For the vast majority of employment relationships around the world, choice-of-law analysis is a non-issue that we rarely ever think about. Obviously (for example), a Paris-resident baker working locally for a French bakery is protected only by French employment law. A Buenos Aires-resident banker working locally for an Argentine bank is protected only by Argentine employment law. And so on. Choice-of-law (also so-called "conflict of laws") analysis in plain-vanilla domestic employment scenarios is so simple, so intuitive and so uncontroversial that it almost never comes up.
But choice-of-employment-law becomes a hot issue—sometimes fiercely contested in expensive litigation—in cross-border employment relationships, for example:
- international business travelers (employed in one country, temporarily working in another)
- expatriates and international "secondees"
- foreign hires (recruited in one country to work in another)
- international commuters (living in one country but working in another)
- foreign correspondents and overseas teleworkers (working in one country for an employer in another)
- employees with international territories (working in several countries at the same time)
- mobile or "peripatetic" employees (with no fixed place of employment—sailors, flight crews, international tour guides and the like)
- international co-/dual-/joint-employees (staff split-payrolled by, or simultaneously employed by, two employer affiliates in different countries)
- former employees accused of having breached a post-term restrictive covenant in a jurisdiction other than the final place of employment
These scenarios implicate employment across borders, and surely the most common question in cross-border employment law is: Which country's employment laws reach border-crossing staff? Plus there are the follow-on questions: Which country's courts can adjudicate disputes between border-crossing staff and their employers? And: To what extent is a choice-of-law provision enforceable when it appears in an employment agreement, expatriate assignment letter, employee benefits program or compensation plan?
These three questions get asked—or, certainly, they should get asked—when an employer recruits, hires, employs, rewards and dismisses an employee in any cross-border employment arrangement. These questions get asked when a multinational employer structures a mobile job, an expatriate posting, an overseas "secondment" or even a long international business trip. These questions get asked when a multinational drafts cross-border employment policies and international benefits or equity plans. These questions get asked as to restrictive covenants and employee intellectual-property assignments with cross-border territorial scope. Indeed, these questions even come up when an organization contracts with an overseas independent contractor (because of the risk of misclassification as a de facto employee). And these questions become vital when an employer needs to dismiss border-crossing staff, because these questions implicate "forum shopping"—and it has been said that employees who can "forum shop" wield "powerful ammunition in negotiations over compensation."
The full answer to these three questions is, at the same time, both simple and complex. A simple general rule applies most of the time, but that general rule is subject to nuances, refinements, strategies, exceptions and purported exceptions. To lay out the full answer to these questions requires a rather detailed discussion analyzing three topics: (1) the general rule on the territoriality of employment protection laws, (2) nuances and refinements to the territoriality rule, and (3) contractual choice-of-law and choice-of-forum provisions and the territoriality rule. We address all three topics in this article.
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