The concept of territoriality means that within the borders in which a state has sovereignty, its laws are mandatory (ie, lex loci solutionis). This rule also applies to labour relationships. The Colombian Labour Code establishes that "it applies in the territory of the republic to all its inhabitants, irrespective of their citizenship or nationality". On the one hand, employment contracts are governed – in accordance with the code – by the law of the country in which the employee carries out his or her work, regardless of where the agreement was performed. Instead, if the agreement is performed in a different country, the law of that country applies.

Despite these concerns, sometimes the law of the place where the contract was signed applies, not the law of the place where it is performed. In this context the Supreme Court of Justice stated that:

"in accordance with the principle of territoriality (Article 2) and the lex loci solutionis rule, in theory, Colombian Legislation does not regulate services rendered abroad, but our jurisprudence has taught that when the subordination is practised in our country, Colombian law is applicable."

One of the distinctive elements of an employment contract is a relationship of subordination. Pursuant to it, every employer can give instructions to determinate the quantity of work and the conditions of time, means and place in which the employee has to carry out his or her activities. This concept is relevant to explaining how the jurisprudential rule works.

If a worker that was hired in Colombia is requested to work abroad temporarily or permanently and receives orders and instructions from his or her boss located in Colombia, this contract will be governed by national law. Employees working abroad have the legitimate expectation that they will suffer no disadvantage concerning the rights and benefits enshrined in the Colombian legal system.

The abovementioned rule is important in respect of the expatriate staff and corporations that have a large flow of personnel across borders. In activities that entail moving workers from one country to another without employer substitution or a change of the conditions agreed, the labour relationship will be governed by foreign law, unless the parties agree otherwise.

If the employee will be resettled permanently, it is important to determinate the new real employer. Concern exists because a worker can sue in accordance with Colombian legislation, which could be contrary to the law where the agreement is performed. If a relationship of subordination is practised abroad, it has to be adjusted in strict accordance with Colombian legislation, especially in relation to the termination of a contract when there is fair cause. At the same time, it is possible to agree a different rule.

For further information on this topic please contact Diego Felipe Valdivieso Rueda at VS+M Abogados by telephone (+57 1 610 6180) or email (dvaldivieso@vsmlegal.com). The VS+M Abogados website can be accessed at www.vsmlegal.com.

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