EU Employment Contracts: Jurisdiction & Applicable Law - Brussels Ia & Rome I Regulations, Lecture notes of Law

Download EU Employment Contracts: Jurisdiction & Applicable Law - Brussels Ia & Rome I Regulations and more Lecture notes Law in PDF only on Docsity! 1 European Judicial Network in Civil and Commercial Matters Practice Guide Jurisdiction and applicable law in international disputes between the employee and the employer 2020 Updated version This document was approved by the European Judicial Network on 6 November 2020. It is available for information purposes, pending its final formatting and publication. The purpose and legal status of the Practice Guide This Practice Guide seeks to give an overview of the relevant rules of EU private international law in relation to employment contracts, including posting of workers. Its purpose is to assist practitioners, but it does not meant to be legally authoritative, nor does it purport to be comprehensive. The content of this Guide, based largely on the case-law of the Court of Justice of the European Union (hereinafter: CJEU or the Court of Justice), is without prejudice to the interpretation by the CJEU of the legal instruments referred to in this Guide. The Guide is horizontal in that it applies to all sectors of employment, but it takes special account of sectors in which cross-border mobility of workers is of particular relevance, such as air transport and other modes of transport. 2 1. Introduction Regulation (EU) No 1215/2012 1 (Brussels Ia Regulation) and the Regulation (EC) No 593/2008 2 (Rome I Regulation) are instruments of EU law which contain special provisions to determine respectively (1) the Member State(s) whose courts have jurisdiction over disputes relating to individual contracts of employment and (2) the applicable law of the employment contract. These special provisions derogate from general principles on jurisdiction and applicable law with the aim of protecting employees as the weaker party to the contract. Generally, as regards jurisdiction, those special provisions allow the protected party to be sued only in the courts of his/her own domicile, but gives that party a choice of jurisdiction when he/she is the claimant. Parties to an individual employment contract have, in principle, contractual autonomy to choose the applicable law and, to a more limited extent, jurisdiction (see Sections 3 and 4 below). This means that, in the event of a dispute, the terms of the employment contract always represent the starting point when determining the applicable law and the jurisdiction. In disputes between the employee and the employer, in the Brussels Ia Regulation and the Rome I Regulation the main connecting factor linking the dispute with a particular court and a particular applicable law is the ‘place where or from where the employee habitually carries out his work’. This means that even when work is carried out in or across more than one country, the employee has access to the courts in the Member State where or from where he/she habitually carries out his/her work and he/she will be protected by non-derogable provisions of that Member State's law. Additional protection applies in posting situations pursuant to the Posting of Workers Directive (see Section 5 below). According to Recital 7 of Rome I Regulation there should be consistent interpretation of scope and provisions of both Rome I and Brussels I (now Brussels Ia) Regulations. 1 Regulation (EU) No 1215/2012 of the European Parliament and of the Council of 12 December 2012 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, OJ L 351, 20.12.2012, p. 1. It replaced Regulation 44/2001/EC (Brussels I) and applies to proceedings commenced on or after 10 January 2015; Regulation 44/2001/EC continues applying to the proceedings initiated before that date. Regulation 44/2001/EC was in turn preceded by Brussels Convention of 1968. Case-law of the Court of Justice developed under Brussels I Regulation and Brussels Convention retains its relevance for Regulation Brussels Ia. The rules of Brussels Ia Regulation apply to Denmark by virtue of a parallel international agreement. The case- law developed under the 1988 and 2007 Lugano Conventions is also relevant for interpretation of Brussels Ia Regulation, and vice-versa. 2 Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the law applicable to contractual obligations (Rome I), OJ L, 4.7.2008, p. 6. The Rome I Regulation replaces the 1980 Rome Convention. The 1980 Rome Convention still applies: (1) to contracts concluded before and on 17 December 2009; (2) to Denmark by virtue of its opt-out from EU civil justice legislation; (3) to some overseas territories of the Member States which are not considered EU territories under the Treaty on the Functioning of the EU. 5 administrative authorities and employees are excluded from the scope of the Regulation (see Article 1(2)(c) and the Jenard Report accompanying the Brussels Convention 9 ). 9 OJ C 59, of 5.3.1979, pp. 1-65, at p. 12. 6 3. Which court is competent to hear the employment dispute? As a general principle, the Brussels Ia Regulation leaves only very limited party autonomy to choose the court in employment disputes. Parties can conclude a choice of court agreement only in two cases: after the dispute has arisen or if the agreement allows the employee to bring proceedings in courts other than the one which would otherwise be available for the employee under the rules of the Regulation (see Article 23). The agreed clause must therefore widen the choice available to the employee. A clause in an employment contract which restricts the choice of court by the employee will not be enforceable against the employee. 10 The rationale behind these limitations is the protection of the employee as the weaker party by ensuring that the choice offered by the Regulation to the employee as to the courts in which he/she can sue the employer is not limited and to prevent the employer from imposing restrictions on the employee's rights under the Regulation. In line with that protective policy, the Regulation differentiates between the claims brought by the employee and the claims brought by the employer.  Where can the employer sue the employee? In case of a dispute, the employer can sue the employee only in the Member State where the employee is domiciled (Article 22).  Where can the employee sue the employer? In case of a claim by the employee against the employer, pursuant to Article 21 of Brussels Ia the employee has the choice to sue the employer:  at the place of domicile of the employer (or of a deemed domicile of a branch (Article 20(2) 11 ); or  at the place where or from where the employee habitually carries out his/her work; or  where the place of habitual work is not situated in any one country, the place where the business which engaged the employee is or was situated. The concept of ‘the place where or from where the employee habitually carries out his/her work’ is determined on the basis of uniform criteria laid down by the Court of Justice to ensure its uniform interpretation and should be applied based on case-by-case assessment. In disputes between an airline operator and air crew members the concept of ‘home base’ within the meaning of EU aviation safety rules plays a significant role among the relevant indicia when it comes to determining the place where or from where the employee habitually carries out his/her work, although it cannot be equated with it. 12 10 See for example, cases C-168/16 and 169/16, Nogueira and Others, para 54. 11 Article 20(2) of the Brussels Ia Regulation covers a situation where the employer is not domiciled in the EU but has a branch, agency or establishment within an EU Member State, and provides that such employer, for the disputes arising from the operation of such a branch, agency or establishment, is deemed to be domiciled in that Member State. 12 See below, section 7 “Jurisprudence of the Court of Justice”, cases C-168/16 and C-169/16, Nogueira and Others. 7 The Brussels Ia Regulation now extends the jurisdiction of Member State courts to employment disputes brought against an employer which is not domiciled in the EU, when the work is habitually carried out in a Member State.  Where is the employer domiciled? The Brussels Ia Regulation (Article 63) provides that a company or other legal person is domiciled at the place where it has its:  statutory seat; or  central administration; or  principal place of business. The company is thus domiciled in the EU even when only one of those criteria is fulfilled. Where an employer is not domiciled in a Member State but has a ‘branch, agency or other establishment’ in a Member State, the employer shall, in disputes arising out of the operations of that branch, agency or establishment, be deemed to be domiciled there (Article 20(2)). 10 5. What if the employee has been posted to another country under the Posting of Workers Directive?  Jurisdiction As regards access to court, the Posting of Workers Directive 96/71/EC 15 lays down an additional forum where the employee can sue his/her employer, i.e. in the country where the employee is/was posted (Article 6). Article 11(1) of Directive 2014/67/EU on the enforcement of the Posting of Workers Directive 16 states that such a forum can only be used to enforce the obligations under the Posting of Workers Directive and the Directive 2014/67/EU.  Applicable law Article 8(2) of the Rome I Regulation establishes that the country where the work is habitually carried out shall not be deemed to have changed if the employee is temporarily employed in another country. The Posting of Workers Directive does not derogate from the Rome I Regulation (or previously the Rome Convention) regarding the choice of law governing the employment contract. It specifies that regardless the law applicable, the employees benefit from the core terms and conditions of employment according to the law of the host Member State if they are more favourable to the employee than the relevant terms and conditions of employment stemming from law of his/her habitual place of work (Article 3(1) of the Posting of Workers Directive 96/71/EC as amended by Directive (EU) 2018/957). The range of terms and conditions which have to be guaranteed to the posted worker has been extended by Directive 2018/957/EU in cases of long-term posting (exceeding 12 months or 18 months in justified cases; Article 3(1a) of the Posting of Workers Directive 96/71/EC, introduced by Directive (EU) 2018/957). Additionally, the Posting of Workers Directive establishes that other terms and conditions of employment than those referred to in Article 3(1) can be applied in case of public policy provisions, which coincides with the overriding mandatory provisions as defined in Article 9 of the Rome I Regulation. National rules which set these overriding provisions in the country where the worker is posted take precedence over the rules of the law of the country where the work is habitually carried out, when such national rules are more favourable to the employee. Recital 34 of the Rome I Regulation clarifies that Article 8 does not prejudice the application of the overriding mandatory rules according to Directive 96/71. 15 Directive 96/71/EC of the European Parliament and of the Council of 16 December 1996 concerning the posting of workers in the framework of the provision of services OJ L 18, 21.1.1997, p. 1. It was amended by Directive (EU) 2018/957 of the European Parliament and of the Council of 28 June 2018, OJ L 173, 9.7.2018, p. 16. 16 Directive 2014/67/EU of the European Parliament and of the Council of 15 May 2014 on the enforcement of Directive 96/71/EC concerning the posting of workers in the framework of the provision of services and amending Regulation (EU) No 1024/2012 on administrative cooperation through the Internal Market Information System (‘the IMI Regulation'), OJ L 159, 28.5.2014, p. 11. 11 6. Jurisprudence of the Court of Justice The Court of Justice has given guidance on the employment provisions in the Brussels Ia Regulation and the Rome I Regulation in a number of cases.  Habitual place of work: Mulox, Rutten, Weber, Koelzsch, Voogsgeerd and Nogueira cases.  Place of hiring: Voogsgeerd.  Escape clause in Rome I: Schlecker.  Assignability of employment claims and issues of standing to bring proceedings: Sähköalojen ammattiliitto ry.  Exclusive jurisdiction clauses and the concept of a branch: Mahamdia.  What is the habitual place of work? The main connecting factor in the Brussels Ia Regulation and the Rome I Regulation is the place where or from where the employee habitually carries out his/her work. As the concept is common both to the Rome I and the Brussels Ia Regulations, it has been interpreted and applied in parallel in the case law. The question of what constitutes the ‘habitual’ carrying out of an employee’s work is a question of fact for the national court to determine in the light of the CJEU case law and all the circumstances of a given case. The Court of Justice has given guidance to determine the place where an employee must be considered to be ‘habitually carrying out work’. The criteria also apply when the working activities are performed in or across several Member States, which is typical in the areas such as international transport. To determine the habitual place of work, the national court must take account of all the factors which characterise the activity of the employee. This ‘circumstantial method’ is important to prevent the concept of ‘place where, or from which, the employee habitually performs his work’ from being exploited or used for the achievement of circumvention strategies. Following the interpretation of the concept of habitual place of work in the Court’s case-law, the connecting factor of ‘the place where the business through which the employee was engaged’ is of relevance very rarely. Case C-125/92, Mulox 17 on the Brussels Convention 18 Facts of the case: a Dutch national, resident in France, was employed by an English company as an international sales manager, selling in Germany, Belgium, the Netherlands, etc., and in France. The employee used his home in France as his office and base of operations. He brought proceedings against the employer in France. 17 C-125/92, Mulox IBC Ltd v Hendrick Geels, judgment of 13 July 1993, ECLI:EU:C:1993:306. Note that the case was decided by reference to the provisions of the Brussels Convention of 1968 which did not include specific provisions in relation to employment contracts; the convention was updated in 1989 to incorporate special provisions and Rutten (C-383/95) and Weber (C-37/00) cases were decided by reference to these provisions. 18 The original version of the Brussels Convention did not contain special provisions on employment contracts. 12 Court of Justice: where an employee carries out his/her working activities in more than one state, the place of performance of the contractual obligation for the purposes of Article 5(1) of the Brussels Convention is the place where or from which the employee principally discharges his/her obligations towards his/her employer. To determine that place the CJEU directed the national court to take account of the fact that the work entrusted to the employee was carried out from an office in the Member State where the employee had become resident, from which he performed his work and to which he/ returned after each business trip. Case C-383/95, Rutten 19 , on the amended version of the Brussels Convention that took into account employment contracts Facts of the case: a Dutch national was working for an English company; he spent two thirds of his working time in the Netherlands and the other third in various other European countries, including England. After each business trip he returned to the Netherlands where he had his office. He brought proceedings against his employer in the Netherlands. Court of Justice: the habitual place of work is the place where the employee has established the effective centre of his/her working activities and where, or from which, he/she in fact performs the essential part of his/her duties vis-à-vis his/her employer. The Court of Justice directed the national court to take account of the fact the employee carried out almost two thirds of his work in one Member State where he thus spent most time, in which he had an office where he organised his work for his employer and to which he returned after each business trip abroad. Case C-37/00, Weber 20 , on the Brussels Convention Facts of the case: Weber, a German national residing in Germany, was employed by a Scottish company as a cook on mining vessels working in the North Sea. He worked at least part of his time on the Netherlands continental shelf and part in Danish territorial waters. He brought proceedings against his employer in the Netherlands. Weber had not established a centre of his working operations (in contrast to Rutten, there was no office in a Member State constituting the effective centre of his professional activities and from which he carried out the essential part of his duties vis-à-vis his employer). Court of Justice: The Court held that, in these circumstances, the relevant criterion for establishing an employee's habitual place of work is 'temporal' — in principle, the place where the employee spends most of his/her working time, engaged on his/her employer’s business. The relevant period over which to judge where he/she had spent most of his/her working time is the duration of the entire period of employment. Case C-29/10, Koelzsch 21 , on the applicable law under the 1980 Rome Convention 19 C-383/95, Petrus Wilhelmus Rutten v Cross Medical Ltd., judgment of 9 January 1997, ECLI:EU:C:1997:7. 20 C-37/00, Herbert Weber v Universal Ogden Services Ltd., judgment of 27 February 2002, ECLI:EU:C:2002:122. 20 C-29/10, Heiko Koelzsch v État du Grand Duchy of Luxemburg, judgment of 15 March 2011, ECLI:EU:C:2011:151. The case was decided under the Rome Convention of 1980,but the employment provisions and concepts applied are relevant to the Rome I Regulation, which applies to contracts made on or after 17 December 2009. 15 In the rare cases in which the place where or from where the employee is habitually carrying out his/her work cannot be determined, the contract is governed by the law of the country where the place of business through which the employee was engaged was situated. In Voogsgeerd the Court of Justice interpreted the Rome Convention but the judgment is also relevant to the same expression in the Brussels Ia and Rome I Regulations. Facts of the case: see above. Court of Justice: the Court held that the connecting factor of the place of hiring need only be used when the habitual place of work cannot be determined, that it may not include factors which are relevant for establishing the habitual place of work and that, being a subsidiary criterion, it must be given a restrictive interpretation. The Court also held that the place of business through which the employee was engaged must be understood as referring exclusively to the place of business which engaged the employee and not to that with which the employee is connected by his/her actual employ- ment, and that the relevant factors to determine that place which engaged the employee are only those relating to the procedure for concluding the contract, whether in writing or not, such as the place of business which published the recruitment notice and that which carried out the recruitment interview. Furthermore, the Court held that a ‘place of business’ does not need to have separate legal personality and could, for example, be an office, provided that it has a degree of permanence and that, in principle, it belongs to the undertaking which engages the employee and forms an integral part of its structure. Exceptionally, the circumstances of the case may show that an undertaking other than that which is formally referred to as the employer is the 'place of business', even though the authority of the employer has not been formally transferred to that undertaking, provided that one company acted for the other so that the place of business of the first could be regarded as belonging to the second and objective factors make it possible to establish that there exists a real situation in respect of the employee different from that which appears from the terms of the contract. In conclusion, the relevant factors to determine 'the place of business through which the employee was engaged’ are limited to those relating to the procedure of concluding the contract, such as the following:  The place of business which published the recruitment notice;  The place of business which carried out the recruitment interview;  The actual location of that place of business.  What is the escape clause in the Rome I Regulation? Case C-64/12, Schlecker 24 Even when the habitual place of work and, in its absence, the place of business through which the employee was engaged can be determined, the law of another country may apply to a contract of employment where it appears from the circumstances of the case that the contract is more closely connected to that other country. These circumstances were considered in Schlecker case. Facts of the case: the claimant was employed by Schlecker, a German undertaking with branches in a number of Member States, to manage the operations of the business in The Netherlands. After 12 years, the claimant was informed that her position was abolished and was invited to take over another 24 C-64/12, Anton Schlecker v Melitta Josefa Boedeker, judgment of 12 September 2013, ECLI:EU:C:2013:551. 16 position in Germany. The claimant brought an action against the defendant claiming that Dutch law should apply to her contract and therefore the unilateral transfer back to Germany was unlawful. Court of Justice: the Court held that priority must be given to the nexus between the contract and the place of habitual work and that a mere preponderance of factors pointing to another country does not automatically displace the application of that law. Nevertheless, even where the employee habitually carries out the work in performance of the contract for a lengthy period of time and without interruption in the same country, the court may, exceptionally, disregard the law of the country where the work is habitually carried out if it appears from the circumstances as a whole that the contract is more closely connected with another country. Among the significant factors suggestive of a close connection with a country are, in particular, the country in which the employee pays taxes on his/her income and where he/she 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. In conclusion, in exceptional situations when other elements of the employment relationship suggest that the contract is more closely connected to a State other than that indicated by the factors provided in Article 8(2) and (3) of the Rome I Regulation, the escape clause can be applied even if it is otherwise possible to determine one of the previously mentioned connecting factors.  Does the law applicable to the contract of employment determine whether an employment claim can be assigned? Case C-396/13, Sähköalojen ammattiliitto ry 25 In this case, the Court of Justice was asked, among other things, to rule on the question whether Article 14(2) of the Rome I Regulation determines the assignability of claims arising out of an employment relationship, irrespective of whether the provisions of another law also apply (in that case, Finnish law constituting overriding mandatory provisions in the context of Directive 96/71/EC on the posting of workers). Facts of the case: the defendant, a Polish company, posted 186 Polish workers to their branch in Finland to work on a nuclear power plant. The employment contracts were concluded under Polish law, which prohibits the assignment of employment claims. The workers assigned their claims against the Polish company to the claimants, a trade union, under Finnish law. The trade union brought proceedings on behalf of the posted workers for the recovery of sums owned to them under certain provisions of the Finnish law applicable by virtue of Directive 96/71/EC. Court of Justice: rather than entertaining the question on whether the assignability of a claim must be determined exclusively by Article 14(2) of the Rome I Regulation, the Court considered the standing of the trade union to bring proceedings on behalf of the workers. It held that this is a procedural question and, in this case, it was governed by Finnish procedural law as the applicable lex fori. The rules on the assignability of employment claims set out in the Polish Labour Code were irrelevant with regard to standing and did not prevent the trade union from bringing proceedings.  What about party autonomy to conclude choice of court agreements? Case C-154/11, Mahamdia 26 , on the Brussels I Regulation (44/2001/EC) 25 C-396/13, Sähköalojen ammattiliitto ry v Elektrobudowa Spolka Akcyjna, judgment of 12 February 2015, ECLI:EU:C:2015:86. 17 Facts of the case: Mr Mahamdia, who had Algerian and German nationality and lived in Germany, concluded with the Ministry of Foreign Affairs of the People's Democratic Republic of Algeria a contract of employment for work as a driver at the Algerian Embassy in Berlin. The contract contained an exclusive agreement on jurisdiction in favour of the Algerian courts. Mr Mahamdia brought the proceedings against the employer in Germany. Court of Justice: the Court recalled that Article 21 of the Brussels I Regulation (now Article 23 of Brussels Ia Regulation) restricts the conclusion of an agreement on jurisdiction by the parties to a contract of employment. Such an agreement can be concluded after the dispute has arisen or, if it was concluded beforehand, must allow the employee to bring proceedings before courts other than those which would have jurisdiction in accordance with the rules of the Regulation (i.e. in addition to those provided for in Articles 18 and 19 of the Regulation 27 ). The effect of the agreement is thus not to exclude the jurisdiction of the latter courts but to extend the employee's possibility of choosing between several courts with jurisdiction. 26 C-154/11, Ahmed Mahamdia v People’s Democratic Republic of Algeria, judgment of 19 July 2012, ECLI:EU:C:2012:491. 27 Now Articles 21 and 22 Brussels Ia Regulation Under the Brussels Ia Regulation, the rules on the conclusion of an agreement on jurisdiction by the parties to a contract of employment remain the same as in Regulation 44/2001/EC.