The vast majority of companies headquartered in the United States generally face minimal restrictions when reducing employee head count. Employment flexibility, as dictated by business requirements, is a cornerstone of U.S. business. Although employers must abide by notice requirements, such as those under the Workers Adjustment and Retraining Notification Act, 29 U.S.C. 2101-9 and its state law analogs — and should undertake analyses to minimize potential discrimination claims resulting from the layoff process — nonunionized U.S. employers generally can implement a reduction in force without much restriction. That frame of mind, however, often conflicts with the employment regimes in many Asian countries where at-will employment is not recognized or enforceable.
As a result of the economic pressures challenging U.S. companies, directions to reduce head count and labor costs have spread globally and created tension between management and employees in many Asian countries, including the People’s Republic of China (PRC), South Korea, Malaysia and Japan. In these countries, reducing head count due to fewer orders or lower profits is not the employer’s unimpeded right based on business need. Rather, employers must address stringent statutory limitations on economic terminations.
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