Cross-Border Executive Employment: Which Law Applies in Italy?

When a group appoints a senior executive to run a region, sit on a board or relocate, the commercial terms are usually settled long before anyone asks the basic question: which country’s employment law governs, and where can a dispute be litigated?

Cross-border executive contracts typically contain a choice-of-law clause and a jurisdiction clause, often selecting the group’s home country, and employers frequently treat them as decisive. In the European framework they are not. Both the governing law and the competent forum are determined by mandatory EU instruments designed to protect the employee, including a senior executive, against losing protections that would otherwise apply. A well-drafted clause can still fail to produce the intended result.

The stakes are highest where executives are most valuable — C-suite officers, regional and global function heads, expatriate executives and internationally mobile managers — because their contracts carry heavy severance, restrictive-covenant and equity exposure, and their working patterns are exactly the ones that make the analysis difficult. 

This article explains how applicable law and jurisdiction are determined in cross-border employment contracts, why the connecting factors matter more than the recitals, and what this means when Italy is involved.

Governing law vs jurisdiction

The most common error in international executive contracts is to conflate the law that governs the contract with the forum in which a dispute is heard. They are distinct and decided under different instruments.

Within the EU, the law applicable to an individual employment contract is determined by Regulation (EC) No 593/2008 (Rome I). Jurisdiction, where the defendant is EU-domiciled and the conditions are met, is determined by Regulation (EU) No 1215/2012 (Brussels I bis). Rome I designates the applicable law even where it is not that of a Member State, and applies regardless of the parties’ nationality. Because a court can and routinely does apply foreign law, the choice-of-law clause tells you little about where the executive can sue, and the jurisdiction clause little about what substantive law decides the case. Each must be analysed on its own footing.

Rome I and the limits of choice-of-law

Article 8 of Rome I contains a purpose-built regime for employment contracts, structured as a hierarchy.

Choice is permitted, but cannot remove the protective floor. Under Article 8(1), the parties may choose the governing law under the freedom-of-choice rule in Article 3. That choice is effective as to most of the relationship, but cannot deprive the employee of the protection of provisions that cannot be derogated from by agreement under the law that would apply in the absence of choice. A choice of, say, English or New York law does not switch off the mandatory protections of the law Article 8 would otherwise designate. In practice, one identifies the law applicable to absent choice (under Article 8(2)–(4)) and its non‑derogable rules, then compares the chosen law against that floor. Where the former is more protective on a point, its rule prevails, while the chosen law governs the rest. The result is often a hybrid application of two systems, but this arises from the mandatory operation of Rome I (Articles 8 and 9), not from contractual design; parties cannot opt out of these layers by clause. 

Overriding rules sit above even this. Article 9 preserves “overriding mandatory provisions” (norme di applicazione necessaria / lois de police) which are rules a country regards as crucial for its public interests, applying irrespective of the governing law. With those of the forum always applying. Article 21 lets a court refuse a rule manifestly incompatible with the forum’s public policy (order public). The Posting of Workers Directive (96/71/EC, as amended by Directive 2018/957/EU) ensures that, for posted workers, a core of host‑state mandatory rules applies in addition to Rome I. Rome I’s recitals and the Posting regime together confirm that its conflict‑of‑law rules do not prejudice the host State’s mandatory employment provisions for posted workers, an issue that matters for longer assignments. A choice-of-law clause is therefore a starting point, not a conclusion.

The habitual workplace test

Where the parties have not chosen a law, or the Article 8(1) floor requires the objectively applicable law to be identified, Article 8 supplies a cascade.

Primary factor (Article 8(2)): the country in or from which work is habitually carried out — the lex loci laboris, which does not change merely because the executive is temporarily employed elsewhere. The Court of Justice reads it broadly, principally in Rome Convention cases treated as applicable to Article 8 because the provisions do not materially differ. In line with Rome I and the Practice Guide of the European e‑Justice Portal, the law of the country where the employee habitually carries out his work normally applies even if the employer is established elsewhere. Short‑term postings or missions to other States do not in themselves alter the habitual place of work. 

For executives this rarely resolves on the contract. An executive who chairs meetings in one country, manages a team in a second and reports to a parent in a third is exactly the multi-country case the case law addresses. Remote and hybrid working sharpen it, since one running a foreign operation from a home office may habitually work “from” the country of residence, not the employer’s seat.

Residual factor (Article 8(3)): the engaging place of business — reached only if the habitual-workplace test cannot identify a country. Because Article 8(2) is read broadly, this is genuinely residual, not a fallback to where the recruiting entity sits.

Escape clause (Article 8(4)): a manifestly closer connection. In Schlecker (C-64/12), the Court confirmed a national court may set aside the lex loci laboris where the contract is more closely connected with another country, weighing factors such as the country of income taxation, social-security affiliation and salary parameters.

What does not decide it. No single formal marker is determinative — not the registered office, the payroll entity, the currency of remuneration or the place of signature, which count only as part of the overall picture.

Jurisdiction over executive disputes

Jurisdiction over employment disputes is governed, within Brussels I bis, by a protective regime in Section 5 (Articles 20–23) that displaces the general rules.

The protective baseline:

Under Article 21, an employee may sue the employer either where the employer is domiciled or in the courts for the place where, or from where, the employee habitually works (or last did). Under Article 22, the employer may in principle sue the employee only where the employee is domiciled — a deliberately asymmetric regime.

Tight limits on jurisdiction agreements:

Article 23 permits departure from Section 5 only where the agreement is entered into after the dispute has arisen, or where it allows the employee to bring proceedings in courts other than those the Section confers. A pre-dispute clause compelling the executive to litigate exclusively in the employer’s chosen forum will generally not be effective against the executive, who may still sue where he or she habitually worked.

Directors who are also employees:

Whether a senior figure is an “employee” is an autonomous EU‑law question turning on subordination: the person must, for remuneration, perform services under the direction of another party which determines the work to be done and the way it is done. As Holterman Ferho (C‑47/14) indicates, a person who is both director and, in substance, an employee may fall within the protective employment‑law rules; a purely corporate mandate without subordination will not. Where an executive holds both a board appointment and an employment contract, each relationship requires separate characterisation. In Italy in particular, termination of the corporate office (revoca dell’amministratore) and termination of any parallel employment contract follow distinct substantive and procedural regimes, and must be analysed separately for applicable law, jurisdiction and remedies.

Arbitration and third-country forums:

Arbitration lies outside the core system of recognition and enforcement governed by Brussels I bis, but arbitration clauses in employment contracts remain subject to national rules on arbitrability and validity. In several Member States, including Italy, statutory and collectively bargained limits on the arbitrability of employment claims significantly restrict the enforceability of pre‑dispute arbitration clauses against employees. A clause selecting a non‑EU court likewise does not guarantee that litigation elsewhere is precluded: if the employer is EU‑domiciled, an employee may still sue in the Member State courts designated by Articles 21–22 of Brussels I bis, and those courts cannot decline jurisdiction solely because the contract pointed to a non‑EU forum. A foreign‑forum or arbitral clause may therefore not hold in practice and must be tested against the protective regime, national arbitration law and the specific configuration.

When Italian law reaches an expatriate executive

Italy enters through the same doors, and which door is open matters. Italian law may govern where the executive habitually works in or from Italy with no valid contrary choice; it may supply the non-derogable floor under Article 8(1) even where another law is chosen; its overriding provisions may apply under Article 9; and it may be brought in under the Article 8(4) escape clause. For an expatriate executive based in Italy, more than one route is often open at once.

Four fact patterns lead to different results: an executive employed by an Italian company (Italian law is the natural centre of gravity); one seconded to Italy (the home contract may continue, but the posting can trigger Italian overriding provisions and a core of Italian terms); one employed abroad but habitually working in Italy (the habitual-workplace test may point to Italy despite a foreign employer and choice of law); and one managing Italian operations from abroad (the connection may be commercial rather than personal — but this must be tested, not assumed).

Where Italian law is engaged, two layers must be distinguished. First, where Italy is designated as the lex loci laboris or as the law most closely connected under Article 8 Rome I, its non‑derogable employment and social‑security rules apply in full: these include termination and notice rules, statutory deferred severance (trattamento di fine rapporto, Article 2120 of the Civil Code), restrictive covenants (Article 2125), certain remuneration and working‑condition protections, and protection against null and discriminatory dismissal. 

TFR is accrued annually on all remuneration and is governed by mandatory calculation and indexation rules; only limited contractual variations are permitted within statutory pension and severance schemes. Second, certain provisions — notably the collective‑redundancy regime and anti‑discrimination rules — may also qualify as overriding mandatory provisions in the sense of Article 9 Rome I, so that Italian courts will apply them irrespective of the governing law where they are seized. Social‑security coordination is governed by EU rules and bilateral treaties and should be verified specifically for each assignment rather than inferred from the employment‑law position.

Collective agreements for dirigenti

Italian executive employment law is not a single, uniform body of rules. Much of what governs an Italian executive relationship sits not in statute but in the applicable national collective agreement (contratto collettivo nazionale di lavoro, CCNL) for dirigenti, and these differ by sector. The most common are the CCNL for executives of industrial companies (Dirigenti Industria) and for commerce, distribution and services (Dirigenti del Terziario), alongside sector agreements such as banking and credit. They are not interchangeable, differing on notice periods, on the supplementary indemnity payable on an unjustified dismissal, on procedure and disciplinary rules, on non-compete arrangements, and on benefits, welfare and insurance.

In practice, the applicability of a given dirigenti CCNL depends on the employer’s sector, on whether it is bound through membership in the relevant employers’ association or explicit contractual reference, and on the duties actually performed; it cannot be assumed that a single CCNL applies automatically to all of a group’s Italian executives.

Dismissing executives across borders

Termination is where a foreign group’s expectations and Italian reality diverge most.

The Italian dirigente regime is distinctive. For genuine executives, Italian law applies Article 2118 of the Civil Code: the employer may terminate with notice, and dirigenti are, as a rule, outside the ordinary statutory regime against unfair individual dismissal that protects other employees (Law No 604/1966 and Article 18 of the Workers’ Statute and the “increasing protections” regime under Legislative Decree No 23/2015 for hires from 7 March 2015). They remain fully protected, however, against discriminatory, retaliatory and other null dismissals, and — following the 2014 reform — are included in the collective‑redundancy regime.

Collective bargaining was introduced, and the Court of Cassation developed the standard of giustificatezza — that the dismissal not be arbitrary or pretextual and that it respects good faith in light of the heightened fiduciary relationship. This is broader than, and does not coincide with, just cause (giusta causa) or justified reason (giustificato motivo). Conduct that would not justify dismissing an ordinary employee may legitimately justify dismissing an executive, given the role’s level of trust and responsibility. Recent Supreme Court case‑law confirms that, in assessing giustificatezza, it is sufficient for the employer to demonstrate, in a global evaluation of the executive’s conduct and performance, that the fiduciary relationship has been seriously and reasonably undermined. A detailed, charge‑by‑charge disciplinary assessment is not always required.

The remedy is generally monetary, not reinstatement. Where an executive dismissal lacks giustificatezza, the applicable CCNL ordinarily provides a supplementary indemnity (indennità supplementare), graduated by seniority and age, in addition to contractual end-of-relationship entitlements and notice. Reinstatement is generally not the remedy for a merely unjustified executive dismissal. The key exceptions are null dismissals — discriminatory, retaliatory or driven by an unlawful determining motive — where reinstatement protections can apply even to executives. Where genuine just cause under Article 2119 exists, no notice is due.

Collective dismissals now include executives. Following Commission v Italy (C-596/12, 13 February 2014), which held that Italy had breached the Collective Redundancies Directive (98/59/EC) by excluding dirigenti from the information-and-consultation procedure, Article 16 of Law No 161/2014 amended Law No 223/1991 to bring executives within the collective-redundancy regime. Executives now count towards the thresholds and must be included, with a dedicated sanction in case of breach of the procedural rules or selection criteria. Under current sectoral CCNLs and case‑law, the indemnity awarded in such cases typically ranges between 12 and 24 months’ remuneration, subject to the specific provisions of the applicable collective agreement. 

Do not import foreign termination models. At-will termination, immediate dismissal without notice, garden leave or a severance-only exit may each require adaptation to be effective in Italy. The consequences turn on the applicable law, the executive’s classification, the CCNL, the place of work, the employer entity and any overriding rules — which is why the analysis must precede, not follow, the exit.

Enforceability and multinational risk

Enforceability must be assessed clause by clause against the governing law, not inferred from the wording. Choice-of-law clauses are subject to the Article 8(1) floor and Article 9; jurisdiction clauses to Section 5 of Brussels I bis; arbitration clauses fall outside Brussels I bis and depend on national rules on arbitrability. Non‑compete covenants under Italian law must satisfy Article 2125. They must be in written form (a formal requirement for validity), provide genuine and adequate financial consideration in favour of the employee, and be limited in respect of subject‑matter, duration and geography. The maximum duration is five years for executives and three years for other employees; if the parties agree to a longer period, it is automatically reduced to these statutory limits. Symbolic or manifestly inequitable consideration is insufficient, and a covenant so wide that it effectively deprives the executive of normal earning capacity may be void.

Confidentiality and IP provisions must be reconciled with mandatory rules and the assignment structured to the governing law; bonus, incentive and equity clauses interact unpredictably with local mandatory rules. Waivers and settlements need particular care: Italian law restricts the effective waiver of non‑derogable statutory and collectively bargained rights (Article 2113 of the Civil Code), so such a settlement typically must be concluded in a protected forum to be secure against challenge. In practice, this means executing the release before labour conciliation commissions, trade‑union offices or the court, or within specific protected procedures provided by the applicable CCNL (for example conciliation minutes under Articles 410–411 of the Code of Civil Procedure), rather than relying solely on a privately signed foreign‑law template. 

The sum of these is the core group risk: inconsistent documentation, unfounded choice-of-law assumptions, forum clauses that fail Section 5, misclassification of executives and CCNL, uncoordinated secondments, and litigation in several jurisdictions over one relationship. Because the connecting factors are created by how the relationship is performed, the analysis belongs before relocation, secondment or duties abroad, when it is far cheaper to shape.

A practical checklist

A planning checklist, not a substitute for advice on the specific facts.

1. Map the working pattern first — the country in or from which the executive habitually works, judged by where duties, instructions, the base and the place of return actually are, not the payroll entity or employer’s seat.
2. Choose the governing law with the floor in mind — knowing which non-derogable protections (Article 8(1)) and overriding provisions (Article 9) sit on top of it.
3. Stress-test the jurisdiction clause — confirm any exclusive-forum or arbitration clause is effective under Section 5, rather than assuming it binds the executive.
4. Classify the executive correctly — verify genuine dirigente status by actual duties, and identify the applicable CCNL by sector.
5. Model termination outcomes in advance — notice, giustificatezza and any supplementary indemnity, just cause, the null-dismissal exceptions and the collective-redundancy obligations.
6. Do not import termination mechanics unadapted — at-will, garden leave, notice-free and severance-only models all require local adaptation.
7. Draft restrictive covenants to the governing law — for Italy, meet Article 2125 (writing, genuine consideration, limits of subject-matter, time and place, five-year cap for executives).
8. Coordinate the whole document set — contract, secondment letter, board appointment, incentive and equity plans, confidentiality and IP terms, data-protection notices and termination provisions.
9. Confirm the social-security and tax position — coordination and any continuing-coverage certificate for the specific assignment.
10. Secure any exit properly — where non‑derogable Italian rights are settled, ensure the release is effective against challenge, not based on a foreign template. For exits engaging Italian‑law rights, use Italian settlement instruments such as conciliation minutes under Articles 410–411 of the Code of Civil Procedure, conciliazione monocratica, or the procedures envisaged by the applicable CCNL, so that waivers of statutory and collectively bargained rights are shielded against subsequent impugnation under Article 2113.

Conclusion

For internationally mobile executives, the contract’s recitals are the least reliable guide to which law governs and where a dispute can be heard. Rome I subordinates the choice of law to a mandatory floor and to overriding rules; Brussels I bis conferred for a jurisdiction clause usually cannot remove; and the country in or from which the executive habitually works is fixed by how the role is performed, not by where the paperwork was signed. When Italy is involved, the dirigente regime, the sector-specific collective agreements, the giustificatezza standard, the inclusion of executives in collective redundancies, and the strict conditions for covenants and waivers can all apply irrespective of what a foreign contract assumes.

This is not a reason to avoid cross-border appointments but to plan them, treating governing law and jurisdiction as a design problem to solve before relocation, secondment or termination, with the documentation aligned to the governing law. Because so much depends on the facts, the wording, the applicable collective agreement, the country of habitual work and the executive’s classification, early and specific legal analysis is the difference between a contract that does what the parties intended and one that does not.

AL AdvaLux advises international groups and senior executives on precisely these questions, from Milan; structuring and reviewing cross-border executive contracts, secondment letters and board appointments, assessing the governing law and competent forum, classifying executives and identifying the applicable dirigenti collective agreement, drafting and testing restrictive covenants, and managing executive dismissals, collective redundancies and negotiated exits under Italian law.