Multi-National Company in Various Jurisdictions: Which Employment Laws Apply?
When a company has more than one location in jurisdictions with different employment legislation, typically the jurisdiction in which a particular employee works will also be the law that applies to their employment contract. This would be indisputable. However, when an employer hires a worker to do work in another jurisdiction, or the employee lives in another province or country, there may be a dispute in which laws apply to the employment contract. Such issues may include termination pay, leave time and benefits, employer benefits contributions, income tax and so forth.
In order to avoid such an issue, an employer may opt to include a ‘choice of law’ clause in the employee’s employment contract. A choice of law clause would allow the parties to agree beforehand on which jurisdiction’s laws would apply to the contract. In the absence of a choice of law clause, a court would then determine the laws that apply to the interpretation of the employment contract or clauses in dispute. This would be done by examining which jurisdiction and legislation relate most closely to the parties.
Employers, however, must be aware that any choice of law clauses must not be adopted in bad faith. If a court determines that the choice of law clause is not related to the parties and that the employer implemented the clause in order to create a more favourable interpretation at the employee’s expense, the court may declare the contract or the disputed clauses invalid. If you are an employer operating in multiple jurisdictions, attaining consultation with an employment lawyer may save valuable time and resources from future disputes.