Dealing with labour laws in multiple jurisdictions

Which laws apply if employees travel and work in different countries?

Stuart Rudner
Question: We’re a multinational company operating in foreign countries where there are few labour laws. We employ nationals from all over the world. Which labour laws would apply? Would it be different for each employee?

Answer: This is an issue that arises often and will continue as the globalization of the business world continues. As organizations become larger and begin to straddle more borders, they will have employees in a variety of jurisdictions. It is certainly not uncommon for American companies to have employees within Canadian jurisdictions and for large Canadian companies to have employees governed by different pieces of legislation due to the fact they are working in different provinces within the country.

Generally speaking, an employee will be governed by the laws of the jurisdiction in which she works. For example, an employee working in Ontario will be governed by the employment standards legislation in Ontario, as well as the common law of Canada, regardless of whether the employer is based in Ontario, Alberta or Pennsylvania.

The question can become murkier when the employee travels significantly, although, generally speaking, she will be considered to be governed by the laws of whichever jurisdiction she is based in. This can, and often does, lead to situations where an employer will have employees in a large number of jurisdictions. It may only have one or two employees in each of those jurisdictions, but, nevertheless, it must address this reality and recognize there will be differences in the way employees must be treated based upon the law in the different jurisdictions. The simplest way to equalize treatment is to apply the most stringent requirements of each applicable jurisdiction to all employees. This way, the company can ensure all employees are treated equally and no applicable laws are breached. Not surprisingly, however, many organizations are reluctant to do this.

These types of issues often arise when there is a significant reorganization, resulting in the dismissal of a number of employees across various jurisdictions. Employees in one jurisdiction (for example, Texas) may be entitled to significantly less notice of dismissal than their counterparts in British Columbia, despite the fact they hold similar positions within the company. This can create resentment between workers as well as political difficulties within the organization.

Many employers try to circumvent this by putting clauses in their employment agreements that stipulate the terms of employment will be governed by the laws of a particular jurisdiction, regardless of where the employee is truly working. One should be cautious, however, about attempting to rely upon such a clause.

Stuart Rudner is a partner who practices commercial litigation and employment law with Miller Thomson LLP’s Toronto office. He can be reached at (416) 595-8672.

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