MLS Chase LLP are frequently asked to advise on choice of law clauses in employment contracts. These are common where an employee works in a cross-border employment, signing his contract in one country and then working in different jurisdictions, often across continents.
The European Court of Justice has again turned its thoughts to this issue and has underlined the fundamental differences between employment law and general commercial law. In short, the employment contract should be read to give maximum advantage to the employee.
The case – Koelzsch (Area of Freedom, Security and Justice) - concerned a determined German truck driver.
He worked under a contract of employment signed in Luxembourg, which expressly chose Luxembouregois law as governing the employment relationship. When a dispute arose, the truck driver first lodged his claim in Germany where the prevailing law was more favourable to him. The German courts refused jurisdiction on the basis that the employment contract specified Luxembourgeois law. The truck driver then brought his claim in the Luxemboug courts, but asked them to apply German law in reaching their decision. They refused to do so. He then sued the Luxembourg state for judicial maladministration. He lost, but appealed. The appeal courts referred the matter to the European Court of Justice (ECJ) for a ruling.
The ECJ applied Article 6 of the Rome Convention, which states that the country in which an employee works is the one in which an employee “performs the greater part of the his obligations towards his employer”. But the ECJ went further, stating that the aim of Article 6 was to protect the employee. Therefore, even where there was a choice of law in the employment contract, the employee could rely on mandatory provisions from other relevant jurisdictions. In this case, it meant that the truck driver was in effect entitled to the protections of Luxembourg law, as the various courts he had applied to had ruled. However, this could be “topped up” with certain elements of German law, where it was advantageous to the employee to do so.
While this approach has been applied before, the relevance of its application to the Rome I Regulation, which superceded the Rome Convention in December 2009, makes this ruling particularly relevant for all employers with a cross-border workforce.
The lesson from an employer’s perspective is that a valid choice of law clause will restrict an employer, but will not necessarily define the law under which an employee can bring a claim.
