‘More closely connected’ in employment contracts – The ECJ in Schlecker emphasises tax and national insurance (social security)

I reported earlier on Wahl AG’s Opinion in Schlecker. The ECJ held last week. Reminder: formally the judgment relates to the application of the similar provision in the predecessor of the Rome I Regulation, the 1980 Rome Convention. The relevant provisions have not materially changed, however. The ECJ in fact refers to the slightly more precise provisions of Rome I in support.

In the case at issue, a closer connection with Germany was suggested by the circumstances as a whole, in particular by the following facts: the employer is a legal person governed by German law; the remuneration was paid in German marks (prior to the introduction of the euro); the pension arrangements were made with a German pension provider; Ms Boedeker had continued to reside in Germany, where she paid her social security contributions; the employment contract referred to mandatory provisions of German law; and the employer reimbursed Ms Boedeker’s travel costs from Germany to the Netherlands.

The Court concurs with the AG that the closer connection test must apply as suggested by its formulation: even if there is a habitual place of performance, this may be trumped by other circumstances. However the Court also held that the sheer amount of ‘other criteria’ in and of itself does not suffice to rebut the presumption: ‘the court called upon to rule in a particular case cannot automatically conclude that the rule laid down in Article 6(2)(a) of the Rome Convention must be disregarded solely because, by dint of their number, the other relevant circumstances – apart from the actual place of work – would result in the selection of another country‘ (at 40).

In other words: the actual place of work has considerable gravity. Nevertheless, among the other criteria, there are two, the Court suggested (however without reference to specific support in preparatory works or otherwise), which are particularly relevant:

among the significant factors suggestive of a connection with a particular country, account should be taken in particular of the country in which the employee pays taxes on the income from his activity and the country in which he is covered by a social security scheme and pension, sickness insurance and invalidity schemes. In addition, the national court must also take account of all the circumstances of the case, such as the parameters relating to salary determination and other working conditions.’ (at 41).

As always, much misery may be avoided by inserting a proper choice of law in the contract, in accordance with the Convention (now Regulation).

Geert.

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  1. #1 by Geert Van Calster on 17/09/2013 - 10:04 AM

    Reblogged this on blog.coleurope.eu.

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