Beyond Corporate Separateness: Parent Company Liability for Foreign Subsidiaries’ Employment Obligations under Conflict-of-Laws Rules

Abstract

The expansion of multinational corporations and the increasing cross-border mobility of workers have intensified legal uncertainty concerning employment obligations within corporate groups. A particularly complex issue arises when employees formally employed by foreign subsidiaries seek to hold parent companies liable for employment-related obligations, thereby challenging the traditional doctrine of separate corporate personality. This study examines the circumstances under which a parent company may be held liable for employment obligations arising from contracts concluded with foreign subsidiaries and how such liability should be determined under conflict-of-laws rules. The study employs descriptive, analytical, and comparative legal methods, examining legislation, judicial decisions, and scholarly literature from Jordan, Egypt, France, and the European Union, with particular reference to the Rome I Regulation. The analysis focuses on party autonomy, the employee’s habitual place of work, the place of business through which the employee was engaged, the closest connection, and the location of the parent company’s central administration as relevant connecting factors. It further examines effective control, legal subordination, corporate separateness, and the protective function of labour law in determining the actual employer and allocating responsibility within multinational corporate structures. The findings demonstrate that relying exclusively on the parent company’s central administration as the principal connecting factor may produce outcomes that privilege corporate interests while inadequately protecting employees’ legitimate expectations and the realities of their employment relationships. The study therefore proposes a protective conflict-of-laws framework for Jordan that combines limited party autonomy, the habitual place of work as the primary connecting factor, a closest-connection exception, overriding mandatory labour protections, and parent-company liability where effective control over material employment decisions can be established. The study contributes to comparative private international law by reconceptualizing parent-company liability beyond formal corporate separateness and developing a worker-oriented framework for resolving cross-border employment disputes within multinational corporate groups.