Posts Tagged Employment contracts
Update 4 December thank you to his Grace der Graf von Luxemburg for additionally pointing out pending case C-16/18 dealing with workers employed on international trains which also travel through the host Member State.
Thank you MPI’s Veerle Van Den Eeckhout for pointing out a highly relevant reference to the CJEU by the Dutch Supreme Court /Hoge Raad. The link between the posted workers Directive and conflict of laws is clear, as I have also explained here. The most interesting part of the reference for conflicts lawyers, are the questions relating to ‘cabotage’, particularly where a driver carries out work in a country where (s)he is not habitually employed (international trade lawyers will recognise the issue from i.a. NAFTA).
One to keep an eye on.
(Handbook of) EU Private International Law, 2nd ed 2016, Chapter 3, Heading 3.2.5.
Thank you Cozen O’Connor for alerting me. California’s Senate Bill 1241 was signed into law at the end of September. It will apply to employment contracts entered into, modified, or extended on or after 1 January 2017.
The Bill will feature in a forthcoming article that I am co-authoring with Jutta Gangsted. I have not (yet) studied the preparatory work in detail however the Bill immediately calls for comparative analysis with the EU’s’ approach to this particular ‘protected category’: what is a labour (employment) contract; how does ‘primarily resides and works in California’ compare with ‘habitually carries out his work’ and ‘domicile’; when exactly is a contract ‘modified’ (on this see for the EU, Nikiforidis). The starting point of both the California and the EU rules is the same: employees cannot be considered to really consent to either choice of law or choice of court hence any clause doing same will be subject to mandatory limitations.
(Handbook of) European Private international law, 2nd ed. 2016. Chapter 2, Heading 18.104.22.168, Chapter 3, Heading 3.2.5.
Commission effectively supplements Rome I using the posted workers Directive. Defines ‘temporary employment’ as not exceeding 24 months.
Update 31 May 2017 A quick note by way of interim update: the proposal is stuck in Parliament (awaiting committee decision).
Thank you Fieke van Overbeeke for pointing this out to me. The EC have proposed to amend the posted workers Directive, to address unfair practices and promote the principle that the same work at the same place be remunerated in the same manner.
The amendment essentially relates to Article 8(2) of the Rome I Regulation, which partially corrects choice of law made in the context of contracts for employment. The proposal amounts to Union harmonisation of the concept ‘temporary employment’, as one not exceeding 24 months.
The proposal, if adopted, would insert an Article 2a in the posted workers Directive, 96/71, as follows:
Posting exceeding twenty-four months
1. When the anticipated or the effective duration of posting exceeds twenty-four
months, the Member State to whose territory a worker is posted shall be deemed to
be the country in which his or her work is habitually carried out.
2. For the purpose of paragraph 1, in case of replacement of posted workers
performing the same task at the same place, the cumulative duration of the posting
periods of the workers concerned shall be taken into account, with regard to workers
that are posted for an effective duration of at least six months.
Recitals 6-8 give context:
(6) The Rome I Regulation generally permits employers and employees to choose the law
applicable to the employment contract. However, the employee must not be deprived
of the protection of the mandatory rules of the law of the country in which or, failing
that, from which the employee habitually carries out his work. In the absence of
choice, the contract is governed by the law of the country in which or, failing that,
from which the employee habitually carries out his work in performance of the
(7) The Rome I Regulation provides that the country where the work is habitually carried
out shall not be deemed to have changed if he is temporarily employed in another
(8) In view of the long duration of certain posting assignments, it is necessary to provide
that, in case of posting lasting for periods higher than 24 months, the host Member
State is deemed to be the country in which the work is carried out. In accordance with
the principle of Rome I Regulation, the law of the host Member Sates therefore applies
to the employment contract of such posted workers if no other choice of law was made
by the parties. In case a different choice was made, it cannot, however, have the result
of depriving the employee of the protection afforded to him by provisions that cannot
be derogated from by agreement under the law of the host Member State. This should
apply from the start of the posting assignment whenever it is envisaged for more than
24 months and from the first day subsequent to the 24 months when it effectively
exceeds this duration. This rule does not affect the right of undertakings posting
workers to the territory of another Member State to invoke the freedom to provide
services in circumstances also where the posting exceeds 24 months. The purpose is
merely to create legal certainty in the application of the Rome I Regulation to a
specific situation, without amending that Regulation in any way. The employee will in
particular enjoy the protection and benefits pursuant to the Rome I Regulation.
It would obviously be attractive to ensure the same rule is verbatim included in a future amendment of the Rome I Regulation.
(Handbook of) EU Private International Law, 2nd ed 2016, Chapter 3, Heading 3.2.5.
Ceci n’est pas une base Ryanair – The court in Charleroi on ‘place where the employee habitually carries out his work’
The title of this piece is taken from a press release by CNE, the trade union who represented plaintiff – and who provided me with a copy of the judgment for which many thanks. Where does an employee ‘habitually carry out his work’ within the meaning of Article 19 of the Brussels I Regulation? The court at Charleroi needed that to be Charleroi, for it to be able to exercise jurisdiction. Ryanair’s domicile being in Ireland was not contested and no choice of court was made in the contract between plaintiff and the airline. The court referred to ECJ precedent, notably Mulox, Rutten, Weber, Koelzsch and Voogsgeerd. Had the ECJ had jurisdiction in C-533/03 Warbecq v Ryanair, current discussion might not have arisen, one imagines.
Plaintiff suggested a list of considerations which in his view led to Charleroi being the place of habitual carrying out of his work, including: journeys as a ‘cabin service agent’ (steward or stewardess to you and me) always started and ended at Charleroi airport; consequently he had to rent a flat in the Charleroi area; flight times were corresponded to plaintiff via a PC located at the airport; prior to each flight, he had to check in at the Charleroi office; staff issues were dealt with at the airport; equipment was provided from the airport; training and fitness et al tests were carried out at Charleroi.
The court however sided with Ryanair’s contention that its organisation at Charleroi was skeleton only, and that in having organised the work schedule from Dublin, there was no team at Charleroi which had the remit to manage the work schedule or anything else independently from Dublin.
I think Charleroi is missing a trick here: per the ECJ’s case-law, the criterion of the country in which the work is habitually carried out must be given a broad interpretation and must be understood as referring to the place in which or from which the employee actually carries out his working activities. Arguably, the employee’s activities lie at the heart of that analysis: not the employer’s, which is what the court at Charleroi has taken as its main clue.
Appeal is underway.
‘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).
In his Opinion in Schlecker v Boedeker, Wahl AG offers a number of substantive criteria for national courts to apply the ‘closer connection’ test of Article 8(4) of the Rome I Regulation on the law applicable to contracts – albeit formally his Opinion is on the application of the similar provision in its predecessor, the 1980 Rome Convention (the relevant provisions have not materially changed). The Convention reads in relevant part
Article 6 – Individual employment contracts
1. Notwithstanding the provisions of Article 3, in a contract of employment a choice of law made by the parties shall not have the result of depriving the employee of the protection afforded to him by the mandatory rules of the law which would be applicable under paragraph 2 in the absence of choice.
2. Notwithstanding the provisions of Article 4, a contract of employment shall, in the absence of choice in accordance with Article 3, be governed: (a) by the law of the country in which the employee habitually carries out his work in performance of the contract, even if he is temporarily employed in another country ; or
(b) if the employee does not habitually carry out his work in any one country, by the law of the country in which the place of business through which he was engaged is situated;
unless it appears from the circumstances as a whole that the contract is more closely connected with another country, in which case the contract shall be governed by the law of that country.
In the case at issue, Schlecker is a company governed by German law which is active in the retailing of beauty and health products. Although Schlecker is established in Germany, it has many branches in several Member States of the European Union. Under an initial employment contract, Mrs Boedeker – a German national and resident – was employed by Schlecker and performed her duties in Germany from 1 December 1979 to 1 January 1994. Under a further contract, concluded on 30 November 1994, Mrs Boedeker was appointed by Schlecker, with effect from 1 March 1995 until the summer of 2006, as distribution manager (‘Geschäftsführerin/Vertrieb’) for the entire territory of the Netherlands. In that capacity, Mrs Boedeker in fact performed her duties in the Netherlands. By letter of 19 June 2006, Schlecker informed Mrs Boedeker that her position as manager for the Netherlands would be abolished with effect from 30 June 2006 and invited her to take up, under the same contractual conditions, the post of head of accounts (‘Bereichsleiterin Revision’) in Dortmund (Germany), with effect from 1 July 2006. Although Mrs Boedeker lodged an objection on 4 July 2006 against that notice of amendment (‘Änderungskündigung’), she took up her post as regional manager in Dortmund. On 5 July 2006, Mrs Boedeker declared herself unfit for work on medical grounds. As from 16 August 2006, she received benefits from a German health insurance fund (‘Krankenkasse’). Subsequently, various actions were brought both by Mrs Boedeker and by Schlecker before the courts.
In the absence of explicit choice of law by the parties to the contract, the connecting factors sub a) and b) need to be looked at consecutively: i.e. with the ‘habitual’ workplace having priority. Both have been looked in detail by previous case-law. The ‘escape clause’ of the final part of the Article, however has so far not been interpreted by the ECJ.
Wahl AG takes the opportunity to firstly set out the overall logic of the choice of law process under Article 6 (now 8), with an important insight (and the helpful use of moot examples; often used by us in class but not often in Opinions of the AG) into the issue of favor laboratoris. Article 6(1) obliges the national court to test any express choice against the laws which would apply in the absence of choice, and to have the strictest of these (i.e. the most favourable towards the employee) – albeit only for those stricter provisions – trump even express choice of law. In the absence of choice, however, this comparison need no longer be made: whichever law is identified by Article 6(2) applies in full, even if it is not the most protective towards the employee.
He subsequently advises in favour of giving the escape clause the widest possible remit, trumping the presumptions of Article 6(1) a) and b), also in the particular situation in which an employee has performed an employment contract habitually, for a lengthy period and without interruption, in a single country. In determining what the AG calls the ‘centre of gravity of the employment relationship’, it is suggested that inter alia the following criteria are relevant: place of habitual performance; the fact that the employee pays taxes and contributions in a particular country, relating to the income from his activity and the fact that he is covered by the social security scheme there and the various pension, sickness insurance and invalidity schemes; In each of these, the AG suggests, the court has to review in fact whether these particular choices were not imposed on the employee, but rather chosen consensually.
As always, one has to wait and see what the Court says – however this case is certain to be very relevant to employment law practice.