Argentina: The Supreme Court Limited the Criteria for Extending Liability for Labour Obligations to Directors of Large Companies
On 10 July 2025, the Argentine Supreme Court of Justice ruled in the case “Oviedo, Javier Darío v. Telecom Argentina S.A. et al. on dismissal,” overturning the decisions of the lower courts that had extended liabilities to the directors of the defendant companies.
The Supreme Court remarked that the law clearly distinguishes the separate legal personality of a company from that of its directors, which constitutes a precise rule and the basis of corporate law that judges must not disregard. It further stated that holding members of a company’s board of directors personally liable must be “duly justified,” i.e. based on clear evidence that they failed in the proper performance of their duties by not acting with the diligence expected of a prudent businessperson.
The High Court stated that it is unreasonable to require directors of large companies to be directly involved in every decision made in the ordinary course of business. Instead, their role is limited to defining the company’s general policies and ensuring that adequate control mechanisms are in place to prevent or remedy labour irregularities. Therefore, they are responsible for instructing management levels to implement such policies and establish adequate audit and control systems, without this implying ongoing or personal supervision over every operational decision.
The Court decided to depart from the approach previously adopted by lower courts, which favoured a broad interpretation regarding the extension of joint liability for labour irregularities to directors of large companies.
In conclusion, the Supreme Court held that liability cannot be extended to directors of large companies for the mere fact of their position if there is no evidence of their personal involvement or reproachable conduct directly related to the absence of appropriate policies or control mechanisms likely to prevent or remedy labour irregularities.
This report cannot be considered as legal advice or advice of any other kind from Allende & Brea.
