Supreme Court Jurisprudence
On July 10, 2025, the Supreme Court of Justice of the Nation (the “Court”) issued a ruling (the “Ruling”) in the case “Oviedo, Javier Darío v. Telecom Argentina S.A. and others / dismissal” (the “Case”), rejecting the extension of liability to the directors who had chaired or been members of the board of Telecom Argentina S.A. (“Telecom”).
The Case:
The National Labor Appeals Court (the “Court of Appeals”) had confirmed the lower court’s decision, admitting the claim for unpaid wages and dismissal compensation against Telecom Argentina S.A., Tel 3 S.A., and Cotelar S.R.L. However, it also held jointly liable the co-defendants who had chaired or been members of Telecom’s board, a decision that was appealed to the Court.
Reasoning of the Court of Appeals:
Regarding the company’s liability, the Court of Appeals considered that Telecom Argentina S.A., in order to conceal its role as the direct employer, fraudulently interposed two intermediary companies, Tel 3 S.A. and Cotelar S.R.L., in the employment relationship.
Regarding the board’s liability, the Court of Appeals held that when a company engages in illicit simulation acts intended to conceal an employment contract, it is appropriate to extend patrimonial liability to its chairman or directors, as provided under the General Companies Law (the “Law”).
Decision of the Supreme Court:
The Court rejected the extension of liability based on the following grounds:
– Under the Law, there is a clear differentiation between the legal personality of the company and its administrators. The Court has upheld this rule in previous cases (“Carballo, Atilano v. Kanmar S.A. and others” and “Palomeque, Aldo René v. Benemeth S.A. and another”), and any exception must be applied restrictively; otherwise, the purpose of the law regarding corporate regulations would be undermined.
– The liability of administrators, representatives, and directors towards third parties under the Law requires them to “compensate for damages,” which differs from the joint liability in labor obligations.
– Personal liability for members of a company’s board must be fully justified by demonstrating misconduct or failure to act with the “diligence of a prudent businessperson.” In the case of large companies, directors cannot personally review every decision made, but are responsible for ensuring that appropriate control mechanisms are in place.
Based on these considerations, the Court concluded that, in Telecom’s case, board members cannot personally participate in all company decisions; their responsibility is to set company policy guidelines, instruct management, and oversee compliance.
Consequently, the Court overturned the appealed ruling for being arbitrary in attributing liability to the directors without examining specific evidence or considering defense arguments, such as the duration of each director’s term relative to the employment relationship of the plaintiff.
This ruling establishes a limit on objective liability attribution, defining the criteria for evaluating directors’ duties in large companies, requiring concrete and reasonable proof of negligent conduct before liability can be extended.
