Employment contracts with an international element quickly raise two important questions. Which court has jurisdiction to rule on the dispute? And which law applies to the employment contract?
In Europe, these questions are largely answered by reference to EU regulations, with the protection of the employee as the central concern.
Which court has jurisdiction?
Jurisdiction is, in principle, determined by the Brussels I bis Regulation (Regulation 1215/2012, also known as the Recast Brussels Regulation). An important starting point is that the employee is protected as the economically weaker party.
It is first important who starts the proceedings. Where the employer initiates proceedings, it must, in principle, turn to the courts of the country where the employee lives. Where the employee initiates proceedings, they have the option of litigating in the country where the employer is established.
In cross-border situations, for example where an employee works in multiple countries, the place where the employee habitually carries out their work also plays an important role. This concept has been further developed in the case law of the Court of Justice of the EU, and ensures that not only formal, but especially factual, circumstances are decisive.
A common example is the cross-border commuter: an employee who works in the Netherlands but lives just across the border in Belgium. If the employer wants to terminate the employment contract, it must turn to the Belgian court. That court will then assess the dispute, but will apply Dutch law in doing so.
If the EU rules do not apply, Dutch rules of civil procedure apply as a fallback. The main rule here is that the court of the defendant’s place of residence has jurisdiction, with some special rules for employment contracts.
Which law applies?
In addition to the question of which court has jurisdiction, it must be established which law applies to the employment contract. This is governed by the Rome I Regulation (Regulation 593/2008) or, for older contracts, the Rome Convention (Convention 80/934/EEC).
Which regime applies depends on when the contract was concluded. For employment contracts concluded after 17 December 2009, the Rome I Regulation applies. Older contracts fall, in principle, under the Rome Convention, unless they have since been substantially amended.
Rome I applies to contractual obligations in civil and commercial matters. Proceedings such as dismissal via the UWV (Employee Insurance Agency), for example, do not fall under it. A different regulation, Rome II, applies to non-contractual obligations.
The starting point under Rome I is that parties may, in principle, choose which law applies to their employment contract themselves. That choice can be made explicitly, but can also be inferred from the circumstances. An important limitation, however, is that an employee may not, as a result of that choice, lose the protection they would have had without it.
If the parties have not made a choice of law, the applicable law is determined using a step-by-step system. First, the country where the employee habitually works is considered. If that cannot be established, the place of business of the employer that engaged the employee is considered. Finally, a correction can still be made if the employment contract is clearly more closely connected with a different country.
Here too, the factual situation is decisive. Particularly for employees active in multiple countries, how the concept of “habitual place of work” is interpreted depends heavily on the specific circumstances.
In conclusion
Both in determining the competent court and in establishing the applicable law, international employment disputes require a tailored approach. EU rules provide the framework, but the outcome depends heavily on the facts of the case.
Please feel free to contact one of our employment lawyers if you have questions about the above.
