It is not at all unusual for an employee to reside in one country, but work in another. In fact, it is not unusual for an employee to regularly work in more than one country. It is also common for the employer to maintain its head offices in a different country than the one where the employee resides.
Situations like these can give rise to conflict of laws questions such as:
“Which law should apply – the law of the country where the employee is situated, or the law of the country where the employer is located?”
“Should the court where the employer’s head offices are located have jurisdiction over the case, or the court where the employee resides?”
Generally speaking, these questions are often determined by the jurisdiction where the employment agreement was made or entered into. Sometimes, the employment contract itself specifies which country’s laws will govern. Other times, however, the answer is not always clear. A recent decision of the Divisional Court, found here, provides a good illustration of this.
In this case, the employee signed the employment contract in Ontario. However, the employee also worked in the state of New York. When the employee was dismissed for a cause, a wrongful dismissal action was started in Ontario.
In response, the employer brought a motion to stay the court proceedings on the basis that the court in New York was the proper forum for the proceedings since that was where the employee worked. The Master in Ontario hearing the motion had to determine whether the balance of convenience favoured conducting the litigation in Ontario or in New York.
The Divisional Court upheld the Master’s decision to dismiss the employer’s motion and agreed with the Master’s analysis that there was an advantage that the courts in Ontario had over the courts in New York in properly determining the issues in this case. Specifically, since Ontario law applied to the employment relationship, it would be necessary to consider the principles of wrongful dismissal and the entitlement to reasonable notice. These are concepts that New York judges, who are more accustomed to “at will” dismissals, would not be as well acquainted with compared to Ontario judges.
The point to be taken away from this case is that these kinds of problems can be avoided with a carefully-worded employment agreement, underscoring the importance of obtaining legal advice before entering into an employment relationship. This type of risk management can save both employers and employees significant time and money down the road.
This article is intended only to provide general information and does not constitute legal advice. Should you require advice specific to your situation, please feel free to contact me to discuss the matter further.