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Employment Practice Guide Practice Guide Jurisdiction and applicable law in international disputes between the employee and the employer 2020 Updated version 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. 1 1. Introduction Regulation (EU) No 1215/20121 (Brussels Ia Regulation) and the Regulation (EC) No 593/20082 (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. 2 2. Scope ➔ What type of relationships are covered? The rules of Brussels Ia and Rome I Regulations cover only civil and commercial matters, and do not concern matters such as revenue, customs and administrative matters or liability of the State for acts and omissions in the exercise of state authority. However, commercial acts performed by a State as a private party do fall within the scope of ‘civil and commercial matters’3. The Brussels Ia and Rome I regimes catch only determination of jurisdiction of the courts and of applicable law in employment contracts with a cross-border element, and exclude substantive labour law matters. The Guide further focuses only on jurisdiction and applicable law for individual employment contracts in view of the need to protect employees as the weaker party. Special rules discussed in this Guide do not apply therefore to collective agreements. ➔ How to determine whether the party is 'an employee’ within the meaning of the Brussels Ia Regulation and the Rome I Regulation and thus can benefit from the protective regimes foreseen in these Regulations? The terms 'employee', ‘employer’ and 'employment contract' are not defined in the Regulations themselves. The Jenard-Möller report accompanying the 1988 Lugano Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters states (paragraph 41) that ‘although there is as yet no independent concept of what constitutes a contract of employment, it may be considered that it presupposes a relationship of subordination of the employee to the employer’. According to the CJEU case law4, the relevant factors to identify an individual employment relationship for the purposes of these Regulations are the following: • The creation of a lasting bond which brings the worker to some extent within the organisational framework of the business of the employer; • A relationship of subordination of the employee to the employer, which lasts for a certain period of time; • The worker receives remuneration for his or her services. In the Holterman Ferho case5, the CJEU ruled that protective rules for individual contracts for employment apply to a person which, in his capacity as director and manager, for a certain period of time performed services for and under the direction of that company in return for which he received remuneration, that being a matter for the referring court to determine. On the other hand, in a judgment 3 In this regard, for example, an employee at an embassy may rely on the provisions of Brussels Ia (recast) where the functions carried out by the employee do not fall within the exercise of public powers, see case C-154/11, Mahamdia. 4 All cases of the CJEU are available at its website, at http://curia.europa.eu/. 5 Case C-47/14, judgment of 10 September 2015, Holterman Ferho Exploitatie BV and Others. v Spies von Büllesheim, ECLI:EU:C:2015:574. 3 in Bosworth case6 the CJEU ruled that a contract between a company and a person performing the duties of director of that company does not create a relationship of subordination and cannot be treated as an ‘individual contract of employment’, where, even if the shareholder(s) of that company have the power to procure the termination of that contract, the director is able to determine the terms of that contract and has control and autonomy over the day-to-day operation of that company’s business and the performance of his own duties. ➔ Are employees in third countries covered? Employees working in or from a third country fall within the scope of the Brussels Ia Regulation when the employer is domiciled or deemed to be domiciled in a Member State. Employees working in or from a third country come within the scope of Rome I Regulation, i.e., the Member State court having jurisdiction will apply the Rome I Regulation to determine applicable law also in such cases.7 Employees whose habitual place of work is in a third country will be protected by the mandatory rules of that country. According to Article 8(2) of the Rome I Regulation the habitual place of work is not deemed to have changed if he/she is temporarily employed in a Member State. Employees contractually assigned to a base established in a third-country but whose habitual place of work is in fact in a Member State will benefit from the protective rules established in the Brussels Ia and Rome I Regulations and thus be protected by the mandatory rules of that Member State. ➔ What about 'bogus self-employment’? A bogus self-employed person is a worker who meets the criteria of an 'employee' but is declared self- employed. The question arises whether such workers, in the case of a dispute with the de facto employer, benefit from the protective rules established in the Brussels Ia and Rome I regulations. A case-by-case assessment has to be made to determine whether such workers are integrated into the framework of the business of the company for which they work and what the nature is of their relationship with the company (for instance whether there is subordination). Thus, in situations of ‘bogus’ self-employment, the application of the Regulations will be triggered if the criteria for determining that the person is in fact an employee are fulfilled, irrespective of the expressions used by the parties in the contract.
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