11-07-2025

On July 10, 2025, the Supreme Court of Justice of the Nation (“CSJN”) issued a ruling in the case “Oviedo, Javier Darío v. Telecom Argentina S.A. and others / dismissal,” which sets an important precedent regarding the scope of joint liability in labor matters of the directors of a commercial company, particularly in the case of large-scale corporations.

The plaintiff’s claim for salary credits and dismissal compensation was favorably received at both the first and second instance levels, with Telecom Argentina S.A. and two intermediary companies (fraudulently interposed to conceal the employment relationship of the aforementioned commercial entity) being held jointly liable, along with three persons who had presided over or been members of Telecom Argentina S.A.’s board of directors.

The extension of responsibility to the directors was based on the fact that it is appropriate when the commercial company engages in illicit simulation acts to conceal an employment contract, which had occurred in this case because Telecom Argentina S.A. had failed to register the employment relationship with the plaintiff. No sufficient reasons were invoked to consider that the directors might have been mistaken about this or had acted without full knowledge or with the deliberate intent to avoid registering the employment bond, thereby violating the law and harming the plaintiff and the social security system.

The CSJN considered that the second instance ruling (issued by the National Chamber of Labor Appeals) was arbitrary, and therefore revoked it. Firstly, the Court recalled that the exception to the rule that distinguishes the personality of the corporation from that of its managers is to be interpreted restrictively. Therefore, personal liability of the members of a corporation’s board must be properly justified and supported by comprehensive evidence that they committed misconduct by failing to act with the diligence of a prudent businessman, a circumstance that must be assessed according to the context.

In this regard, the CSJN pointed out that, in the case of large-scale companies with a significant workforce, substantial capital, diverse functions, and decentralized administrative and/or territorial structure, directors cannot personally review all decisions made. It is sufficient that appropriate control mechanisms exist to prevent or correct irregularities sanctioned by labor legislation.

In this sense, the ruling issued in second instance was disqualified by the CSJN because it did not explain the circumstances in the case that led to the conclusion that the directors had directly participated in the management of business transactions that resulted in the hiring of the plaintiff through intermediary companies, nor how they had full knowledge of the relationship with the plaintiff and decided not to register it. Furthermore, the CSJN based its decision on the grounds that the ruling was founded on dogmatic considerations and did not analyze the defensive arguments concerning, for companies of Telecom Argentina S.A.’s size, the role of directors being limited to setting policies, instructing management, and overseeing compliance.

This precedent from the CSJN is significant because it reaffirms the limit of directors’ joint liability in labor matters and maintains that the criterion of the diligence expected of a prudent businessman should be evaluated based on the context of the corporation. This means that, in the case of large companies, responsibility cannot be validly attributed to directors if an internal control mechanism exists that can prevent or rectify situations contrary to labor legislation.