.

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