Chapter 12 – Global Employee Benefits at a Glance
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Chapter 12 Global Employee Benefits at a Glance
I. Learning Objectives (use PP 12.2)
1. Differences among benefits in the US and around the world
3. Protection benefits such as retirement, health care, and social security in
various continents and countries
5. Other practices that distinguish countries benefits programs
II. North America
A. Overview (use PP 12.4)
1. Mexico, Canada, and the US are part of a trade bloc known as NAFTA –
the North Atlantic Free Trade Agreement
3. Trade between the US and its NAFTA partners has soared since the
agreement entered into force
5. Exports totaled $397 billion
7. The U.S. goods and services trade deficit with NAFTA countries was $41
billion in 2009
8. The labor side of NAFTA is the North American Agreement on Labor
9. While there has definitely been a convergence of labor standards in North
10. Overall NAFTA is reported as having been good for Mexico, which has
experienced a fall in poverty rates and rise in real income as a result of the
trade agreement
B. Canada (use PP 12.5)
2. Individual and collective employment relationships are controlled at the
provincial level and federal legislation cannot override provincial laws,
3. Paid time-off benefits:
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c. Employees are also entitled to two weeks’ paid vacation time,
4. Protection benefits:
a. Canada has two state pension plans, one for Quebec residents
only and one for all other Canadians; both funded by matching
C. Mexico (use PP 12.6)
1. The “Labor and Social Security” article of the constitution is still in effect.
2. Employment relationships in Mexico fall under the Federal Labor Law
3. Paid time-off benefits:
a. Workers are entitled to paid time-off during public holidays and
those who are required to work during a mandatory holiday are
4. Protection benefits:
a. Social security programs in Mexico are administered by the
Mexican Social Security Institute, which protects employees in
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5. Other benefits:
a. Has a national system of worker housing paid for by employer
contributions in the form of payroll taxes fixed at 5%, this helps
III. South America
A. Overview (use PP 12.7)
1. The biggest trade bloc in South America used to be Mercosur, also called
3. These two trade blocs merged as of a declaration signed on December 8,
2004 at the Third South American Summit and formed one large trade
B. Brazil (use PP 12.8)
1. The Consolidation of Labor Laws (Consolidacao das Leis do Trabalho)
2. Brazilian law states that any/all benefits habitually granted by an
3. In practice, employers discharge employees arbitrarily because there is a
4. Paid time-off benefits:
a. Brazilian labor law stipulates an annual 30-day vacation with pay
5. Protection benefits:
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b. Comprehensive social security benefits are provided by law to all
workers for retirement for illness, old age, or length of service;
C. Argentina (use PP 12.9)
1. Argentina had suffered economic decline and depression in the 1990s – a
2. With various successive governments trying to revive the economy with
IMF aid and measures to cut fiscal deficit it was finally in 2002 that the
3. Employment relationships in Argentina are governed by the Employment
Contract Law and employees are entitled to various statutory protections.
4. Paid time-off benefits:
a. Employees are entitled to 14 days of paid annual vacation when
5. Protection benefits:
a. There is a mandatory retirement and pension system and all
employees must be covered by the social security system.
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IV. Europe
A. Overview (use PP 12.10)
1. The European Union (EU) is a unique international organization that aims
3. The concept of “employment at will” does not exist in the EU as in the
United States.
5. All member states either have specific legislation or unfair dismissal or
6. The EU website reports that community labor law was designed with the
aim of ensuring that the creation of the single market did not result in a
lowering of labor standards or distortions in competition.
B. France (use PP 12.11)
1. Employment laws are incorporated in the French Labor Code (Code du
2. Such features as mandatory profit sharing and greater employee
3. Paid time-off benefits:
a. French law grants every employee the right to minimum five
weeks of paid leave after one year of employment.
4. Protection benefits:
a. Effective August 21, 2003, the French government mandated that
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c. There is a base regime of social insurance that applies equally to
5. Other benefits:
a. French law provides more flexible rules for management level
employees.
C. Germany (use PP 12.12)
1. Germany’s employment laws provide considerable voice to labor and job
2. There have been increasing concerns about the aging workforce and high
3. Paid time-off benefits:
a. The statutory minimum vacation has been set at 24 working days
(or 4 weeks since Saturdays are counted). Younger workers have
4. Protection benefits:
a. Germany has a statutory pension system similar to the Social
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d. For blue collar workers (and some white collar workers)
mandatory state health insurance premiums are borne 50% by the
insured and 50% by the employer.
e. Employees whose income exceeds a certain amount can opt out
of the state plan and purchase private health insurance.
D. United Kingdom (use PP 12.13)
1. The employment relationship in the U. K. is governed by a variety of
common law and statutory provisions.
3. Paid time-off benefits:
a. Workers are entitled to 4 weeks paid annual leave, including
statutory and public holidays.
4. Protection benefits:
a. All employees with the requisite National Insurance
Contributions are entitled to basic state pension.
b. However, this is a small amount and employees must supplement
it using one of the four ways:
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E. Sweden (use PP 12.14)
1. Employment relationships are partly covered by the law under the
2. Paid time-off benefits:
a. The annual work year in Sweden is among the shortest in the
3. Protection programs:
a. There are two statutory plans.
i. One provides old age pension to every person with a close
connection to Sweden, regardless of previous employment
V. Asia
A. Overview
B. People’s Republic of China (use PP 12.15)
1. The PRC Labor Law was established in 1995, resulting in a break from the
2. Under the older welfare system the workforce was considered the property
3. With the introduction of the PRC Labor Law, employment relationships
are now defined by individual contracts
4. Paid time-off benefits:
Chapter 12 – Global Employee Benefits at a Glance
5. Protection benefits:
a. There has been a new law decoupled the employment
relationships from the social insurance system and, set up a
unified basic pension system.
b. The system now has social insurance and mandatory individual
C. Hong Kong (use PP 12.16)
1. Under the governing constitution of Hong Kong known as the Basic Law,
the Hong Kong Special Administrative Region has the authority to make
2. Paid time-off benefits:
a. Employees who have worked for at least 1 year are entitled to
12–10
3. Protection benefits:
a. Employers are required to pay medical expenses for on-the-job
injuries and occupational diseases. Employers are also required
to carry a valid insurance policy for each employee.
D. Japan (use PP 12.17)
1. Employment relationships are based on the traditional notion of freedom
2. However, the outdated Civil Code has been replaced and there are
3. Paid time-off benefits:
a. Annual paid leave is allowed for 10 days after 6 months of
consecutive service and one additional day for each
4. Protection benefits:
a. Japan has a social insurance system involving a flat-rate benefit
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b. The national pension program is one in which the contribution is
included in the insured person’s contribution to the employees’
E. South Korea (use PP 12.18)
1. Most aspects of employment in South Korea are governed by laws and
violations of mandatory provisions are treated as criminal offenses. A free
2. Paid time-off benefits:
a. Employees are entitled to paid holidays designated by the
company and are also entitled to 10 days of paid leave when they
3. Protection benefits:
a. Peoples’ Pension covers most workers while the Local Pension
covers public workers, military personnel, and private
schoolteachers.
F. India (use PP 12.19)
1. The Directive Principle of State Policy has statutes that affect various
2. Wide variations exist between the public and private sectors, with the
3. Paid time-off benefits:
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a. Leave is usually calculated for each year based on the number of
4. Protection benefits:
a. First and current laws regarding pensions were passed in 1952
(employees’ provident funds), with amendments in 1972
(payment of gratuities), 1976 (employees’ deposit-linked
insurance), 1995 (employees’ pension scheme), and 1995
G. Saudi Arabia (use PP 12.20)
1. Numerous legal obligations rest on the employers regarding employment
relationships that must be strictly complied with and employment laws are
2. Paid time-off benefits:
a. After one year of service, a worker is entitled to an annual
vacation of 15 days at full wages and vacation time increases to
3. Protection benefits:
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b. The following groups of individuals are excluded: agricultural
4. Other benefits:
a. Employers are obligated to provide adequate living quarters,
suitable camps for living if needed, three meals per day when
VI. Africa
A. Overview
2. Some areas of economic success are South Africa and Botswana in the
southern part of the continent. Some comparable success is also being
B. South Africa (use PP 12.21)
1. Labor rights in South Africa stem from the constitution and the newest
legislation is the Labour Relations Act of 1995, under which there is no
2. Paid time-off benefits:
a. All employees are entitled to 21 consecutive days’ of annual
3. Protection benefits:
Chapter 12 – Global Employee Benefits at a Glance
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b. The social assistance system provides coverage for citizens with
VII. Australia (use PP 12.22)
1. Employment contracts are affected by awards or industrial agreements that
2. Paid time-off benefits:
a. Full time employees are entitled to 10 days of paid personal
3. Protection benefits:
a. Employers are required to make annual contributions to help
support the government pension
Chapter 12 – Global Employee Benefits at a Glance
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Summary
We reviewed benefits offerings mandated by the governments of several countries across
the world. There is extensive variation in minimum standards. A striking difference
Discussion Questions
1. Discuss the main differences between health care offerings in the United States and
one other country’s practices discussed in this chapter. How do these differences affect
companies’ ability to compete with other companies worldwide?
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2. Discuss the main differences between retirement systems in the United States (taking
into account legally-required and discretionary programs) and one other country
discussed in this chapter. Does it appear that the cost of retirement programs are creating
burdens for competitive advantage?
Main Points
Cases
Understanding Your Benefits
Working Abroad
1. How do the benefits offered in Brazil compare to those offered in Argentina?
2. How do benefits offered in these countries compare to those typically offered in
the United States?
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Student Responses
1. How do the benefits offered in Brazil compare to those offered in Argentina?
2. How do benefits offered in these countries compare to those typically offered in
the United States?
1. What are some challenges Ellie is going to face in creating the new benefit
packages for the international locations?
2. What are some general recommendations for Ellie as she plans these benefit
offerings?
Chapter 12 – Global Employee Benefits at a Glance
Instructor Notes
As an U.S. company looking to expand internationally, it is important for Suds
1. What are some challenges Ellie is going to face in creating the new benefit
packages for the international locations?
2. What are some general recommendations for Ellie as she plans these benefit
offerings?