The European Private International Law of Employment 1107082943, 9781107082946

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THE EUROPEAN PRIVATE INTERNATIONAL LAW OF EMPLOYMENT

The European Private International Law of Employment provides a descriptive and normative account of the European rules of jurisdiction and choice of law which frame international employment litigation in the courts of EU Member States. The author outlines the relevant rules of the Brussels I Regulation Recast, the Rome Regulations, the Posted Workers Directive and the draft of the Posting of Workers Enforcement Directive, and assesses those rules in light of the objective of protection of employees. By using the UK as a case study, he also highlights the impact of the ‘Europeanisation’ of private international law on traditional perceptions and rules in this field of law in individual Member States. For example, the author demonstrates that the private international law of the EU is fundamentally reshaping English conflict of laws by almost completely merging the traditionally perceived contractual, statutory and tortious claims into one claim for choice-of-law purposes. Uglješa Grušić is an assistant professor at the School of Law of the University of Nottingham, where he teaches commercial conflict of laws, arbitration and the law of torts.

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THE EUROPEAN PRIVATE INTERNATIONAL LAW OF EMPLOYMENT UGLJEŠA GRUŠIĆ Assistant Professor, University of Nottingham

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University Printing House, Cambridge CB2 8BS, United Kingdom Cambridge University Press is part of the University of Cambridge. It furthers the University’s mission by disseminating knowledge in the pursuit of education, learning and research at the highest international levels of excellence. www.cambridge.org Information on this title: www.cambridge.org/9781107082946 © Cambridge University Press 2015 This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 2015 A catalogue record for this publication is available from the British Library Library of Congress Cataloguing in Publication data Grusic, Ugljesa, author. The European private international law of employment / Ugljesa Grusic. pages cm Based on author’s thesis (doctoral – London School of Economics and Political Science (University of London), 2012), under title: The international employment contract : ideal, reality and regulatory function of European private international law of employment. ISBN 978-1-107-08294-6 (hardback) 1. Conflict of laws – Labor laws and legislation – European Union countries. 2. Labor laws and legislation – European Union countries. 3. Freedom of movement – European Union countries. I. Title. KJE2855.G78 2015 344.2401–dc23 2015008286 ISBN 978-1-107-08294-6 Hardback Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate.

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THE EUROPEAN PRIVATE INTERNATIONAL LAW OF EMPLOYMENT

The European Private International Law of Employment provides a descriptive and normative account of the European rules of jurisdiction and choice of law which frame international employment litigation in the courts of EU Member States. The author outlines the relevant rules of the Brussels I Regulation Recast, the Rome Regulations, the Posted Workers Directive and the draft of the Posting of Workers Enforcement Directive, and assesses those rules in light of the objective of protection of employees. By using the UK as a case study, he also highlights the impact of the ‘Europeanisation’ of private international law on traditional perceptions and rules in this field of law in individual Member States. For example, the author demonstrates that the private international law of the EU is fundamentally reshaping English conflict of laws by almost completely merging the traditionally perceived contractual, statutory and tortious claims into one claim for choice-of-law purposes. Uglješa Grušić is an assistant professor at the School of Law of the University of Nottingham, where he teaches commercial conflict of laws, arbitration and the law of torts.

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THE EUROPEAN PRIVATE INTERNATIONAL LAW OF EMPLOYMENT UGLJEŠA GRUŠIĆ Assistant Professor, University of Nottingham

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University Printing House, Cambridge CB2 8BS, United Kingdom Cambridge University Press is part of the University of Cambridge. It furthers the University’s mission by disseminating knowledge in the pursuit of education, learning and research at the highest international levels of excellence. www.cambridge.org Information on this title: www.cambridge.org/9781107082946 © Cambridge University Press 2015 This publication is in copyright. Subject to statutory exception and to the provisions of relevant collective licensing agreements, no reproduction of any part may take place without the written permission of Cambridge University Press. First published 2015 A catalogue record for this publication is available from the British Library Library of Congress Cataloguing in Publication data Grusic, Ugljesa, author. The European private international law of employment / Ugljesa Grusic. pages cm Based on author’s thesis (doctoral – London School of Economics and Political Science (University of London), 2012), under title: The international employment contract : ideal, reality and regulatory function of European private international law of employment. ISBN 978-1-107-08294-6 (hardback) 1. Conflict of laws – Labor laws and legislation – European Union countries. 2. Labor laws and legislation – European Union countries. 3. Freedom of movement – European Union countries. I. Title. KJE2855.G78 2015 344.2401–dc23 2015008286 ISBN 978-1-107-08294-6 Hardback Cambridge University Press has no responsibility for the persistence or accuracy of URLs for external or third-party internet websites referred to in this publication, and does not guarantee that any content on such websites is, or will remain, accurate or appropriate.

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CONTENTS

Acknowledgements page x Table of cases xii Table of treaties and legislation

xxiii

1

1

Introduction

2

Protection of employees in private international law 17 2.1. Reasons for protecting employees in private international law 19 2.1.1. 2.1.2. 2.1.3. 2.1.4. 2.1.5. 2.1.6.

Shortcomings of party autonomy: freedom of contract 21 Shortcomings of party autonomy: economic efficiency 23 Shortcomings of party autonomy: legal certainty Systemic perspective: legitimate interests of states 26 Systemic perspective: the EU context 29 Conclusion 34

25

2.2. Employees protected in private international law 35 2.3. Protecting employees by choice-of-law rules 2.3.1. 2.3.2.

38

Protection of employees and party autonomy 39 Protection of employees and the law applicable in the absence of choice 44

2.4. Protecting employees by jurisdictional rules 2.5. Conclusions

49

54

v

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contents

3

‘Individual employment contracts’ in private international law 56 3.1. The genealogy of the term ‘individual employment contracts’ 58 3.2. Autonomous or domestic interpretation? 3.3. Who is the employee? 3.3.1. 3.3.2. 3.3.3.

3.5. Conclusions Jurisdiction

69

Elements of an autonomous definition: comparative analysis 70 Elements of an autonomous definition: substantive EU law 78 Conclusion 82

3.4. Who is the employer?

4

62

83

89

91

4.1. Evolution of the European rules of jurisdiction in employment matters 95 4.2. Importance, in practice, of jurisdictionally preferring claimant employees 100 4.3. Claimant employees versus claimants in general: is the objective of protection of employees yet to be attained? 106 4.3.1. 4.3.2.

4.3.3. 4.3.4. 4.3.5. 4.3.6. 4.3.7.

Employer’s domicile versus domicile of defendants in general 106 Habitual place of work versus place of provision of services 109 4.3.2.1. Habitual place of work 109 4.3.2.2. Place of provision of services 115 4.3.2.3. Conclusion 118 Engaging place of business 120 Branches, agencies and other establishments 124 Other non-consensual jurisdictional bases 126 Jurisdiction agreements 126 Conclusion 128

4.4. How to achieve protection of employees? 4.4.1.

Improving the existing rules

129

129

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contents 4.4.2.

Introducing new rules

4.5. Conclusions 5

132

136

Choice of law: contractual claims

137

5.1. Evolution of the European choice-of-law rules for employment contracts 139 5.2. Party autonomy and its limitations 5.2.1.

5.2.2.

5.2.3.

140

Choosing the applicable law 140 5.2.1.1. Express choice 141 5.2.1.2. Tacit choice 142 5.2.1.3. Severance (dépeçage) 143 5.2.1.4. Contracts without foreign or non-EU elements 144 Limitations of party autonomy 144 5.2.2.1. Relevant mandatory provisions 144 5.2.2.2. Sources of mandatory provisions 147 5.2.2.3. Situations in which the mandatory provisions of the objectively applicable law apply 149 5.2.2.4. Comparing the chosen law and the objectively applicable law 150 5.2.2.5. Role of the courts 152 Conclusion 154

5.3. Law applicable in the absence of choice 5.3.1.

5.3.2. 5.3.3. 5.3.4.

Habitual place of work 156 5.3.1.1. Postings abroad 157 5.3.1.2. Intra-group transfers 161 5.3.1.3. ‘Transnational occupations’ Engaging place of business 167 Escape clause 174 Conclusion 177

5.4. Conclusions 6

155

162

177

Choice of law: statutory claims

179

6.1. Territorial scope of British employment legislation 181 6.1.1.

Statutory rights 181 6.1.1.1. Employment Rights Act 1996

181

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contents

6.1.2. 6.1.3.

6.1.1.2. Equality Act 2010 189 6.1.1.3. Other statutes 190 Contractual rights 192 EU law-derived rights 195

6.2. The importance of choice of law 6.2.1. 6.2.2.

6.2.3.

Lawson v. Serco: a closer look 202 ‘European’ choice-of-law rules and the boundaries within which British employment legislation applies 206 Should the Lawson v. Serco approach be abandoned? 214

6.3. Conclusions 7

201

219

Choice of law: tortious claims

221

7.1. Concurrent causes of action in choice of law 7.1.1. 7.1.2. 7.1.3. 7.1.4. 7.1.5.

7.2. Exemption clauses 7.2.1. 7.2.2.

247

The common law 248 Rome I and Rome II 250

7.3 Conclusions 8

222

The common law 223 A procedural issue? 225 Does European private international law allow concurrent causes of action in choice of law? 229 Rome I and Rome II and concurrent causes of action in choice of law 241 Conclusion 247

252

Posting of workers in Europe

254

8.1. Posted Workers Directive: at the crossroad of competing interests 261 8.2. Enforcing the Posted Workers Directive 8.2.1. 8.2.2. 8.2.3.

273

(In)effectiveness of public enforcement 274 (In)effectiveness of collective enforcement 280 Conclusion 285

8.3. Private enforcement of the Posted Workers Directive in England 286 8.3.1.

A receiving perspective

286

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contents 8.3.2.

A sending perspective

8.4 Conclusions 9

Conclusion

300

Bibliography Index 327

307

294

298

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ACKNOWLEDGEMENTS

This book is based on my doctoral thesis, defended at the London School of Economics and Political Science in March 2013. I am grateful to my supervisors, Hugh Collins and Jan Kleinheisterkamp, for their support, encouragement, advice and patience. A big thank you also goes to Jacco Bomhoff, Michael Bridge, Cosmin Cercel, Mary Footer, Stéphanie Francq, Trevor Hartley, Marko Milanović, Paul Torremans, Aukje van Hoek, as well as to Mark Freedland and Louise Merrett, who examined my dissertation. This book also benefitted from the hospitality and assistance of Horatia Muir-Watt during my stay at Sciences Po in the spring of 2012. Many other friends and colleagues also helped me, directly or indirectly, to complete this book. I would particularly like to mention Besim Hatinoglu, Ian Inkster, Ivana Isailović, Jovan Leković, Susan Lin, Dragan Pavlićević, Manuel Penadés Fons and Slobodan Tomić. I am also grateful to my teachers of private international law at the Universities of Nottingham and Belgrade, James Fawcett, the late Gašo Knežević and Vladimir Pavić, for introducing me to this fascinating discipline. An earlier version of Chapter 4 was published as ‘Jurisdiction in Employment Matters under Brussels I – A Reassessment’ (2012) 61 International and Comparative Law Quarterly 91 and an earlier version of Chapter 6 was published as ‘The Territorial Scope of Employment Legislation and Choice of Law’ (2012) 75 Modern Law Review 722. A part of Chapter 5 is based on my article ‘Should the Connecting Factor of the “Engaging Place of Business” Be Abolished in European Private International Law?’ (2013) 62 International and Comparative Law Quarterly 173. I am grateful to the publishers and editors of these journals and anonymous referees. Many thanks are due to the University of Nottingham, where I teach private international law, and to the LSE Law Department, for funding my PhD studies through the Wedderburn Scholarship. x

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acknowledgements

xi

Finally, this dissertation would not have been possible without the support and encouragement of my parents, Sonja and Mihajlo, and my brother, Strahinja.

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TABLE OF CASES

Court of Justice of the European Union A. De Bloos, SPRL v. Société en commandite par actions Bouyer [1976] ECR 1497; [1977] 1 CMLR 60, Case 14-76 pp. 96 and 114 Ahmed Mahamdia v. République algérienne démocratique et populaire, CJEU judgment, 19 July 2012, nyr, Case C-154/11 pp. 18, 62, 80, 100, 103, 106, 123, 124, 127 Allianz SpA and Generali Assicurazioni Generali SpA v. West Tankers Inc. [2009] ECR I663; [2009] 1 AC 1138, Case C-185/07 p. 229 Andrew Owusu v. N.B. Jackson, t/a ‘Villa Holidays Bal-Inn Villas’ and Others [2005] ECR I-1383; [2005] QB 801, Case C-281/02 p. 229 Anton Schlecker v. Melitta Josefa Boedeker, CJEU judgment, 12 September 2013; AG Opinion, 16 April 2013, nyr, Case C-64/12 pp. 8, 18, 26, 45, 103, 149, 151, 157, 159, 160, 172, 174, 175, 176, 177, 255 Athanasios Kalfelis v. Bankhaus Schröder, Münchmeyer, Hengst and Co. [1988] ECR 5565, Case 189/87 pp. 205, 225, 229, 232, 233, 234 Besix SA v. Wasserreinigungsbau Alfred Kretzschmar GmbH & Co. KG (WABAG) and Planungs- und Forschungsgesellschaft Dipl. Ing. W. Kretzschmar GmbH & KG (Plafog) [2002] ECR I-1699; [2003] 1 WLR 1113, Case C-256/00 p. 117 B.N.O. Walrave and L.J.N. Koch v. Association Union cycliste internationale, Koninklijke Nederlandsche Wielren Unie et Federación Española Ciclismo [1974] ECR 1405; [1975] 1 CMLR 320, Case 36-74 p. 200 Bülent Kurz, né Yüce v. Land Baden-Württemberg [2002] ECR I-10691, Case C-188/ 00 p. 80 Car Trim GmbH v. KeySafety Systems Srl [2010] ECR I-1255; [2010] 2 All ER (Comm) 770, Case C-381/08 p. 115 Color Drack GmbH v. Lexx International Vertriebs GmbH [2007] ECR I-3699; [2010] 1 WLR 1909, Case C-386/05 p. 115 Commission v. Austria [2006] ECR I-9041, Case C-168/04 pp. 274, 276 Commission v. Belgium [2006] ECR I-10653, Case C-433/04 pp. 274, 279 Commission v. Belgium [2009] ECR I-9213, Case C-219/08 pp. 275, 276 Commission v. Germany [2005] ECR I-2733, Case C-341/02 p. 266 Commission v. Germany [2006] ECR I-885; [2006] 2 CMLR 23, Case C-244/04 pp. 274, 276 Commission v. Germany [2007] ECR I-6095, Case C-490/04 pp. 275, 278

xii

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table of cases

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Commission v. Italy [2002] ECR I-1425; [2003] 2 CMLR 20, Case C-279/00 pp. 274, 277 Commission v. Luxembourg [2004] ECR I-10191; [2005] 1 CMLR 22, Case C-445/ 03 pp. 274, 276 Commission v. Luxembourg [2008] ECR I-4323, Case C-319/06 pp. 208, 209, 268, 269, 272, 275, 276, 277, 290 Criminal proceedings against Alfred John Webb [1981] ECR 3305; [1982] 1 CMLR 719, Case 279/80 p. 274 Criminal proceedings against André Mazzoleni and Inter Surveillance Assistance SARL, as the party civilly liable, third parties: Eric Guillaume and Others [2001] ECR I-2189; [2003] 2 CMLR 10, Case C-165/98 p. 274 Criminal proceedings against Jean-Claude Arblade and Arblade & Fils SARL (C-369/96) and Bernard Leloup, Serge Leloup and Sofrage SARL (C-376/96) [1999] ECR I-8453; [2001] ICR 434, Joined Cases C-369/96 and C-376/96 pp. 210, 274, 277, 278 Criminal proceedings against Michel Guiot and Climatec SA, as employer liable at civil law [1996] ECR I-1905, Case C-272/94 p. 274 Criminal proceedings against Vítor Manuel dos Santos Palhota and Others [2010] ECR I-9133, Case C-515/08 pp. 275, 276, 277, 278 D. M. Levin v. Staatssecretaris van Justitie [1982] ECR 1035; [1982] 2 CMLR 454, Case 53/81 p. 79 Deborah Lawrie-Blum v. Land Baden-Württemberg [1986] ECR 2121; [1987] 3 CMLR 389, Case 66/85 pp. 79, 80, 82 Debra Allonby v. Accrington & Rossendale College, Education Lecturing Services, t/a Protocol Professional and Secretary of State for Education and Employment [2004] ECR I-873; [2004] 1 CMLR 35, Case C-256/01 pp. 79, 80, 87 Dirk Rüffert v. Land Niedersachsen [2008] ECR I-1989; [2002] 2 CMLR 39, Case C-346/ 06 pp. 269, 272 Electrosteel Europe SA v. Edil Centro SpA [2011] ECR I-4987, Case C-87/10 p. 115 Elefanten Schuh GmbH v. Pierre Jacqmain [1981] ECR 1671; [1982] 3 CMLR 1, Case 150/80 pp. 95, 103, 126 Ferdinand M.J.J. Duijnstee v. Lodewijk Goderbauer [1983] ECR 3663; [1985] 1 CMLR 220, Case 288/82 pp. 103, 104 Finalarte Sociedade de Construção Civil Lda (C-49/98), Portugaia Construções Lda (C-70/98) and Engil Sociedade de Construção Civil SA (C-71/98) v. Urlaubs- und Lohnausgleichskasse der Bauwirtschaft and Urlaubs- und Lohnausgleichskasse der Bauwirtschaft v. Amilcar Oliveira Rocha (C-50/98), Tudor Stone Ltd. (C-52/98), Tecnamb-Tecnologia do Ambiante Lda (C-53/98), Turiprata Construções Civil Lda (C-54/98), Duarte dos Santos Sousa (C-68/98) and Santos & Kewitz Construções Lda (C-69/98) [2001] ECR I-7831; [2003] CMLR 11, Joined Cases C-49/98, C-50/98, C-52/98 to C-54/98 and C-68/98 to C-71/98 pp. 262, 263, 264, 272, 274, 275 Fonderie Officine Mecchaniche Tacconi SpA v. Heinrich Wagner Sinto Maschinenfabrik GmbH [2002] ECR I-7357, Case C-334/00 pp. 93, 234, 236

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table of cases

Fonnship A/S v. Svenska Transportarbetareförbundet and Facket för Service och Kommunikation (SEKO) and Svenska Transportarbetareförbundet v. Fonnship A/S, CJEU judgment, 8 July 2014, nyr, Case C-83/13 p. 280 Giulia Pugliese v. Finmeccanica SpA, Betriebsteil Alenia Aerospazio [2003] ECR I-3573; [2004] All ER (EC) 154, Case C-437/00 pp. 8, 18, 103, 109, 113, 114, 161 Glaxosmithkline and Laboratoires Glaxosmithkline v. Jean-Pierre Rouard [2008] ECR I3965; [2008] ICR 1375, Case C-462/06 pp. 18, 91, 93, 98, 103 Gregory Paul Turner v. Felix Fareed Ismail Grovit, Harada Ltd. and Changepoint SA [2004] ECR I-3565; [2005] 1 AC 101, Case C-159/02 pp. 103, 104, 229 Haase v. Superfast Ferries [2008] OJ C51/40, Case C-413/07 pp. 103, 121, 122 Hassan Shenavai v. Klaus Kreischer [1987] ECR 239; [1987] 3 CMLR 782, Case 266/ 85 pp. 60, 61, 80, 82, 97 Heiko Koelzsch v. État du Grand Duchy of Luxemburg [2011] ECR I-1595, Case C-29/ 10 pp. 18, 51, 69, 103, 122, 147, 155, 163, 177, 205, 206, 255 Herbert Weber v. Universal Ogden Services Ltd. [2002] ECR I-2013; [2002] QB 1189, Case C-37/00 pp. 18, 103, 109, 112, 113, 114, 156, 160, 167 Industrie Tessili Italiana Como v. Dunlop AG [1976] ECR 1473; [1977] 1 CMLR 26, Case 12-76 pp. 96, 114 Ingmar GB Ltd. v. Eaton Leonard Technologies Inc. [2000] ECR I-9305; [2001] 1 CMLR 9, Case C-381/98 pp. 32, 199, 200, 211 Ingrid Boukhalfa v. Bundesrepublik Deutschland [1996] ECR I-2253; [1996] 3 CMLR 22, C-214/94 pp. 32, 200, 201 Intercontainer v. Balkenende [2009] ECR I-9687; [2010] QB 411, Case C-133/08 p. 174 International Transport Workers’ Federation and Finnish Seamen’s Union v. Viking Line ABP and OÜ Viking Line Eesti [2007] ECR I-10779; [2008] 1 CMLR 51, Case C-438/ 05 pp. 31, 281, 282, 283, 284 Jakob Handte & Co. GmbH v. Traitements Mécano-chimiques des Surfaces SA [1992] ECR I-3967; [1993] ILPr 5, Case C-26/91 pp. 205, 230 Jan Voogsgeerd v. Navimer SA [2011] ECR I-13275, Case C-384/10 pp. 18, 64, 69, 80, 81, 85, 86, 103, 120, 122, 147, 149, 150, 151, 155, 164, 166, 167, 168, 169, 170, 171, 172, 173, 176, 177, 205, 232, 255 Karl Robert Kranemann v. Land Nordrhein-Westfalen [2005] ECR I-2421; [2005] 2 CMLR 15, Case C-109/04 p. 80 Laval un Partneri Ltd. v. Svenska Byggnadsarbetareförbundet, Svenska Byggnadsarbetareförbundets avdelning 1, Byggettan and Svenska Elektrikerförbundet [2007] ECR I-11767; [2008] 2 CMLR 9, Case C-341/05 pp. 31, 254, 266, 270, 271, 272, 278, 280, 281, 283, 284, 290 Lloyd’s Register of Shipping v. Société Campenon Bernard [1995] ECR I-961; [1995] All ER (EC) 531, Case C-439/93 p. 124 Magali Warbecq v. Ryanair Ltd. [2004] ECR I-6041, Case C-555/03 pp. 103, 121, 122, 166

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table of cases

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Marc Brogsitter v. Fabrication de Montres Normandes EURL and Karsten Fräßdorf, Case C-548/12, 13 March 2014, nyr pp. 232, 233, 237 Marleasing SA v. La Comercial Internacional de Alimentacion SA [1990] ECR I-4135; [1992] 1 CMLR 305, Case C-106/89 p. 197 Melzer v. MF Global UK Ltd., CJEU judgment, 16 May 2013, nyr, Case C-228/11 pp. 231, 232 Mulox IBC Ltd. v. Hendrick Geels [1993] ECR I-4075; [1993] ILPr 668, Case C-125/ 92 pp. 18, 51, 52, 61, 97, 103, 109, 110, 111, 112, 114, 123, 130, 156, 162 Peter Rehder v. Air Baltic Corp. [2009] ECR I-6073; [2009] ILPr 44, Case C-204/08 pp. 116, 117 Petra Engler v. Janus Versand GmbH [2005] ECR I-481; [2005] ILPr 8, Case C-27/ 02 p. 230 Petrus Wilhelmus Rutten v. Cross Medical Ltd. [1997] ECR I-57; [1997] All ER (EC) 121, Case C-383/95 pp. 18, 103, 109, 110, 111, 112, 114, 123, 156, 162 Portugaia Construções Lda [2002] ECR I-787; [2003] 2 CMLR 35, Case C-164/99 pp. 264, 274 Raymond Vander Elst v. Office des Migrations Internationales [1994] ECR I-3803; [2005] 1 CMLR 513, Case C-43/93 pp. 256, 262, 274, 275, 276 Roger Ivenel v. Helmut Schwab [1982] ECR 1891; [1983] 1 CMLR 538, Case 133/81 pp. 18, 60, 61, 96, 97, 103, 114 Rush Portuguesa Lda v. Office national d’immigration [1990] ECR I-1417; [1991] 2 CMLR 818, Case C-113/89 pp. 256, 262, 263, 264, 272, 274, 275, 298 Sanicentral GmbH v. René Collin [1979] ECR 3423; [1980] 2 CMLR 164, Case 25/ 79 pp. 95, 96, 103, 126, 204 SAR Schotte GmbH v. Parfums Rotschild SARL [1987] ECR 4905; [1989] ECC 431, Case 218/86 p. 124 Sähköalojen ammattiliitto ry v. Elektrobudowa Spółka Akcyjna, Opinion of AG Wahl, 18 September 2014, nyr, Case C-396/13 pp. 266, 285 Shearson Lehmann Hutton Inc. v. TVB Treuhandgesellschaft für Vermögensverwaltung und Beteiligungen mbH [1993] ECR I-139, Case C-89/91 p. 234 Six Constructions Ltd. v. Paul Humbert [1989] ECR 341; [1990] ILPr 206, Case 32/ 88 pp. 61, 103, 107, 108, 109, 129 Société anonyme de droit français Seco et Société anonyme de droit français Desquenne & Giral v. Etablissement d’assurance contre la vieillesse et l’invalidité [1982] ECR 223, Joined Cases 62-63/81 p. 274 Somafer SA v. Saar-Ferngas AG [1978] ECR 2183; [1979] 1 CMLR 490, Case 33/78 p. 124 Tevfik Isbir v. DB Services GmbH, CJEU judgment, 7 November 2013, nyr, Case C-522/ 12 pp. 266, 278 The Queen v. Ministry of Agriculture, Fisheries and Food, ex parte Agegate Ltd. [1989] ECR 4459; [1990] 1 CMLR 366, Case C-3/87 p. 79

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Udo Steymann v. Staatssecretaris van Justitie [1988] ECR 6159; [1989] 1 CMLR 449, Case 196/87 p. 80 United Antwerp Maritime Agencies (Unamar) NV v. Navigation Maritime Bulgare, CJEU judgment, 17 October 2013; AG Opinion, 15 May 2013; nyr, Case C-184/ 12 pp. 211, 212 Union royale belge des sociétés de football association ASBL v. Jean-Marc Bosman, Royal club liégeois SA v. Jean-Marc Bosman and Union des associations européennes de football (UEFA) v. Jean-Marc Bosman [1995] ECR I-4921; [1996] 1 CMLR 645, Case C-415/93 p. 80 Vicoplus SC PUH (C-307/09), BAM Vermeer Contracting sp. zoo (C-308/09) and Olbek Industrial Services sp. zoo (C-309/09) v. Minister van Sociale Zaken en Werkgelegenheid [2011] ECR I-453, Joined Cases C-307/09 to C-309/09 pp. 263, 265 V.J.M. Raulin v. Minister van Onderwijs en Wetenschappen [1992] ECR I-1027; [1994] 1 CMLR 227, Case C-357/89 p. 80 Wolff & Müller GmbH & Co. KG v. José Filipe Pereira Félix [2004] ECR I-9553; [2005] 1 CMLR 21, Case C-60/03 pp. 274, 279 Wood Floor Solutions Andreas Domberger GmbH v. Silva Trade SA [2010] ECR I-2121, C-19/09 p. 116

EFTA Court EFTA Surveillance Authority v. Iceland [2011] 3 CMLR 31, Case E-12/10 pp. 266, 269, 278 STX Norway Offshore AS v. Norway [2012] 2 CMLR 12, Case E-2/11 pp. 266, 269, 272, 278

Australia John Pfeiffer Pty. v. Rogerson (2000) 203 CLR 503 p. 227 McKain v. R W Miller & Co. (SA) Pty. Ltd. (1991) 174 CLR 1 p. 277

Canada Tolofson v. Jensen [1994] 3 SCR 1022

p. 227

Estonia Supreme Court, 16 January 2013, No. 3-2-1-179-12 p. 297

France Bardou, Cass. civ., 6 July 1931, Grands arrêts No. 1 p. 72 Cass. civ., 9 December 1960 (1961) 50 Revue critique de droit international privé 835 p. 41

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Cass soc., 17 October 2000, case number 98-45.864, unreported p. 142 Cass. soc., 4 July 2001, case number 99-44.519, unreported p. 143 Copagau, Cass. soc., 1 December 2005 [2006](2) Revue de jurisprudence sociale No. 147 p. 72 Cour d’appel de Lyon, 18 February 2004, case number 2003/00993, unreported p. 168 Four Winds Charter (Société) v. Latoja, Cass., 31 March 2009 [2009] ILPr 50 p. 113 Labbane, Cass. soc., 19 December 2000 [2001] Droit social 227, note A. Jeammaud p. 72 Martine Carasset-Marillier v. Salahadin Imam et autres, Cass., 13 January 1998, available at http://curia.europa.eu/common/recdoc/convention/en/1998/27-1998. htm p. 125 Minéo v. Albert, Cour d’appel d’Angers, 18 May 1989 (1990) 117 Journal du droit international 616, note P. Fieschi-Vivet; (1990) 79 Revue critique de droit international privé 501, note V. Heuzé p. 176 Mme Arsac v. United Airlines, Cass.soc., 27 May 2009 [2010] Droit social 343, note P. Chaumette pp. 142, 166 Mme Briand v. Institut culturel autrichien, Cass. soc., 12 November 2002 [2003] Droit social 339, note M.-A. Moreau; (2004) 131 Journal du droit international 131, note S. Dion; (2003) 92 Revue critique de droit international privé 450, note F. Jault pp. 148, 151, 152 Royal Air Maroc, Cass. soc., 31 March 1978 (1978) 67 Revue critique de droit international privé 701, note A. Lyon-Caen p. 41 SA CIEC v. Piriou, Cass. soc., 28 October 1997 [1998] Droit social 186, note M.-A. Moreau pp. 143, 218 Shell International Ltd. v. Liem, Cass., 21 January 2004 [2004] ILPr 18 p. 109 Société Générale, Cass. soc., 15 November 1996 [1996] Droit social 1067, note J.-J. Dupeyroux p. 72 Tous Services de Personnel v. Leclerc, Cass. soc., 25 January 1984 (1985) 74 Revue critique de droit international privé 327 p. 41 X v. Royal Bank of Scotland, Cass., 27 November 2013 [2014] ILPr 22 p. 113

Germany AG Münster, 26 January 1999, IPRspr. 2000 No. 111 p. 63 BAG, 13 January 1983, AP BGB §611 Abhängigkeit No 42 p. 73 BAG, 24 August 1989, IPRspr. 1989 No. 72 p. 213 BAG, 9 October 1991, IPRspr. 1991. No. 68 p. 142 BAG, 21 January 1999, IPRspr 1999 No. 46 p. 218 BAG, 20 August 2003, IPRspr. 2003 No. 140 p. 63 BAG, 11 December 2003, IPRspr. 2003 No. 46 p. 176 BAG, 13 November 2007 (2008) 54 RIW 644 pp. 142, 143, 166 BAG, 26 June 2008, IPRspr. 2008 No. 40 p. 142 Bundesfinanzhof, 14 June 1991 (1991) 37 RIW 966 p. 121

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Hessisches LAG, 16 November 1999, NZA-RR 2000, 401 p. 168 Hessisches LAG, 25 August 2008, IPRspr. 2008 No. 47 p. 168 LAG Frankfurt, 14 August 2000, IPRspr. 2000 No. 40 p. 146 LAG Frankfurt/Main, 13 September 2000, IPRspr. 2000 No. 42 p. 143 LAG Niedersachsen, 20 November 1998, AR-Blattei ES 920 Nr 6 p. 168 Re Employment in More Than One State, BAG, 29 May 2002 [2003] ILPr 33

p. 112

Ireland Burke v. Uvex Sports GmbH [2005] ILPr 26 p. 235 Gerhard Fahey v. McKinsey & Co. Inc. EE/2001/146 (Equality Tribunal)

pp. 93, 236

Italy Pitzolu v. Banca Gesfid SA, Corte di Cassazione, 9 January 2008 [2009] ILPr 27

p. 112

Luxembourg Cour d’appel, 3 December 1992 (1993) 29 Pasicrisie Luxembourgeoise 30

p. 152

The Netherlands Sorensen v. Aramco Overseas Co., Hoge Raad, 23 October 1987, NJ 1988, 842

p. 213

United Kingdom Addison v. Denholm Ship Management (UK) Ltd. [1997] ICR 770 p. 192 Alpha Laval Tumba AB v. Separator Spares International Ltd. [2012] EWCA Civ 1569; [2013] 1 WLR 1110 pp. 93, 235 Amin Rasheed Shipping Corp. v. Kuwait Insurance Co. [1984] AC 50 p. 141 Anton Durbeck GmbH v. Den Norske Bank ASA [2003] EWCA Civ 147; [2003] QB 1160 p. 124 Autoclenz Ltd. v. Blecher [2011] UKSC 41; [2011] 4 All ER 745 p. 74 Barber v. RJB Mining (UK) Ltd. [1999] ICR 679 p. 195 Barry v. Bradshaw [2000] ILPr 706 p. 234 Base Metal Trading Ltd. v. Shamurin [2002] CLC 322 pp. 224, 225, 236, 237 Base Metal Trading Ltd. v. Shamurin [2003] EWHC 2419 (Comm); [2004] 1 All ER (Comm) 159 pp. 224, 236 Base Metal Trading Ltd. v. Shamurin [2004] EWCA Civ 1316; [2005] 1 WLR 1157 pp. 224, 225, 236, 237 Bates Van Winkelhof v. Clyde & Co. LLP, Employment Tribunal, case number 2200549/ 2011, 16 May 2011, unreported pp. 188, 189, 190, 213

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Bates Van Winkelhof v. Clyde & Co. LLP, UKEAT/0568/11/RN, UKEAT/0168/12/RN, 26 April 2012, unreported p. 188 Bates Van Winkelhof v. Clyde & Co. LLP [2012] EWCA Civ 1207; [2013] 1 All ER 844 pp. 27, 188, 287 Bates Van Winkelhof v. Clyde & Co. LLP [2014] UKSC 32; [2014] 1 WLR 2047 pp. 27, 188, 287 Bleuse v. MBT Transport Ltd. [2008] ICR 488 pp. 182, 188, 195, 196, 197, 198, 199, 202, 297 Booth v. Phillips [2004] EWHC 1437 (Comm); [2004] 1 WLR 3292 pp. 165, 168, 176, 224 Bossa v. Nordstress Ltd. [1998] ICR 694 p. 201 British Airways plc v. Mak [2011] EWCA Civ 184; [2011] ICR 735 p. 190 British Airways plc v. Sindicato Espanol de Pilotos de Lineas Aeras [2013] EWHC 1657 (Comm); [2013] ILPr 45 pp. 282, 283 Brodin v. A/R Seljan, 1973 SLT 198 pp. 249, 251 Broom v. Morgan [1953] 1 QB 597 p. 194 Bryant v. Foreign and Commonwealth Office, EAT/174/02/RN, 10 March 2003, unreported p. 184 Bullen v. Club Cantabrica Coach & Air Holidays Ltd., Employment Tribunal, case number 3303362/2009, 21 April 2010, unreported p. 297 Cameron v. Navy, Army and Air Force Institutes (NAAFI), Employment Appeal Tribunal, case number 0124/06/DA, 14 December 2006, unreported p. 185 Carmichael v. National Power plc [1999] 1 WLR 2042 pp. 71, 74 Carver v. Saudi Arabian Airlines [1999] 3 All ER 61 pp. 182, 183, 189, 191 CEF Holdings Ltd. v. Mundey [2012] EWHC 1524 (QB); [2012] IRLR 912 pp. 92, 104, 235 Chunilal v. Merrill Lynch International Inc. [2010] EWHC 1467 (Comm) pp. 161, 168 Cook v. Square D Ltd. [1992] ICR 262 p. 224 Coupland v. Arabian Gulf Oil Co. [1983] 1 WLR 1136 pp. 221, 223, 224, 248 Cox v. ELG Metals Ltd. [1985] ICR 310 p. 289 Dhunna v. Creditsights Ltd. [2014] EWCA Civ 1238 p. 188 Diggins v. Condor Marine Crewing Services Ltd. [2009] EWCA Civ 1133; [2010] ICR 213 pp. 165, 183, 192 Domicrest Ltd. v. Swiss Bank Corp. [1999] QB 548 pp. 234, 235 Duarte v. Black & Decker Corp. [2007] EWHC 2720 (QB); [2008] 1 All ER (Comm) 401 pp. 63, 81, 146, 148 Duncombe v. Secretary of State for Children, Schools and Families [2009] EWCA Civ 1355; [2010] 4 All ER 335 pp. 194, 195, 196, 197, 201, 218 Duncombe v. Secretary of State for Children, Schools and Families (No 1) [2011] UKSC 14; [2011] 2 All ER 417 pp. 184, 195, 197, 198, 201, 218 Duncombe v. Secretary of State for Children, Schools and Families (No 2) [2011] UKSC 36; [2011] 4 All ER 1020 pp. 179, 184, 185, 186, 187, 188, 197, 201, 206, 215, 217, 218

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Express & Echo Publications Ltd. v. Tanton [1999] ICR 693 p. 74 Financial Times Ltd. v. Bishop, UKEAT/0147/03/ZT, 25 November 2003, unreported pp. 181, 184, 202, 216 Fuller v. United Healthcare Services Inc., UKEAT/0464/13/BA, 4 September 2014, unreported pp. 190, 201 Galaxias Steamship Co. Ltd. v. Panagos Christofis (1947–48) 81 Ll L Rep 499 p. 248 Gunning v. Mirror Group Newspapers Ltd. [1986] 1 WLR 546 p. 76 Harada Ltd. (t/a Chequepoint UK Ltd.) v. Turner (No 1) [2000] ILPr 574 p. 113 Harding v. Wealands [2006] UKHL 32; [2007] 2 AC 1 p. 226 Hasan v. Shell International Shipping Services (PTE) Ltd., UKEAT/0242/13/SM, 14 January 2014, unreported p. 192 Henderson v. Merrett Syndicates Ltd. (No 1) [1995] 2 AC 145 p. 221 Holis Industries v. GMB [2008] ICR 464 p. 192 Hunt v. United Airlines Inc. [2008] ICR 934 p. 183 James v. Redcats (Brands) Ltd. [2007] ICR 1006 p. 75 Jivraj v. Hashwani [2011] UKSC 40; [2011] 1 WLR 1872 pp. 76, 213 Johnson v. Coventry Churchill International Ltd. [1992] 3 All ER 14 pp. 223, 224 Kleinwort Benson Ltd. v. Glasgow City Council (No.2) [1999] 1 AC 153 p. 234 Lane v. Shire Roofing Company (Oxford) Ltd. [1995] IRLR 493 p. 71 Lawson v. Serco Ltd., EAT/0018/02TM, 11 March 2003, unreported p. 202 Lister v. Romford Ice and Cold Storage Co. Ltd. [1957] AC 555 p. 221 Lodge v. Dignity & Choice in Dying, Compassion in Dying, UKEAT/0252/15/LA, 2 December 2014, unreported pp. 184, 188 MacFarlane v. Glasgow City Council [2001] IRLR 7 p. 74 Macritchie Bros. Ltd. v. Commercial Power Ltd., 2011 GWD 2-82 p. 234 Market Investigations Ltd. v. Minister of Social Security [1969] 2 QB 173 p. 71 Matthews v. Kuwait Bechtel Corp. [1959] 2 QB 57 p. 223 Mazur Media Ltd. v. Mazur Media GmbH [2004] EWHC 1566 (Ch); [2004] 1 WLR 2966 p. 234 McDermid v. Nash Dredging & Reclamation Co. Ltd. [1987] AC 906 p. 224 McMeechan v. Secretary of State for Employment [1997] ICR 549 p. 74 Mercedes-Benz AG v. Leiduck [1996] AC 284 p. 102 Mercury Publicity Ltd. v. Wolfgang Loerke GmbH [1993] ILPr 142 pp. 63, 81 Mingely v. Pennock (t/a Amber Cars) [2004] EWCA Civ 328; [2004] ICR 727 pp. 73, 76 Ministry of Defence v. Gandiya [2004] EWCA Civ 1171 p. 190 Ministry of Defence v. Wallis [2011] EWCA Civ 231; [2011] ICR 617 pp. 185, 196, 197, 198, 200 Nethermere (St Neots) Ltd. v. Gardiner [1984] ICR 612 pp. 71, 74 O’Kelly v. Trusthouse Forte [1984] QB 90 pp. 71, 74 Office of Fair Trading v. Lloyd’s Bank TSB [2007] UKHL 48; [2007] 3 WLR 733 p. 301 OJSC TNK-BP Holding v. Lazurenko [2012] EWHC 2781 (Ch) pp. 104, 247

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Pervez v. Macquarie Bank Ltd. [2011] ICR 266 pp. 183, 292 Portec (UK) v. Mogensen [1976] 3 All ER 565 p. 121 Powell v. OMV Exploration & Production Ltd. [2014] ICR 63 p. 106 R (on the Application of BBC) v. Central Arbitration Committee [2003] EWHC 1375 Admin; [2003] ICR 1542 p. 73 Raiffeisen Zentralbank Osterreich Aktiengesellschaft v. National Bank of Greece SA [1999] 1 Lloyd’s Rep 408 p. 234 Ravat v. Halliburton Manufacturing and Services Ltd. [2012] UKSC 1; [2012] 2 All ER 905 pp. 179, 186, 187, 188, 202, 206, 215, 217 Rayner v. Davies [2002] 1 All ER (Comm) 620 p. 234 Ready Mixed Concrete (South East) Ltd. v. Minister of Pensions and National Insurance [1968] 2 QB 497 pp. 71, 74 Rogers v. Ministry of Defence, UKEAT/0455/12/ZT, 1 February 2013, unreported p. 185 Saggar v. Ministry of Defence [2005] EWCA Civ 413; [2005] ICR 1073 p. 189 Samengo-Turner v. J&H Marsh & McLennan (Services) Ltd. [2007] EWCA Civ 723; [2007] 2 All ER (Comm) 813 pp. 32, 63, 81, 87, 88, 101, 102, 104 Sayers v. International Drilling Co. NV [1971] 1 WLR 1176 pp. 17, 18, 28, 42, 141, 170, 218, 248, 249 Serco Ltd. v. Lawson; Botham (FC) v. Ministry of Defence; Crofts v. Veta Ltd. [2006] UKHL 3; [2006] 1 All ER 823 pp. 27, 137, 179, 181, 182, 183, 184, 186, 188, 189, 190, 192, 193, 194, 195, 196, 201, 202, 203, 204, 206, 207, 214, 215, 217, 219, 220, 287 Shekar v. Satyam Computer Services Ltd. [2005] ICR 737 pp. 141, 142, 159, 183, 188 Simpson v. Intralinks Ltd. [2012] ICR 1343 p. 100 Smania v. Standard Chartered Bank, UKEAT/0181/14/KN, 5 December 2014 p. 188 Source Ltd. v. TUV Rheinland Holding AG [1998] QB 54 p. 234, 235 Stevenson v. Atos Origin IT Services UK Ltd. (2012) 165(16) SJLB 39 p. 189 Stevenson, Jordan & Harrison v. MacDonald & Evans [1952] 1 TLR 101 p. 71 Swithenbank Foods Ltd. v. Bowers [2002] EWHC 2257 (QB); [2002] 2 All ER (Comm) 974 pp. 92, 104, 235 Thomson v. Cremin [1956] 1 WLR 103 (Note) p. 224 Todd v. British Midland Airways Ltd. [1978] ICR 959 p. 183 Tradition Securities and Futures SA v. X [2009] ICR 88 p. 189 Walker v. Church Mission Society, UKEAT/0036/11/ZT, 17 June 2011, unreported p. 184 Williams v. University of Nottingham [2007] IRLR 660 pp. 183, 184, 189 Wilson v. Maynard Shipbuilding Consultants AB [1978] QB 665 pp. 183, 190, 191 WPP Holdings Italy SRL v. Benatti [2006] EWHC 1641 (Comm); [2007] 1 All ER (Comm) 208 pp. 63, 81, 82, 87, 104 WPP Holdings Italy SRL v. Benatti [2007] EWCA Civ 263; [2007] 1 WLR 2316 pp. 63, 65, 81, 82, 87, 104

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Wright v. Deccan Chargers Sporting Ventures Ltd. [2011] EWHC 1307 (QB); [2011] ILPr 37 p. 106 YKK Europe Ltd. v. Heneghan [2010] ICR 611 p. 183

United States of America Babineaux v. Southeastern Drilling Corp., 170 So.2d 518 (La.App. 3 Cir.1965) p. 132 Carnival Cruise Lines, Inc. v. Shute, 499 US 585 (1991), 111 S.Ct. 1522, 113 L.Ed.2d 622 (1991) p. 35 Clark v. Moran Towing & Transp. Co., Inc., 738 F.Supp. 1023 (E.D.La.1990) p. 132 Conti v. Pneumatic Products Corp., 977 F.2d 978 (6th Cir.1992) p. 132 Farbman v. Esskay Manufacturing Co., 676 F.Supp. 666 (W.D.N.C.1987) p. 132 M/S Bremen and Unterweser Reederei GmbH v. Zapata Off-Shore Co., 407 US 1 (1972) pp. 21, 22, 35 Mabry v. Fuller-Shuwayer Co. Ltd., 50 N.C.App. 245, 273 S.E.2d 509 (N.C. App.1981) p. 132 Moreno v. Milk Train, Inc., 182 F.Supp.2d 590 (W.D.Tex.2002) p. 132 Payne v. The Western & Atlantic Railroad Co., 81 Tenn. 507 (1884) p. 25 Phillips v. Prarie Eye Ctr., 530 F.3d 22 (1st Cir.2008) p. 132 Runnels v. TMSI Contractors, Inc., 764 F.2d 417 (5th Cir.1985) p. 132 Shah v. Nu-Kote Intern. Inc., 898 F.Supp. 496 (E.D.Mich.1995), affirmed 106 F.3d 401 (6th Cir.1997) p. 132 Speckine v. Stanwick Intern. Inc., 503 F.Supp. 1055 (W.D.Mich.1980) p. 132

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TABLE OF TREATIES AND LEGISLATION

European Union Agreement between the European Community and the Kingdom of Denmark on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2005] OJ L299/62 Charter of Fundamental Rights of the European Union (consolidated version) [2012] OJ C326/391 Commission Decision 2009/26/EC of 22 December 2008 on the request from the United Kingdom to accept Regulation (EC) No 593/2008 of the European Parliament and the Council on the law applicable to contractual obligations (Rome I) (notified under document number C(2008) 8554) [2009] OJ L10/22 Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters [1972] OJ L299/32 Convention on jurisdiction and the enforcement of judgments in civil and commercial matters, done at Lugano on 16 September 1988 [1988] OJ L319/9 Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, done at Lugano on 30 October 2007 [2009] OJ L147/1 Convention on the accession of the Kingdom of Spain and the Portuguese Republic to the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters and to the Protocol on its interpretation by the Court of Justice with the adjustments made to them by the Convention on the accession of the Kingdom of Denmark, of Ireland and of the United Kingdom of Great Britain and Northern Ireland and the adjustments made to them by the Convention on the accession of the Hellenic Republic [1989] OJ L285/1 Convention on the law applicable to contractual obligations, opened for signature in Rome on 19 June 1980 [1980] OJ L266/1 Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions [1976] OJ L39/40 Council Directive 77/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses [1977] OJ L61/26

xxiii

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treaties and legislation

Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents [1986] OJ L382/17 Council Directive 89/391/EEC of 12 June 1989 on the introduction of measures to encourage improvements in the safety and health of workers at work [1989] OJ L183/1 Council Directive 91/533/EEC of 14 October 1991 on an employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship [1991] OJ L288/32 Council Directive 97/81/EC of 15 December 1997 concerning the Framework Agreement on part-time work concluded by UNICE, CEEP and the ETUC [1998] OJ L14/9 Council Directive 1999/70/EC of 28 June 1999 concerning the Framework Agreement on fixed-term work concluded by ETUC, UNICE and CEEP [1999] OJ L175/43 Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses [2001] OJ L82/16 Council Directive 2010/18/EU of 8 March 2010 implementing the revised Framework Agreement on parental leave concluded by BUSINESSEUROPE, UEAPME, CEEP and ETUC and Repealing Directive 96/34/EC [2010] OJ L68/13 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 [1997] OJ L18/1 Directive 2002/14/EC of the European Parliament and of the Council of 11 March 2002 establishing a general framework for informing and consulting employees in the European Community [2002] OJ L80/29 Directive 2002/73/EC of the European Parliament and of the Council of 23 September 2002 amending Council Directive 76/207/EEC on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions [2002] OJ L269/15 Directive 2003/88/EC of the European Parliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time [2003] OJ L299/9 Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast) [2006] OJ L204/23 Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market [2006] OJ L376/36 Directive 2008/94/EC of the European Parliament and of the Council of 22 October 2008 on the protection of employees in the event of the insolvency of their employer (codified version) [2008] OJ L283/36 Directive 2008/104/EC of the European Parliament and of the Council of 19 November 2008 on temporary agency work [2008] OJ L327/9 Directive 2009/38/EC of the European Parliament and of the Council of 6 May 2009 on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees (recast) [2009] OJ L122/28

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treaties and legislation

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Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2001] OJ L12/1 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) [2008] OJ L177/6 Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II) [2007] OJ L199/40 Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems [2004] OJ L166/1 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 (recast) [2012] OJ L351/1 Treaty on European Union (consolidated version) [2012] OJ C326/13 Treaty on the Functioning of the European Union (consolidated version) [2012] OJ C326/47

Hague Conference on Private International Law Convention on the law applicable to traffic accidents, 4 May 1971, 965 UNTS 416

Organisation of American States Inter-American Convention on the Law Applicable to International Contracts, 17 March 1994, 33 ILM 732

Austria 1978 Private International Law Act

Belgium Private International Law Code

Canada Quebec Civil Code

China Chinese Private International Law Act

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treaties and legislation France

Civil Code Labour Code

Germany 1975 Private International Law Act of the German Democratic Republic Collective Agreements Act Civil Code Commercial Code Federal Holidays Act General Act on Equal Treatment Introductory Act to the Civil Code Labour Courts Act Occupational Health and Safety Act Posting of Workers Act

Poland 1966 Private International Law Code

Switzerland Federal Private International Law Code

United Kingdom Civil Jurisdiction and Judgments Act 1982 Civil Jurisdiction and Judgments Order SI 2001/3928 Civil Procedure Rules Practice Direction 6B Commercial Agents (Council Directive) Regulations 1993/3053 Consumer Credit Act 1974 Contracts (Applicable Law) Act 1990 Contracts (Rights of Third Parties) Act 1999 Contracts of Employment Act 1963 Disability Discrimination Act 1995 Employment Equality (Religion or Belief) Regulations SI 2003/1660 Employment Equality (Sexual Orientation) Regulations SI 2003/1661 Employment Equality (Age) Regulations SI 2006/1031 Employment Protection (Consolidation) Act 1978 Employment Protection (Offshore Employment) Order SI 1976/766 Employment Relations Act 1999

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treaties and legislation

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Employment Relations (Offshore Employment) Order SI 2000/1828 Employment Tribunals (Constitution and Rules of Procedure) Regulations SI 2013/ 1237 Employment Tribunals Extension of Jurisdiction (England and Wales) Order SI 1994/ 1623 Equal Opportunities (Employment Legislation) (Territorial Limits) Regulations SI 1999/3163 Equal Pay Act 1970 Equality Act 2010 Equality Act 2010 (Offshore Work) Order SI 2010/1835 Equality Act 2010 (Work on Ships and Hovercraft) Regulations SI 2011/1771 European Communities Act 1972 Factories Acts 1961 Fixed-term Employees (Prevention of Less Favourable Treatment) Regulations SI 2002/ 2034 Health and Safety at Work Act 1974 Law Reform (Personal Injuries) Act 1948 National Minimum Wage Act 1998 National Minimum Wage (Offshore Employment) Order SI 1999/1128 Part-time Workers (Prevention of Less Favourable Treatment) Regulations SI 2000/ 1551 Patents Act 1977 Race Relations Act 1976 Right to Time Off for Study or Training Regulations SI 2001/2801 Senior Courts Act 1981 Sex Discrimination Act 1975 Trade Union and Labour Relations Act 1974 Trade Union and Labour Relations (Consolidation) Act 1992 Transfer of Undertaking (Protection of Employment) Regulations SI 1981/1794 Transfer of Undertakings (Protection of Employment) Regulations SI 2006/246 Patents Act 1977 Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order SI 2012/989 Working Time Regulations SI 1998/1833

United States of America Age Discrimination in Employment Act 1967 Americans with Disabilities Act 1990 Civil Rights Act 1964 Louisiana Civil Code Oregon Revised Statutes Texas Civil Practice and Remedies Code

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ABBREVIATIONS

1976 draft Regulation

1998 Lugano Convention

2007 Lugano Convention

Brussels Convention

Brussels I

Brussels I Recast

CJEU CJJA 1982 ERA 1996 EqA 2010 EU NMWA 1998 Posted Workers Directive

Posting of Workers Enforcement Directive

Amended Proposal for a Regulation of the Council on the Provisions of Conflict of Laws on Employment Relationships within the Community Convention on jurisdiction and the enforcement of judgments in civil and commercial matters, done at Lugano on 16 September 1988 Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, done at Lugano on 30 October 2007 Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in civil and commercial matters Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters 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 (recast) Court of Justice of the European Union Civil Jurisdiction and Judgments Act 1982 Employment Rights Act 1996 Equality Act 2010 European Union National Minimum Wage Act 1998 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 European Commission, ‘Proposal for a Directive of the European Parliament and of the Council on the

xxviii

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list of abberviations

Rome Convention

Rome I

Rome II

SDA 1975 TEU TFEU TULR(C)A 1992 TUPE 2006 WTR 1998

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Enforcement of Directive 96/71/EC concerning the Posting of Workers in the Framework of the Provision of Services’, COM(2012) 131 final Convention on the law applicable to contractual obligations, opened for signature in Rome on 19 June 1980 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) Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II) Sex Discrimination Act 1975 Treaty on European Union Treaty on the Functioning of the European Union Trade Union and Labour Relations (Consolidation) Act 1992 Transfer of Undertakings (Protection of Employment) Regulations 2006/246 Working Time Regulations 1998/1833

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1 Introduction

This book is about the legal regulation of transnational employment relationships in the private international law of the European Union (EU). Transnational employment relationships, that is, relationships between employer and employee that are connected to more than one country, are a common occurrence. People migrate from one country to another in search of a better life. Workers commute to a place of work in a neighbouring country. Employers post their employees, either temporarily or permanently, to a foreign place of business, branch, subsidiary or affiliate. Companies seek out workers abroad. Employees are ‘hired out’ to foreign businesses. There are workers whose occupations are ‘transnational’ by their very nature: commercial representatives covering territories of several countries, international transport workers such as lorry drivers, seamen, aircrew members, workers on offshore installations and so on. The diversity of factual patterns under which transnational employment relationships arise suggests how widespread a social phenomenon they are, constantly growing in size and significance. This is a consequence of globalisation and the resulting interconnectedness and interdependence of markets, internationalisation of the production of goods and supply of services, rise of transnational corporations, increased international mobility of workers and the growth of the service industry. Looking particularly at the EU, the freedoms of movement of workers, of establishment and to provide services guaranteed by the Treaty on the Functioning of the EU (TFEU)1 ensure the elimination of obstacles within the EU to the creation of factual patterns referred to above. Indeed, the growing number and significance of transnational employment relationships is reflected in the recent surge in the number of judgments concerning such relationships delivered by the Court of 1

Arts. 45, 49 and 56, respectively, of the TFEU (consolidated version) [2012] OJ C326/47.

1

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Justice of the EU (CJEU) and the courts of the United Kingdom (UK) and other Member States. The various types of transnational employment relationships are almost universally understood, from a legal point of view, by reference to the legal institution of the contract of employment. But a truly international legal regulation of transnational employment relationships does not exist. International organisations such as the United Nations, International Labour Organisation and the Council of Europe have not achieved and cannot be expected to achieve in the foreseeable future a comprehensive worldwide or regional unification or harmonisation of labour laws. This does not mean, however, that legal instruments adopted under the auspices of such international organisations do not have a significant impact on domestic labour law systems. For example, the European Convention on Human Rights and the case law of the European Court of Human Rights are of particular importance for the member states of the Council of Europe. In the EU, the Union and the Member States share the competence to legislate in the social sphere.2 Although some important issues, namely pay, the right of association and the right to take industrial action, are expressly excluded from its competence, the EU is allowed to, and does, legislate in certain other areas of labour law. The main objectives of EU labour legislation have traditionally been the removal of obstacles to the free movement of workers, fight against discrimination and the prevention of actual or potential negative consequences of the creation of an internal market that are captured by the terms ‘social dumping’ and regulatory ‘race to the bottom’.3 These objectives underlie the Treaty of Rome’s provisions on free movement and equal pay between men and women, which have been given effect through a number of instruments of EU law, and the labour law directives of the 1970s (on collective redundancies, transfers of undertakings and employer insolvency) and the 1990s (introducing minimum standards in the areas of health and safety, including working time, and on posting of workers). The turn of 2 3

Title X TFEU, in particular Art. 153. H. Collins, ‘Justifying European Employment Law’ in S. Grundman, W. Kerber and S. Weatherhill (eds.), Party Autonomy and the Role of Information in the Internal Market (Berlin: Walter de Gruter, 2001) 205; H. Collins, ‘Social Dumping, Multi-level Governance and Private Law in Employment Relationships’ in D. Leczykiewicz and S. Weatherill (eds.), The Involvement of EU law in Private Law Relationships (Oxford: Hart, 2013) 223. See generally C. Barnard, EU Employment Law, 4th edn (Oxford University Press, 2013), Ch. 1.

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the millennium brought a shift in policy, with ‘flexicurity’, namely the combination of the ideas of flexibility in labour markets and employment security (rather than job security) as vehicles for greater economic efficiency and competitiveness of businesses, becoming the dominant objective. It is in this context that legal instruments concerning telework, part-time, fixed-term and temporary agency work were adopted, with some of these instruments being negotiated between European employers’ associations and trade unions. Another important objective of EU law in the social sphere has been the protection of fundamental rights, which was recently given a strong impetus by granting the Charter of Fundamental Rights of the EU the same legal value as the Treaty on European Union (TEU) and the TFEU.4 Apart from the areas of fundamental economic freedoms, equality and fundamental rights, EU labour legislation is contained in directives that do not lead to the uniformity of the Member States’ labour laws. Directives lay down goals, usually in the form of minimum standards, that have to be achieved by the Member States through domestic implementing measures. Although their domestic implementations differ across the EU, as does their interpretation by domestic courts, EU labour directives have at least two things in common: the focus of these directives and domestic implementing measures is on individual employment relationships, which contributes to the individualisation of the Member States’ labour laws; implementation tends to occur through legislation, which results in the juridification of domestic labour laws.5 A corollary of these two developments is the proliferation of individual, including transnational, employment disputes. Domestic regulation of transnational employment relationships thus remains of primary importance at both the international and EU levels. Although the legal institution of the contract of employment is almost universal, domestic labour law systems remain widely divergent in their regulatory objectives, techniques and content. Legal diversity is a reflection of the unique social, political, economic and cultural textures in different countries. In the EU, for example, Nordic countries, in particular Denmark and Sweden, represent, in many respects, one end of the spectrum. Here, most of the important issues are regulated by collective bargaining at different levels. France is at the other end with 4

5

Consolidated versions of the Charter and TEU are published in [2012] OJ C326/391 and [2012] OJ C326/13, respectively. H. Collins, ‘Social Dumping’.

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comprehensive and detailed regulation of the employment relationship, often backed up by public law sanctions, but also with high levels of collective bargaining coverage. The UK represents a third model, which is characterised by minimum employment standards laid down by legislation but also considerable flexibility with regard to the content of the employment relationship, with individual employment litigation being the main means of monitoring and enforcing statutory and contractual employment standards. The extent and depth of legal diversity is the main reason for the exclusion of some of the most important issues from the legislative competence of the EU and the lack of regulation of many other important issues like unfair dismissal. A consequence of this blend of different levels and sources of regulation is that it is often difficult to determine the rules that govern a particular transnational employment relationship. Some rules pertain to the internal aspects of the employment relationship, that is, the rights and obligations of the parties. Others concern the legal environment in which such relationships are created and performed. The fundamental economic freedoms, for example, guarantee the opening up of labour and services markets within the EU, thus expanding the potential area of operation of covered workers and service providers. The multilevel system of governance that is the EU6 leads to three different types of conflict of laws. First, there are ‘vertical’ conflicts between EU law and the Member States’ domestic laws, where the former trumps the latter. Second, there are ‘horizontal’ conflicts, which arise in horizontal relationships between employers and employees because of the diversity of the Member States’ labour laws. Finally, there are ‘diagonal’ conflicts that arise in situations in which the EU is competent to regulate one aspect of the problem, for example, freedom of establishment and to provide services, whereas the Member States remain competent to regulate another aspect, for example, industrial action. The central argument of this book is that private international law matters in this multilevel system of governance. Individual transnational

6

See C. Joerges, ‘European Challenges to Private Law: On False Dichotomies, True Conflicts and the Need for a New Constitutional Perspective’ (1998) 18 Legal Studies 146; C. Joerges, ‘The Challenges of Europeanization in the Realm of Private Law: A Plea for a New Legal Discipline’ (2004) 14 Duke International and Comparative Law Journal 149; C. Joerges, ‘Unity in Diversity as Europe’s Vocation and Conflicts Law as Europe’s Constitutional Form’, LEQS Paper No. 28/2010 (December 2010, revised version: April 2013), available at www.lse.ac.uk/europeanInstitute/LEQS/LEQSPaper28.pdf.

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employment disputes typically raise issues of ‘horizontal’ conflicts of laws and sometimes of ‘vertical’ and ‘diagonal’ conflicts. It goes without saying that the outcome of such disputes may depend on the competent court, applicable laws and the possibility of recognition and enforcement of judgments abroad. But looking beyond its role in the resolution of individual transnational employment disputes, the European private international law of employment also has an important systemic role in coordinating and maintaining the diversity of the Member States’ labour law systems, while aiming to contribute to the enforcement of basic principles and rights of EU law and the safeguarding of the objectives and values of EU law from non-EU elements. As such, the European private international law of employment is a crucial accompaniment of key constitutional principles of EU law of subsidiarity and proportionality in the vertical allocation of regulatory (i.e. legislative and adjudicatory) authority in the social sphere, as well as the EU law principles of supremacy and effectiveness. The objectives of private international law in the EU context can, therefore, be aptly summarised as pursuing ‘unity in diversity’, which was the motto of the unsuccessful 2004 draft Treaty establishing a Constitution for Europe. Surprisingly, however, the importance of the European private international law of employment is matched by the apparent lack of interest in this legal discipline by many of those interested in the role of European private law in general in achieving social justice.7 The rules of the European private international law of employment are contained in the following legal instruments: • 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 (recast) (Brussels I Recast),8 which superseded, as of 10 January 2015, Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters (Brussels I),9 which, in turn, superseded the Convention of 27 September 1968 on jurisdiction and the enforcement of judgments in 7

8

For example, the Manifesto of the Study Group on Social Justice in European Private Law does not contain a single reference to either private international law or conflict of laws: Study Group on Social Justice in European Private Law, ‘Social Justice in European Contract Law: A Manifesto’ (2004) 10 European Law Journal 653. See also B. Bercusson and others, ‘A Manifesto for Social Europe’ (1997) 3 European Law Journal 189. 9 [2012] OJ L351/1. [2001] OJ L12/1.

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civil and commercial matters (Brussels Convention).10 Denmark is the only Member State not bound by the two regulations. It has, however, entered into an agreement with the EU, thus ensuring the application of the provisions of Brussels I in Denmark.11 Closely related are the Convention on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters, done at Lugano on 30 October 2007 (2007 Lugano Convention),12 superseding the Convention on jurisdiction and the enforcement of judgments in civil and commercial matters, done at Lugano on 16 September 1988 (1988 Lugano Convention).13 The two Lugano Conventions extend the European system of adjudicatory jurisdiction and recognition and enforcement of judgments to three European Free Trade Association states, namely Iceland, Norway and Switzerland. • 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),14 superseding, with regard to contracts concluded after 17 December 2009, the Convention on the law applicable to contractual obligations, opened for signature in Rome on 19 June 1980 (Rome Convention).15 Denmark is not bound by Rome I, but only by the Rome Convention. • Regulation (EC) No 864/2007 of the European Parliament and of the Council of 11 July 2007 on the law applicable to non-contractual obligations (Rome II),16 applicable from 11 January 2009 to events giving rise to damage after that date. Denmark is not bound by Rome II. • 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 (Posted Workers Directive).17 This directive will soon be supplemented by a directive on the enforcement 10

11

12 13 14

15 16

[1972] OJ L299/32, implemented into UK law by the Civil Jurisdiction and Judgments Act 1982 (CJJA 1982). Agreement between the European Community and the Kingdom of Denmark on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters [2005] OJ L299/62. [2009] OJ L147/1, implemented into UK law by CJJA 1982. [1988] OJ L319/9, implemented into UK law by CJJA 1982. [2008] OJ L177/6. The UK decided to opt into Rome I: Commission Decision 2009/26/EC of 22 December 2008 on the request from the United Kingdom to accept Regulation (EC) No 593/2008 of the European Parliament and the Council on the law applicable to contractual obligations (Rome I) (notified under document number C(2008) 8554) [2009] OJ L10/22. [1980] OJ L266/1, implemented into UK law by the Contracts (Applicable Law) Act 1990. 17 [2007] OJ L199/40. [1997] OJ L18/1.

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of the Posted Workers Directive (Posting of Workers Enforcement Directive).18 • The provisions of the TFEU concerning the fundamental economic freedoms, which are based on the principles of mutual recognition and the country of origin, also influence the choice of the applicable law and can, therefore, be regarded as ‘functional equivalents’19 of the listed choice-of-law instruments in matters falling within their scope. The European private international law instruments expressly pursue the objective of protection of employees as weaker contractual parties. Recital 18 of the Brussels I Recast states: ‘in relation to . . . employment contracts, the weaker party should be protected by rules . . . more favourable to his interests than the general rules’. In essentially identical words, Recital 23 of Rome I also endorses the objective of protection of employees.20 Somewhat differently, Recital 5 of the Posted Workers Directive speaks of ‘a climate of fair competition and measures guaranteeing respect for the rights of workers’. These statements of purpose can be seen as a confirmation of the general principle of protection of weaker parties in EU private law.21 At least regarding the Brussels I Recast and Rome I, the objective seems clear. The special private international law rules concerning employment should grant protection to the employee and be more favourable to his or her interests than the general rules. This view of the objective of protection of employees, focused on the protection and benefit that individual employees should receive vis-à-vis their employers, is shared by the CJEU. This court has consistently held that jurisdiction in employment 18

19

20

21

European Commission, ‘Proposal for a Directive of the European Parliament and of the Council on the Enforcement of Directive 96/71/EC concerning the Posting of Workers in the Framework of the Provision of Services’, COM(2012) 131 final. This directive is very likely to be adopted in the near future. It is definitely adopted by the European Council: European Commission, ‘Commission Welcomes Council Adoption of Posting of Workers Enforcement Directive’ (13 May 2014), available at http://europa.eu/rapid/ press-release_IP-14–542_en.htm. M. Fallon and J. Meeusen, ‘Private International Law in the European Union and the Exception of Mutual Recognition’ (2002) 4 Yearbook of Private International Law 37; R. Michaels, ‘EU Law as Private International Law? Reconceptualising the Country-ofOrigin Principle as Vested-Rights Theory’ (2006) 2 Journal of Private International Law 195, pp. 210–13. See also European Commission, ‘Proposal for a Regulation of the European Parliament and the Council on the Law Applicable to Non-Contractual Obligations (Rome II): Explanatory Memorandum’, COM(2003) 427 final, p. 13. N. Reich, General Principles of EU Civil Law (Cambridge, Antwerp, Portland: Intersentia, 2014), Ch. 2.

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matters should be given to the courts for the habitual place of work ‘as that is the place where it is least expensive for the employee to commence or defend court proceedings’.22 Furthermore, in explaining the meaning of the objective of protection of employees, the CJEU has often cited with approval23 the following part of the Giuliano-Lagarde Report on the Rome Convention: the question was one of finding a more appropriate arrangement for matters in which the interests of one of the contracting parties are not the same as those of the other, and at the same time to secure thereby more adequate protection for the party who from the socio-economic point of view is regarded as the weaker in the contractual relationship.24

It, therefore, seems clear that the interests of employees in minimising litigation costs and maximising their welfare hold sway over the competing interests of employers. A way for employers engaged in transnational employment to achieve the greatest business efficiency is to insert clauses into employment contracts subjecting all disputes with their employees to their own courts and to their own laws. But European private international law does not permit this. To protect individual employees, the Brussels I Recast and Rome I restrict party autonomy and mandate the jurisdiction of the courts and the application of the law considered the most appropriate for the employee. The focus of the Brussels I Recast and Rome I on individual employment relationships is in line with the mentioned trend of individualisation and juridification of the Member States’ labour laws under the influence of EU law. It also accords with the traditional conception of private international law as a field of law concerned with resolving individual private disputes and achieving private justice and fairness in individual cases. Thus, in the introductory pages of their treatises, the authors of Dicey, Morris and Collins on the Conflict of Laws and Cheshire, North and Fawcett: Private International Law find justification for private international law in that it implements ‘the reasonable and legitimate expectations of the parties to a transaction or an occurrence’,25 in the 22

23

24

25

Most recently in Case C-437/00 Giulia Pugliese v. Finmeccanica SpA, Betriebsteil Alenia Aerospazio [2003] ECR I-3573; [2004] All ER (EC) 154, [18]. Most recently in Case C-64/12 Anton Schlecker v. Melitta Josefa Boedeker, 12 September 2013, nyr, [33]. M. Giuliano and P. Lagarde, ‘Report on the Convention on the Law Applicable to Contractual Obligations’ [1980] OJ C282/1, p. 25. L. Collins (gen. ed.), Dicey, Morris and Collins on the Conflict of Laws, 15th edn (London: Sweet & Maxwell, 2012), [1–005].

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need to avoid ‘grave injustice and inconvenience’ that would arise if English courts refused to apply foreign law and recognise and enforce foreign judgments in appropriate cases,26 and in the ‘desire to do justice’ to the parties.27 The statements of purpose found in the recitals to the Brussels I Recast and Rome I and in the CJEU case law disclose the intention to achieve justice and fairness in individual transnational employment cases by favouring the interests of employees over those of employers. Authors writing about the European private international law of employment also usually discuss the protection of employees in similar terms. But such an individualistic, bipolar view of the objective of protection of employees oversimplifies the structure and nature of the interests involved in transnational employment relationships. By focusing on the relative positions of the parties to such relationships, this view does not sufficiently take into account the collective, public, systemic interests involved concerning the legal environment in which such relationships are created and performed. Furthermore, by focusing exclusively on the protection of employees as weaker parties, this view fails to consider other objectives of modern employment regulation such as social inclusion, greater economic efficiency and the protection of human rights in the workplace. Several observations of importance for private international law can be made when one shifts the focus from the individualistic to the systemic view of the objective of protection of employees. On the one hand, states usually have an interest in safeguarding their existing regulatory objectives, techniques and employment standards, so they often apply these to anyone carrying out work within their territory, regardless of the law governing the employment contract and the regulatory claims of other states. On the other hand, the fact that the regulation of employment takes place primarily at domestic level means that labour law is one of the factors on the basis of which countries compete for attracting and retaining investments and attempt to increase the competitiveness of their economies, potentially by ‘racing to the bottom’. States thus often have an interest in the application of their employment standards to economic operators established within their territory, even when those operators operate abroad and post workers abroad to that end. Not 26 27

Ibid., [1–006]–[1–007]. J. J. Fawcett and J. M. Carruthers, Cheshire, North and Fawcett: Private International Law, 14th edn (Oxford University Press, 2008), p. 5.

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infrequently, the legitimate interests of states clash. This is particularly visible in the EU, where a significant gap exists between the level of wages and other standards among Member States and where the freedoms of establishment and to provide services are guaranteed. The Posted Workers Directive, which is designed to deal with the competing regulatory claims of different Member States, is an example of an instrument that adopts the systemic perspective of the objective of protection of employees, as is clear from its Recital 5. The following questions thus arise. What does the objective of protection of employees really entail in the European private international law of employment? Should the private interests of the parties to transnational employment relationships be the prevalent or even exclusive concern? What roles do and should the collective, public, systemic interests involved have in the process of making and interpreting private international law rules concerning employment? These questions define the first theme of this book. The argument advanced here is that the individualistic view of the objective of protection of employees, seemingly favoured by the drafters of the Brussels I Recast and the Rome Regulations, gives an incomplete picture of the European private international law of employment. The objective of this field of law should not be to unreservedly favour the interests of employees over those of employers, but to adequately allocate and safeguard the regulatory authority of states in the field of labour law, primarily in the EU context. Differences among the Member States’ labour laws are not accidental. They reflect a conscious decision to refrain from complete unification of labour law in Europe, thereby respecting national peculiarities. A mechanism is needed to coordinate and maintain the diversity of domestic labour law systems existing within the EU and at the same time to safeguard the objectives and values of EU law. The European private international law of employment is that mechanism. In identifying and contrasting the individualistic and systemic objectives of private international law, I was influenced by the work of Mills.28 For the sake of clarity, I should note that I do not subscribe to Mills’ view that there is a confluence of private and public international law. I am of the opinion that private international law is a domestic or, in the case of the EU, a quasi-federal law, separate from public international law. I do 28

A. Mills, The Confluence of Public and Private International Law: Justice, Pluralism and Subsidiarity in the International Constitutional Ordering of Private Law (Cambridge University Press, 2009).

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agree with Mills, however, that European private international law performs a ‘public’, ‘regulatory’ function of allocating the regulatory authority of states, primarily the Member States, and thereby frames and guides many social, political, economic and cultural processes. Other authors, such as Michaels, Muir Watt and Wai, have also pointed out the systemic role of private international law, one of ‘adequate’, ‘appropriate’, ‘optimal’ or ‘proper’ allocation of regulatory authority.29 By focusing not only on the systemic role of one particular field of European private international law, that of employment, but also on the content of the relevant rules and making proposals for their improvement, this book builds on the foundations laid down by these authors. Finally, I was influenced by the work of Collins on the European Civil Code.30 The essence of his argument is that the EU cannot evolve into a more effective system of governance unless it creates a cohesive community, an integrated transnational civil society with a post-national identity. Such a community requires an economic and social constitution, which would fix in a fairly permanent form the structures for a particular kind of economic and social system that would endeavour to promote a Europe-wide consensus of values regarding fairness and social justice. Private law is a key ingredient in the creation of such a constitution. But unlike Collins, who sees the European private international law of employment as a ‘potentially deleterious’ force,31 my argument is that this field of law is an essential building block of an economic and social constitution. It is expected that the analysis of the European private international law of employment through these lenses will reveal something about the 29

30

31

R. Michaels, ‘New European Choice-of-Law Revolution’ (2008) 82 Tulane Law Review 1607; H. Muir Watt, ‘Choice of Law in Integrated and Interconnected Markets: A Matter of Political Economy’ (2003) 9 Columbia Journal of European Law 383; H. Muir Watt, ‘Integration and Diversity: The Conflict of Laws as a Regulatory Tool’ in F. Cafaggi (ed.), The Institutional Framework of European Private Law (Oxford University Press, 2006) 107; R. Wai, ‘Transnational Liftoff and Juridical Touchdown: The Regulatory Function of Private International Law in an Era of Globalisation’ (2002) 40 Columbia Journal of Transnational Law 209. H. Collins, ‘A Workers’ Civil Code? Principles of European Contract Law Evolving in EU Social and Economic Policy’ in M. W. Hesselink (ed.), The Politics of a European Civil Code (The Hague: Kluwer, 2006) 55; H. Collins, The European Civil Code: The Way Forward (Cambridge University Press, 2008); H. Collins, ‘The European Economic Constitution and the Constitutional Dimension of Private Law’ (2009) 5 European Review of Contract Law 71; H. Collins, ‘Why Europe Needs a Civil Code’ (2013) 21 European Review of Private Law 907. H. Collins, ‘The Impossible Necessity of European Labour Law’ in S. Muller and others (eds.), The Law of the Future and the Future of Law (Oslo: Torkel Opsahl Academic Publisher, 2011) 453, p. 463; H. Collins, The European Civil Code, pp. 10–12.

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nature of this legal discipline as a whole. If the European private international law of employment indeed performs such a systemic role, that shows that the division between the ‘private’ and the ‘public’, traditionally perceived as embedded in the foundations of the discipline and even expressed in its very name, is fading away. This is not to say that there is a confluence of private and public international law. This is to say that private international law is becoming increasingly ‘publicised’ through the functions it performs. The purpose of this book is not to be primarily an exploration of the theory of private international law. There is a second theme concerning the content of the European private international law of employment. Is the European private international law of employment adequately performing its systemic role? To answer this question, a detailed descriptive and normative analysis of the current European private international law rules concerning employment is required. The insights obtained by exploring the first theme provide the necessary theoretical framework. The rules of the Brussels I Recast, Rome I and Rome II require some, mainly technical, changes. But the interaction between these instruments and the fundamental economic freedoms guaranteed by the TFEU, largely regulated by the Posted Workers Directive, is a reason for concern. As things stand, service providers from Member States with relatively low employment standards that post workers to Member States with relatively high standards for the purpose of providing services there remain, as a matter of principle, subject to the labour legislation of their home countries. They must comply with only a limited range and type of the host Member State standards and are thus capable of undercutting local competitors. Such intra-EU movement of services is often perceived as ‘unfair competition’ and ‘social dumping’ in affluent host Member States. Whether such downward pressures on the host Member State labour law systems are acceptable goes to the core of the question of what social model is best for Europe. From being a cause of the problem of the posting of workers in Europe, can the European private international law of employment develop into a part of the solution? The ‘Europeanisation’ of the private international law of employment necessarily leads to significant changes in the traditional perceptions and rules in this field of law in individual Member States. Whereas the European private international law of employment is concerned with coordinating and maintaining the diversity of European domestic labour law systems and safeguarding the objectives and values of EU law, domestic private international law regimes traditionally dealt solely

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introduction

13

with protecting their own regulatory objectives, techniques and employment standards. But the Member States cannot pursue purely domestic interests anymore. They must cooperate to achieve the supranational objectives of the European private international law of employment. The extent of the impact of this field of law on the private international law of employment of one Member State, namely the UK, forms the third theme of this book. Although the focus here is on the law of England and Wales (for which a shorthand expression ‘English law’ is hereinafter used), the discussion and the conclusions reached are also potentially relevant for the laws of Scotland and Northern Ireland and, more broadly, for other Member States. The European private international law of employment does not share the logic of the traditional English approach to conflict of jurisdictions and choice of law in employment matters. The Brussels I Recast, with its special jurisdictional rules concerning employment and its rules on the recognition and enforcement of judgments, is an obvious example of the changes brought about in English conflict of laws. So are the effects of the principles of mutual recognition and the country of origin. But Rome I and Rome II seem to have an even greater, but much subtler and largely unrecognised, impact. In English employment law the vast majority of claims are based on the breach of employment legislation by the employer. The minority of claims are brought, either by the employee or the employer, in contract and/or tort. Different considerations apply to the three types of claim in substantive law. They are even heard in different courts: statutory claims go to the employment tribunal; other claims go to ordinary courts, although the jurisdiction of the employment tribunal has been extended to include some contractual claims.32 Traditionally, these claims also enjoy a separate choice-of-law treatment. Whether an employee falls within the territorial scope of a statutory right forming part of English law is currently approached as purely a matter of statutory construction, completely detached from the choice-of-law process.33 Contractual 32

33

Employment Tribunals Extension of Jurisdiction (England and Wales) Order SI 1994/ 1623. A terminological issue should be mentioned here. The question of whether an employee falls within the territorial scope of a statutory right forming part of English law is often described as one of jurisdiction. ‘Jurisdiction’ in this sense, however, is not the same as ‘jurisdiction’ for the purposes of the Brussels I Recast. ‘Jurisdiction’ in the first sense refers to the fact that employment tribunals are not courts of general jurisdiction – they can only hear statutory employment claims and, exceptionally, contractual claims determined by the Employment Tribunals Extension of Jurisdiction (England and Wales) Order. On the

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introduction

claims are subject to the choice-of-law rules of Rome I. With regard to tortious claims, the parties are traditionally allowed to proceed either in tort or in contract (for breach of an implied term), or both, and to argue their case under the law applicable to the tort and/or the law applicable to the contract. Rome I and Rome II, however, recognise only two basic categories of claim for choice-of-law purposes: claims based on the breach of a contractual obligation, triggering the application of Rome I, and claims based on the breach of a non-contractual obligation, triggering the application of Rome II. The conceptual differences between English conflict of laws and European private international law in this area raise complex difficulties. A central question is how the traditionally perceived statutory claims, which, in English conflict of laws, are understood as not being subject to choice-of-law rules but as defining their own scope of application, fit within the ‘European’ approach? Given that the two regulations cover all obligations, it seems that the choice-of-law process must have some impact on resolving the question whether an employee engaged in transnational employment can claim under a statute forming part of English law. Furthermore, the notions of contractual and noncontractual obligations for the purposes of the two regulations do not necessarily correspond to the traditional English concepts of contract and tort. Some of the traditionally perceived tortious claims may have to be classified as contractual for the purposes of Rome I. Depending on the extent of the changes, that is, on whether EU law still allows English courts to pursue the traditional approach or whether it mandates a radically different approach that almost completely merges contractual, statutory and tortious claims into one claim for choice-of-law purposes and subjects them to the same governing law, thus largely abolishing concurrent causes of action in choice of law, one could talk either of an evolution or of a tectonic shift in English conflict of laws in this field. Although the focus here is on the private international law of employment, the broadest implication of this analysis is that Rome I and Rome II may have profound impact on the traditional approach to conflict of laws issues in England in all fields of law in which the problems of the other hand, ‘jurisdiction’ for the purposes of the Brussels I Recast refers to the concept of adjudicatory jurisdiction in private international law, i.e. the power of a law-applying agency to adjudicate a matter involving significant non-domestic elements. This dual meaning of the term ‘jurisdiction’ in the English private international law of employment caused some confusion in the past: see L. Merrett, ‘The Extra-Territorial Reach of Employment Legislation’ (2010) 39 Industrial Law Journal 355, pp. 357–9.

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15

territorial scope of statutes and concurrence of contractual and other causes of action arise. This discussion is also potentially relevant for the laws of other Member States. This book is organised in nine chapters. Chapter 2 starts by exploring the idea of protection of employees, from the standpoint of private international law theory. It is argued that the individualistic view of this objective is too narrow a view and that the European private international law of employment plays an important systemic role. Chapters 3 to 5 analyse in detail the rules of the Brussels I Recast and Rome I. Chapter 3 deals with the question of which work relations fall within the scope of the special rules concerning employment of the two regulations. It is shown that the wide and inclusive scope of these rules can be perceived as an attempt both to provide private international law protection to all workers in genuine need of protection and to allocate and safeguard the regulatory authority of states that have intermediate legal categories of dependent self-employed workers or ascribe employer responsibilities to multiple employing entities. In this sense, the special rules of the Brussels I Recast and Rome I have a potential to adequately deal with the phenomena of vertical disintegration of production and the multiplication of employing entities, which result in the proliferation of atypical employment relationships. The rules concerning employment of the Brussels I Recast are described and critically analysed in Chapter 4, which deals with jurisdiction in employment matters. Chapter 5 examines the special choice-of-law rules for employment contracts. The shortcomings of the rules of the Brussels I Recast and Rome I are exposed in these two chapters and certain amendments are proposed. Chapters 6 and 7 focus on the third theme of this book, namely the extent of the impact of the European private international law of employment on the English conflict of laws of employment. Chapter 6 examines the impact of Rome I on statutory employment claims brought in English courts, whereas Chapter 7 explores the joint effect of Rome I and Rome II on claims traditionally perceived as being of a tortious nature. It is argued that the two regulations have introduced profound changes in the traditional perceptions and rules in the English conflict of laws of employment by almost completely merging contractual, statutory and tortious claims into one claim for choice-of-law purposes and, furthermore, almost completely abolishing concurrent causes of action in choice of law. This is explained as a consequence of the regulatory function of Rome I, which seeks to channel the legislative authority over an employment contract, in principle, to one country only, that of the employee’s origin.

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The interaction between the instruments of the European private international law of employment and the fundamental economic freedoms guaranteed by the TFEU is dealt with in Chapter 8. It is shown that the European private international law of employment is a cause of the problem of the posting of workers in Europe and, as things stand, does not assist in its resolution. Chapter 9 concludes by bringing together the conclusions of the preceding chapters.

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2 Protection of employees in private international law

Seeing that Mr Sayers put his faith in the company, I trust that the company will play fair by him and grant him just compensation for his injuries. Lord Denning MR1

When Lord Denning made this statement, which happened shortly before the UK joined the European Communities, English conflict of laws did not regard employees as a category of parties requiring any special treatment.2 Conflicts rules applied equally to commercial and employment matters. If any protection was to be given to employees, it was in the realm of substantive law: either through employment law provisions of the applicable law, domestic overriding employment statutes or applicable collective agreements. Sayers3 exposed the inadequacy of this approach. Here, neither the governing law (Dutch) nor the lex fori (English) granted protection to the claimant employee. He fell outside the territorial scope of their employment legislation because his work was performed in Nigeria. Nigerian law, however, was disregarded for not being sufficiently closely connected. There were no applicable collective agreements. Mr Sayers thus found himself in a legal vacuum, without statutory protection to which he would have been entitled had he worked in England or the Netherlands, presumably also had Nigerian law been found applicable. All he could do was ‘put his faith in the company’ and ‘trust that the company [would] play fair by him’. Sayers illustrates how classical private international law operated before the advent of the European regime. Since neither England nor the Netherlands had an interest in protecting their own regulatory objectives and employment standards, their employment legislation did not apply. Nigerian law, which presumably had such an interest, was disregarded on a rather 1 2

3

Sayers v. International Drilling Co. NV [1971] 1 WLR 1176, 1182. See J. H. C. Morris (ed.), Dicey and Morris on the Conflict of Laws, 8th edn (London: Stevens, 1967). See n 1.

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technical point. Adequate allocation and safeguarding of regulatory authority was not a concern for classical private international law. Inspired by the idea of protection of employees, many modern private international law instruments contain special rules concerning employment, such as Articles 20–23 of the Brussels I Recast and Article 8 of Rome I. The recitals of the two regulations clarify that these rules pursue the objective of protection of employees as weaker contractual parties,4 which has been confirmed by the CJEU on many occasions.5 As mentioned in the introductory chapter, the drafters of the Brussels I Recast and the Rome Regulations seem to favour an individualistic view of the objective of protection of employees, which focuses on achieving justice and fairness in individual transnational employment cases by favouring the interests of employees over those of employers. But such a view oversimplifies the structure and nature of the interests involved in transnational employment relationships. This chapter unpacks the objective of protection of employees in private international law. The first section presents the reasons for protecting employees engaged in transnational employment. The individualistic view of the objective of protection of employees can be explained, to a large extent, as a response to the shortcomings of party autonomy in transnational employment contracts. But private international law rules concerning employment have a more important function than just protecting employees from the abuse of party autonomy by their employers. These rules also perform a systemic role of allocating and safeguarding the regulatory authority of states in the field of labour 4

5

Recital 18 Brussels I Recast; Recital 23 Rome I. See also European Commission, ‘Proposal for a Regulation of the European Parliament and the Council on the Law Applicable to Non-Contractual Obligations (Rome II): Explanatory Memorandum’, COM(2003) 427 final, p. 13; Recital 5 Posted Workers Directive. Case 133/81 Roger Ivenel v. Helmut Schwab [1982] ECR 1891; [1983] 1 CMLR 538, [14], [16], [19]; Case C-125/92 Mulox IBC Ltd. v. Hendrick Geels [1993] ECR I-4075; [1993] ILPr 668, [18]–[19]; Case C-383/95 Petrus Wilhelmus Rutten v. Cross Medical Ltd. [1997] ECR I-57; [1997] All ER (EC) 121, [17], [20], [22]; Case C-37/00 Herbert Weber v. Universal Ogden Services Ltd. [2002] ECR I-2013; [2002] QB 1189, [40], [49]; Case C-437/00 Giulia Pugliese v. Finmeccanica SpA, Betriebsteil Alenia Aerospazio [2003] ECR I-3573; [2004] All ER (EC) 154, [18], [22]; Case C-462/06 Glaxosmithkline and Laboratoires Glaxosmithkline v. Jean-Pierre Rouard [2008] ECR I-3965; [2008] ICR 1375, [17]; Case C-29/10 Heiko Koelzsch v. État du Grand Duchy of Luxemburg [2011] ECR I-1595, [40]–[42], [46]; Case C-384/10 Jan Voogsgeerd v. Navimer SA [2011] ECR I-13275, [35]; Case C-154/11 Ahmed Mahamdia v. République algérienne démocratique et populaire, 19 July 2012, nyr, [44], [46], [64]; Case C-64/12 Anton Schlecker v. Melitta Josefa Boedeker, 12 September 2013, nyr, [33], [34].

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2.1 reasons for protecting employees in private law 19

law. Although the legitimate interests of states in protecting their regulatory objectives, techniques and employment standards have always had an impact on the making and interpretation of private international law rules concerning employment, such interests take centre stage in today’s world. The systemic role of this field of law is particularly evident in the EU context. After presenting the reasons for protecting employees in private international law, an account of employees who actually merit such protection follows. Next, the various ways in which the objective of protection of employees shapes the design of choice-of-law and jurisdictional rules are described. The examination undertaken in this chapter is conducted from a comparative perspective and takes into account both traditional and modern private international law scholarship. The purpose is to provide a theoretical background for the assessment of the solutions of EU law in subsequent chapters.

2.1 Reasons for protecting employees in private international law Not so long ago, a salient feature of private international law was its neutrality.6 Compared to other branches of the law, the impact of social facts and policies on the development and operation of classical private international law was minimal. Choice-of-law rules decided which domestic law was to apply in a particular case and for this purpose used abstract legal categories (e.g. contract) and connecting factors (e.g. party autonomy, place of contracting, place of performance). The idea behind this jurisdiction-selecting approach, grounded by von Savigny in the nineteenth century, was to find a legal system in which the legal relationship had its seat or centre of gravity.7 The search for such a legal system was perceived as a specific ‘conflicts justice’, distinguished from the ‘material justice’ of substantive law.8 The protection of employees was a 6

7

8

K. Zweigert, ‘Some Reflections on the Sociological Dimensions of Private International Law or What Is Justice in Conflict of Laws?’ (1973) 44 University of Colorado Law Review 283. F. K. von Savigny, Private International Law: A Treatise on the Conflict of Laws and the Limits of Their Operation in Respect of Place and Time, W. Guthrie trans. (Edinburgh: Clark, 1869). S. Symeonides, ‘Material Justice and Conflicts Justice in Choice of Law’ in P. Borchers and J. Zekoll (eds.), International Conflict of Laws for the Third Millennium: Essays in Honour of Friedrich K. Juenger (Ardsley, NY: Transnational Publishers, 2001) 125; S. Symeonides, ‘Result-Selectivism in Private International Law’ (2008) 3 Romanian Journal of Private International Law and Comparative Private Law 1.

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matter primarily left to the employment law provisions of the applicable law. According to Rabel, To care for social prosperity is the responsibility of the municipal private laws, which have to resolve the merits of each particular problem. The principle, jus suum cuique tribuere, instructs legislators and judges to ponder carefully private and public interests. But this is what each private law does for itself; the function of private international law rules is to choose the applicable law with all its evaluations whatever they may be . . . But, as things are, to inject national policies directly into conflicts law, will destroy it.9

Similarly, no special jurisdictional treatment was traditionally given to employees or other weaker parties.10 This state of affairs, labelled ‘poverty of private international law in social values’,11 turned a blind eye to the shortcomings of party autonomy in transnational employment contracts, as well as to the states’ legitimate interests in the application of their labour laws. Indisputably, the freedom to choose the applicable law and the competent court is a basic principle of the private international law of contract.12 But none of the three main reasons that justify the widespread acceptance of this principle, namely freedom of contract, economic efficiency and legal certainty,13 holds fully in relation to most transnational employment contracts. It is to a large extent for the purpose of remedying the deficiencies of party autonomy that special private international law rules concerning employment were introduced, which is reflected in the prevalence of the individualistic view of the objective of protection of employees in the European private international of employment. But special rules are also needed to ensure that party autonomy and other 9

10

11

12

13

E. Rabel, The Conflict of Laws: A Comparative Study, 2nd edn (Ann Arbor: University of Michigan Law School, 1958), vol. I, p. 97. For instance, in his work ‘The Doctrine of Jurisdiction in International Law’ (1964-I) 111 Recueil des Cours 1, F. A. Mann mentions no jurisdictional rules concerning weaker parties. K. Zweigert, ‘Zur Armut des internationalen Privatrechts an sozialen Werten’ (1973) 37 Rabels Zeitschrift für ausländisches und internationales Privatrecht 435. A. Briggs, Agreements on Jurisdiction and Choice of Law (Oxford University Press, 2008); T. Hartley, Choice-of-Court Agreements under the European and International Instruments (Oxford University Press, 2013); P. E. Nygh, Autonomy in International Contracts (Oxford: Clarendon, 1999); G. Rühl, ‘Party Autonomy in the Private International Law of Contracts: Transatlantic Convergence and Economic Efficiency’ in E. Gottschalk and others (ed.), Conflict of Laws in a Globalised World (Cambridge University Press, 2007) 153. Nygh, Autonomy, pp. 2–3.

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2.1 reasons for protecting employees in private law 21

abstract connecting factors do not undermine important objectives and values pursued by domestic labour laws. This consideration is particularly important today when some countries are eager to protect their existing regulatory objectives, techniques and employment standards, whereas others are simultaneously deregulating their labour laws with the aim of increasing the competitiveness of their economies in the global market. The threats of ‘social dumping’ and regulatory ‘race to the bottom’ are of particular concern in the EU. A key question is whether private international law can help to achieve an adequate allocation and safeguarding of the regulatory authority of states in the field of labour law.

2.1.1

Shortcomings of party autonomy: freedom of contract

Party autonomy in private international law is derived from the wider principle of freedom of contract. ‘[A]greements are made to be kept: pacta sunt servanda. Whether the case brought before the judge raises issues of private international law or not, the principle that those who make agreements . . . ought to perform them is central to the nervous system of the . . . law.’14 This correspondence between substantive contract law and the private international law of contract is not surprising. Historically, the freedom to choose the applicable law became recognised in many countries in the second half of the nineteenth century.15 This was the heyday of liberalism and its laissez-faire credo. The parties were regarded as private legislators in their contractual relationships. Their will was placed at the forefront of the law of contract as the source of contractual rights and obligations. The role of the law and courts was minimal. Their primary task was to facilitate the enforcement of contractual rights and prevent fraud, misrepresentation and duress.16 The logical extension of this freedom was to allow the parties to subject the contract to the law of their choice.17 The freedom to choose the competent court has been justified on the same principle. As the United States (US) Supreme Court stated in M/S Bremen and Unterweser Reederei 14 15

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17

Briggs, Agreements on Jurisdiction and Choice of Law, [2.04]. O. Lando, ‘The Conflict of Laws of Contracts: General Principles’ (1984-VI) 189 Recueil des Cours 225, pp. 256–84. P. S. Atiyah, The Rise and Fall of Freedom of Contract (Oxford: Clarendon, 1979), pp. 402–8. A. L. Diamond, ‘Harmonization of Private International Law Relating to Contractual Obligations’ (1986-IV) 199 Recueil des Cours 233, p. 265.

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GmbH v. Zapata Off-Shore Co.:18 ‘This approach [of enforcing choice-ofcourt agreements] . . . accords with ancient concepts of freedom of contract.’ Freedom of contract is, therefore, a strong argument in favour of party autonomy in the fields of law, such as commercial law, in which state interference is minimal. But labour law is of a fundamentally different nature. For much of the nineteenth century, relationships between employer and worker were primarily regulated by the general law of contract and property.19 The parties to such relationships were seen as equals before the law, freely exercising their will over the letting and hiring of labour. Wages depended on the law of supply and demand. The liberal model of regulating employment, however, never brought about genuine equality. Instead, it exposed the difference in socioeconomic power between employers and workers that enabled the former to impose their will on the latter. It became acknowledged that the typical features of employment contracts were not freedom and equality, but submission, subordination and inequality of bargaining power. As famously observed by Kahn-Freund, ‘In its inception [the relationship between an employer and an employee] is an act of submission, in its operation it is a condition of subordination, however much the submission and subordination may be concealed by that indispensable figment of the legal mind known as the “contract of employment”.’20 This change in perception led to the creation of an autonomous concept of the employment contract and to the development and extension of collective bargaining and protective legislation.21 Employees were also frequently given the right to commence proceedings before specialised labour courts or tribunals. A goal of regulating employment has thereafter been to compensate employees for their typically weaker position. But that is not the only goal pursued by labour law. The modern legal regulation of employment is also motivated by the objectives of social inclusion, greater economic efficiency and competitiveness of businesses and the protection of human

18 19

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407 US 1 (1972), 11 (per Mr Chief Justice Burger). B. Veneziani, ‘The Evolution of the Contract of Employment’ in B. Hepple (ed.), The Making of Labour Law in Europe: A Comparative Study of Nine Countries up to 1945 (London: Mansell, 1986) 31. P. Davies and M. Freedland, Kahn Freund’s Labour and the Law, 3rd edn (London: Stevens, 1983), p. 18. See also H. Collins, Employment Law, 2nd edn (Oxford University Press, 2010), pp. 6–14. Atiyah, Freedom of Contract, pp. 523–44.

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rights in the workplace.22 Achieving correspondence with substantive labour law requires commensurable efforts in private international law.

2.1.2

Shortcomings of party autonomy: economic efficiency

Scholars engaged in the economic analysis of private international law support party autonomy for reasons of economic efficiency.23 But their support depends on the fulfilment of certain premises, namely that the parties are rational, that there are no transaction costs, asymmetric information, opportunistic behaviour and negative externalities. Leaving aside the problem of bounded rationality, the fact is that the typical features of transnational employment contracts are high transaction costs, asymmetric information and opportunistic behaviour.24 Where such market failures are present, limitations of party autonomy are justified. The comparison of domestic labour laws is an expensive task. Employees typically lack resources that employers have. They usually cannot afford the services of comparative labour law specialists or labour lawyers from different jurisdictions. Furthermore, a rational party will engage in such comparison only if the value of the envisaged transaction corresponds to the cost of legal advice or if the result thereof can be applied in a great number of cases. Employment contracts are characterised by a standardisation on the employers’ side. It is they who benefit from the economies of scale: the greater the number of employees, the lower the cost of legal advice per employee. For employees, in contrast, entering into an employment contract does not form part of a large series of similar transactions. It is an isolated occurrence, whose value normally does not justify a comprehensive and expensive legal analysis. The difference in practical availability of legal advice and experience results in information 22

23

24

H. Collins, ‘Against Abstentionism in Labour Law’ in J. Bell and J. Eekelaar (eds.), Oxford Essays in Jurisprudence 3rd Series (Oxford: Clarendon, 1987) 79; H. Collins, ‘Is There a Third Way in Labour Law?’ in J. Conaghan, R. M. Fischl and K. Klare (eds.), Labour Law in an Era of Globalization: Transformative Practices and Possibilities (Oxford University Press, 2002) 449; H. Collins, ‘Justifications and Techniques of Legal Regulation of the Employment Relation’ in H. Collins, P. Davies and R. Rideout (eds.), Legal Regulation of the Employment Relation (London: Kluwer, 2000) 3; A. C. L. Davies, Perspectives on Labour Law, 2nd edn (Cambridge University Press, 2009). See J. Basedow and T. Kono (eds.), An Economic Analysis of Private International Law (Tübingen: Mohr Siebeck, 2006); Rühl, ‘Party Autonomy’. J. Basedow, ‘Lex Mercatoria and the Private International Law of Contracts in Economic Perspective’ in Basedow and Kono (eds.), An Economic Analysis of Private International Law, 57, pp. 67–8; Rühl, ‘Party Autonomy’, section III.B.2.

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asymmetry. Employees are typically far less likely than their employers to be knowledgeable of the available alternatives and possible risks. Furthermore, choice-of-law and choice-of-court clauses often form part of lengthy and complex standard-form employment contracts and may therefore pass unnoticed by employees. As with many other contractual terms and conditions, employees may underestimate the importance of, or simply fail to understand, choice-of-law and choice-of-court clauses. An employee, even if aware of the available alternatives and possible risks, may not object to the employer’s choice of law or court for the fear of losing the job. As discussed in the following section, not even managerial, advisory and specialist staff can routinely be assumed to be on an equal footing with their employers regarding transaction costs and the availability of information. Although one could argue that employers do not normally risk their reputation by abusing their superior knowledge or that employees have cheap access to many sources of information that would prevent them from contracting with disreputable employers, these arguments seem to overestimate the capacity of employees engaged in transnational employment to gather and process the relevant information. To remedy these deficiencies, private international law should safeguard the application of the law and the jurisdiction of the courts that are accessible to employees, that is, with which employees are sufficiently closely connected and presumably familiar and which the parties can reasonably expect. Private international law can thereby assist in the building and maintenance of trust between the parties to transnational employment contracts, which is a crucial ingredient in improving competitiveness.25 The application of foreign lax labour laws to an employment contract may create negative externalities for the society to which the employee belongs. In some countries, employers are allowed to dismiss employees without offering reasons for dismissal, giving notice or providing redundancy payment. In England, for example, in order to qualify for the right not to be unfairly dismissed and to a redundancy payment, an employee must be continuously employed for more than two years.26 In the US, there is the ‘contract at will’: ‘men must be left, without interference to 25

26

H. Collins, ‘Regulating the Employment Relation for Competitiveness’ (2001) Industrial Law Journal 17; H. Collins, Regulating Contracts (Oxford University Press, 1999); S. Deakin and F. Wilkinson, ‘Labour Law and Economic Theory: A Reappraisal’ in H. Collins, P. Davies and R. Rideout (eds.), Legal Regulation of the Employment Relation (London: Kluwer, 2000) 29. Sections 108 and 155 Employment Rights Act 1996 (ERA 1996).

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buy and sell where they please, and to discharge or retain employees at will for good cause or for no cause, or even for bad cause without thereby being guilty of an unlawful act per se’.27 At the far end of the spectrum are countries where employers can require their employees to work excessively long hours for low wages in precarious conditions, without job and employment security or freedom of association and the right to collective bargaining. If employers were allowed to impose on their employees the application of the law and the jurisdiction of the courts of such countries, they might be able to avoid the otherwise applicable protective legislation. Such a choice may be efficient for the business itself. But if the broader social costs are taken into account (e.g. the costs of supporting unemployed or injured workers and their dependants), the choice may not be efficient overall. Legal regulation is often necessary to compel employers to internalise at least a part of the social costs.28 Party autonomy should not be allowed to thwart this goal.

2.1.3

Shortcomings of party autonomy: legal certainty

Transnational contracts require legal certainty. Where a number of laws are potentially applicable and several forums can assume jurisdiction, the parties should, in principle, be allowed to choose the law and the forum. Otherwise, the outcome of a particular case will depend on the private international law rules and the administration of justice in the state in which the claim is brought. But states will often refuse to give full effect to choice-of-law and choiceof-court clauses contained in transnational employment contracts because of the importance of the objectives and values pursued by domestic labour laws.29 Inserting such clauses in favour of the law or the courts of a country not sufficiently closely connected with and legitimately interested in regulating a particular employment contract may produce a high level of uncertainty. It may be uncertain whether the chosen court will take jurisdiction. Even if the chosen court assumes jurisdiction, the proceedings may not be recognised abroad (e.g. through lis pendens or the recognition and enforcement of the resulting judgment) and may even be restrained abroad by means of anti-suit injunctions. The effect of the choice-of-law 27

28 29

Payne v. The Western & Atlantic Railroad Co., 81 Tenn. 507 (1884), 518–19 (per Ingersoll Sp J). See R. Epstein, ‘In Defence of the Contract at Will’ (1984) 57 University of Chicago Law Review 947. H. Collins, ‘Justifications and Techniques’, pp. 15–16. Various restrictions of party autonomy are examined in Sections 2.3 and 2.4.

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clause also depends on the forum’s private international law rules. It may be given full effect, limited effect or no effect at all. Achieving legal certainty in this field of private international law, therefore, requires taking into account the states’ legitimate interests in applying their laws to, and adjudicating disputes arising out of, employment contracts with which they are sufficiently closely connected. Restrictions of party autonomy that achieve this goal and that the parties to transnational employment contracts can reasonably expect are justified.

2.1.4

Systemic perspective: legitimate interests of states

The three shortcomings of party autonomy in transnational employment contracts have influenced greatly the creation and evolution of private international law rules concerning employment. The prevalence of the individualistic view of the objective of protection of employees in the European private international law of employment can be explained, to a large extent, as a response to these shortcomings. For example, this explanation seems to be adopted by Advocate General Wahl, who stated the following in the recent Schlecker case:30 It is, in my opinion, [Article 6] in particular which expresses the objective, pursued by the draftsmen of the Rome Convention, of protecting the employee, traditionally regarded as the weaker party from a socioeconomic point of view. Indeed, given the element of subordination which characterises the employment relationship, the employee runs the risk that an employer will impose on him the application of the law of a country which is objectively unrelated to the reality of the contractual relationship between them.

It is, however, evident from the preceding analysis that the states’ legitimate interests in safeguarding their regulatory objectives, techniques and employment standards also have a significant impact in this respect. Every country’s labour law is unique and is normally the result of hard bargaining between workers, employers and the state. The outcomes of these processes depend on many factors: political history of a particular country, its path and stage of economic development, the relative power of employers’ associations and trade unions, the role of the state, culture and so on.31 Some countries, for example, Denmark and Sweden, rely 30 31

See n 5, [25] (footnote omitted and emphasis added). See Hepple (ed.), The Making of Labour Law in Europe; B. Hepple and B. Veneziani, The Transformation of Labour Law in Europe: A Comparative Study of 15 Countries 1945–2004 (Oxford: Hart, 2010).

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largely on collective bargaining for the setting of employment standards and on trade unions for their monitoring and enforcement. Others, for example, France, have comprehensive and detailed labour legislation and rely, to a significant extent, on public law sanctions for its enforcement. There are also countries, for example, the UK, that give the parties a lot of freedom to shape their employment relationship and leave it mainly to individual employees to enforce their statutory and contractual rights. The diversity of labour laws is even greater beyond Europe.32 States pursue important domestic social, political and economic objectives through their labour laws. States thus normally have an interest in the application of their labour laws to work performed within their borders, sometimes also to their nationals and workers habitually working in their territory who are posted abroad. This is reflected in the express or implied territorial scope of many employment statutes. For instance, statutes forming part of English law traditionally apply to employees who work or are based in Britain or the UK, regardless of the law governing the employment contract.33 The labour laws of France and, to a large extent, Germany are also of territorial application.34 In Nordic countries the setting and enforcement of domestic employment standards applicable to workers posted there is traditionally primarily achieved by trade unions.35 Looking beyond Europe, US statutes also apply, in principle, territorially, although some statutes expressly extend their application to US corporations employing US workers and operating overseas.36 32

33

34

35

36

See R. Blanpain and others, The Global Workforce: International and Comparative Employment Law – Cases and Materials (Cambridge University Press, 2007). Section 43(2) Patents Act 1977; section 285(1) Trade Union and Labour Relations (Consolidation) Act 1992 (TULR(C)A 1992); section 1(2)(b) National Minimum Wage Act 1998 (NMWA 1998); reg. 3 Transfer of Undertakings (Protection of Employment) Regulations SI 2006/246 (TUPE 2006); Serco Ltd. v. Lawson; Botham (FC) v. Ministry of Defence; Crofts v. Veta Ltd. [2006] UKHL 3; [2006] 1 All ER 823, concerning the territorial scope of ERA 1996; Bates Van Winkelhof v. Clyde & Co. LLP [2012] EWCA Civ 1207; [2013] 1 All ER 844, concerning the territorial scope of the Equality Act 2010 (EqA 2010), reversed on a different point in [2014] UKSC 32; [2014] 1 WLR 2047. The territorial scope of employment legislation forming part of English law is discussed in detail in Chapter 6. J.-J. Kuipers, EU Law and Private International Law: The Interrelationship in Contractual Obligations (Leiden: Nijhoff, 2012), pp. 125–36; P. Mankowski, ‘Employment Contracts under Article 8 of the Rome I Regulation’ in F. Ferrari and S. Leible (eds.), Rome I Regulation (Munich: Sellier, 2009) 171, pp. 202–3. M. Rönnmar, ‘Free Movement of Services versus National Labour Law and Industrial Relations Systems: Understanding the Laval Case from a Swedish and Nordic Perspective’ (2007–2008) 10 Cambridge Yearbook of European Legal Studies 493. §2000e(f) Civil Rights Act 1964; §630(f) Age Discrimination in Employment Act 1967; §§12101–12213 Americans with Disabilities Act 1990. For case law on the extraterritorial

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In setting, monitoring and enforcing domestic employment standards, states are typically guided by the interests and values of local workers and employers and do not have to consider and accommodate the regulatory claims of other states. The lack of centralisation and coordination of regulatory authority in the field of labour law may result in both underand over-regulation. An example of the former is the Sayers case,37 in which England (the forum) and the Netherlands (the country of the applicable law) did not have an interest in safeguarding their own regulatory objectives and employment standards and Nigerian law (the law of the place of work) was disregarded. Under-regulation 19 also occurs in a different sense. In the modern world, in which the capital moves freely and the trade in goods and services is, to a large extent, liberalised, some countries are deregulating their labour laws in order to attract and retain investments and increase the competitiveness of their economies. The resulting regulatory competition may prompt some states to compete on the basis of low employment standards, a phenomenon known as ‘social dumping’, which may lead to an overall decrease in employment standards through a ‘race to the bottom’. Transnational employment cases that engage the regulatory claims of two or more states, and thus may result in over-regulation, are even more frequent. Both under- and over-regulation lead to a globally suboptimal allocation of resources. Private international law, a field of law traditionally concerned with ‘horizontal’ conflicts of laws, could play a key role in remedying these regulatory failures.38 Private international law should lead to outcomes that avoid both under- and over-regulation. Private international law can attain this goal only if choice-of-law and jurisdictional rules result in an adequate allocation of regulatory authority. The common social objective of domestic labour laws, which is captured by the motto of the International Labour Organisation – ‘labour is not a

37 38

application of US statutes, see K. Stone, ‘Labour and the Global Economy: Four Approaches to Transnational Labour Regulation’ (1995) 16 Michigan Journal of International Law 987, pp. 1011–17. See n 1. A. T. Guzman, ‘Choice of Law: New Foundations’ (2002) 90 Georgetown Law Journal 883; H. Muir Watt, ‘Choice of Law in Integrated and Interconnected Markets: A Matter of Political Economy’ (2003) 9 Columbia Journal of European Law 383; R. Wai, ‘Transnational Liftoff and Juridical Touchdown: The Regulatory Function of Private International Law in an Era of Globalisation’ (2002) 40 Columbia Journal of Transnational Law 209, pp. 250–6.

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commodity’,39 should make it acceptable for states to uphold not only their own but also foreign labour laws in appropriate circumstances.40 This idea is especially strong in federal and quasi-federal unions of states, where the union takes upon itself the task of ‘refereeing’ the competing interests of its members.41 But the increasing acceptance of special choice-of-law rules that safeguard the application of the law of any country in the world that is objectively applicable to the employment contract42 shows that other states are also concerned with an adequate allocation of regulatory authority in the field of labour law. The key question is when should the application of a law and the jurisdiction of courts, be it domestic or foreign, be upheld? The answer lies in the effects test.43 Such circumstances exist when a state is sufficiently closely connected with an employment contract and affected by it to be considered to be legitimately interested in regulating it. In some cases in which more than one state have a legitimate interest, it might be necessary to allocate regulatory authority to multiple states.

2.1.5

Systemic perspective: the EU context

The project of European integration was originally of an economic nature. The aim was to establish a European common market based on four fundamental economic freedoms (free movement of goods, services, workers and capital) and competition policy. The Member States retained almost exclusive competence in the social field. An exception 39

40

41

42 43

International Labour Organisation, Declaration concerning the aims and purposes of the ILO (Declaration of Philadelphia) (1944), available at www.ilo.org/public/english/ bureau/leg/declarations.htm. M. Keller, ‘Schutz des Schwächeren im internationalen Vertragsrecht’ in P. Böckli and others (eds.), Festschrift für Frank Vischer zum 60. Geburtstag (Zurich: Schulthess, 1983) 175, pp. 179–86; J. Kropholler, ‘Das kollisionsrechtliche System des Schutzes der schwächeren Vertragspartei’ (1978) 42 Rabels Zeitschrift für ausländisches und internationales Privatrecht 634, pp. 648–9; P. Mayer, ‘La protection de la partie faible en droit international privé’ in J. Ghestin and M. Fontaine (eds.), La protection de la partie faible dans les rapports conflictuels (Paris: LGDJ, 1996) 513, pp. 518, 525, 527; R. J. Weintraub, ‘Functional Developments in Choice of Law for Contracts’ (1984-IV) 187 Recueil des Cours 239, pp. 251, 258–9. J. Basedow, ‘Federal Choice of Law in Europe and the United States: A Comparative Account of Interstate Conflicts’ (2008) 82 Tulane Law Review 2119. See Section 2.3.1. Guzman, ‘New Foundations’, pp. 915–16; A. Mills, The Confluence of Public and Private International Law: Justice, Pluralism and Subsidiarity in the International Constitutional Ordering of Private Law (Cambridge University Press, 2009), pp. 106–7, 259–64; Muir Watt, ‘Choice of Law in Integrated and Interconnected Markets’, pp. 407–8.

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was equal pay between men and women, the legislative competence for which was expressly conferred on the European institutions by the Treaty of Rome. But it would be a fallacy to conclude that the original European Communities lacked a social dimension.44 It was thought that social issues were best left to the Member States because of their political sensitivity and because the Member States had democratic legitimacy to regulate the social sphere. It was also believed that the optimum rate of economic growth achieved by means of the common market would eventually lead to a harmonisation and gradual improvement in working conditions and living standards across Europe.45 The original compromise that was struck between the economic and the social through the decoupling of the two spheres quickly proved to be unstable.46 For example, the operation of the common market had a number of potential or actual socially negative consequences that had to be prevented through supra-national legislation on equality of treatment between men and women, collective redundancies, transfers of undertakings, employer insolvency, health and safety and so on. Furthermore, the gradual expansion of the scope of the fundamental economic freedoms achieved primarily by the CJEU led to a corresponding shrinkage of the regulatory autonomy of the Member States in the social field. There is little to prevent economic operators who fall within the scope of the freedoms from shopping for the laxest labour laws by establishing themselves in the Member State of their choosing and then from selling their goods and services Europe-wide. Such economic operators are also allowed, under certain conditions mainly set out in the Posted Workers Directive, to temporarily post their workers to other Member States for the purpose of providing services there and undercut competitors from other Member States who bear 44

45

46

S. Giubboni, Social Rights and Market Freedom in the European Constitution (Cambridge University Press, 2009), Ch. 1. See the Ohlin and Spaak reports, which preceded the Treaty establishing the European Economic Community: International Labour Office, ‘Social Aspects of European Economic Co-operation’ (1956) 74 International Labour Review 99; Intergovernmental Committee on European Integration, ‘The Brussels Report on the General Common Market’ (June 1956), available at http://aei.pitt.edu/995/1/Spaak_report.pdf. C. Barnard, EU Employment Law, 4th edn (Oxford University Press, 2013), Ch. 1; H. Collins, ‘Justifying European Employment Law’ in S. Grundman, W. Kerber and S. Weatherhill (eds.), Party Autonomy and the Role of Information in the Internal Market (Berlin: Walter de Gruter, 2001) 205; H. Collins, ‘Social Dumping, Multi-level Governance and Private Law in Employment Relationships’ in D. Leczykiewicz and S. Weatherill (eds.), The Involvement of EU Law in Private Law Relationships (Oxford: Hart, 2013) 223.

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2.1 reasons for protecting employees in private law 31

higher labour costs. The big enlargement of the EU in 2004 and the subsequent accession of Bulgaria, Romania and Croatia increased significantly the extent and depth of diversity of domestic labour laws in Europe. While many of the old Member States have relatively high employment standards and are eager to safeguard them, many of the new Member States see their relatively low employment standards as an important part of their strategy for attracting and retaining investments and competing in the regional and world markets. The internal market, therefore, makes the threats of ‘social dumping’ and regulatory ‘race to the bottom’ very real in Europe. This state of affairs pits affluent and less affluent Member States against each other,47 thus jeopardising the creation of ‘an ever closer union among the peoples of Europe’.48 These points are well illustrated by the notorious CJEU cases of Viking49 and Laval50 and are discussed extensively in Chapter 8. Under the Treaty of Lisbon, the EU acquired a stronger social dimension. Article 3(2) of the TEU refers to the EU as the ‘social market economy’ and states that ‘[the Union] shall combat social exclusion and discrimination, and shall promote social justice and protection, equality between women and men, solidarity between generations’, which objectives are of equal value to that of the establishment of an internal market. The Charter of Fundamental Rights of the EU, which includes not only civil and political liberties but also social, economic and cultural rights, was granted the same legal value as the TEU and the TFEU. The equality between the economic and the social objectives of the EU implies that an adequate balance must be struck between the competing regulatory claims of different Member States. European private international law is a field of law that could play an important role in this respect. That is why Chapter 8 assesses the conclusion that the Posted Workers Directive puts into place ‘appropriate conflict rules’ in order to ‘correct distortions’ ‘[i]n areas where an unlevel playing-field is perceived to distort competition between 47

48 49

50

N. Lindstrom, ‘Service Liberalization in the Enlarged EU: A Race to the Bottom or the Emergence of Transnational Political Conflict?’ (2010) 48 Journal of Common Market Studies 1307. Art. 1(2) TEU. Case C-438/05 International Transport Workers’ Federation and Finnish Seamen’s Union v. Viking Line ABP and OÜ Viking Line Eesti [2007] ECR I-10779; [2008] 1 CMLR 51. Case C-341/05 Laval un Partneri Ltd. v. Svenska Byggnadsarbetareförbundet, Svenska Byggnadsarbetareförbundets avdelning 1, Byggettan and Svenska Elektrikerförbundet [2007] ECR I-11767; [2008] 2 CMLR 9.

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firms . . . while leaving each national system free to pursue its own economic or social policies through diverse substantive rules’.51 Transnational employment relationships that come before the Member State courts usually have connections either exclusively with the EU or with both the EU and one or more non-European countries. In ‘internal’ cases that are connected exclusively with the EU, the role of the European private international law of employment is to coordinate and maintain legal diversity in Europe, while enforcing basic principles and rights of EU law. In ‘external’ cases that are connected with both the EU and one or more non-European countries, a role of this legal discipline is to safeguard the objectives and values of EU law whenever these are threatened by non-EU elements. This is particularly visible when English courts issue anti-suit injunctions restraining proceedings in nonEuropean courts to protect their jurisdiction under the Brussels jurisdictional regime52 or apply overriding EU law to cases falling within its territorial scope.53 As such, the European private international law of employment is a crucial accompaniment of key European constitutional principles of subsidiarity and proportionality in the vertical allocation of regulatory authority in the social sphere,54 supremacy and effectiveness.55 The objectives of this field of law can, therefore, be aptly summarised as pursuing ‘unity in diversity’. Another way of describing these developments is to say that the European private international law of employment is being constitutionalised through the impact of the EU treaties and human rights. 51

52

53

54

55

H. Muir Watt, ‘European Integration, Legal Diversity and the Conflict of Laws’ (2005) 9 Edinburgh Law Review 6, pp. 17–18. See also H. Muir Watt, ‘Integration and Diversity: The Conflict of Laws as a Regulatory Tool’ in F. Cafaggi (ed.), The Institutional Framework of European Private Law (Oxford University Press, 2006) 107, pp. 138–44. Samengo-Turner v. J&H Marsh & McLennan (Services) Ltd. [2007] EWCA Civ 723; [2007] 2 All ER (Comm) 813. See Chapter 4, Section 4.2. Case C-381/98 Ingmar GB Ltd. v. Eaton Leonard Technologies Inc. [2000] ECR I-9305; [2001] 1 CMLR 9. See also C-214/94 Ingrid Boukhalfa v. Bundesrepublik Deutschland [1996] ECR I-2253; [1996] 3 CMLR 22; S. Francq, ‘The Scope of Secondary Community Law in the Light of the Methods of Private International Law – or the Other Way Around?’ (2006) 8 Yearbook of Private International Law 333. For an extensive discussion, see Chapter 6, Section 6.1.3. A. Mills, ‘Federalism in the European Union and the United States: Subsidiarity, Private Law, and the Conflict of Laws’ (2010) 32 University of Pennsylvania Journal of International Law 369; Mills, The Confluence. U. Grušić, ‘The Principle of Effectiveness in European Law and European Private International Law: The Case of Transnational Employment in the European Court of Justice and English Courts’, forthcoming in J.-S. Bergé, S. Francq and M. Gardeñes Santiago (eds.), Boundaries of European Private International Law (Brussels: Bruylant, 2015).

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Arguably, this field of law is simultaneously undergoing a somewhat different but related process of constitutionalisation.56 According to Collins,57 the way forward for the development of European private law is the adoption of principles at the European level that would fix in a fairly permanent form the structures for a particular kind of economic and social system that would promote European values of fairness and social justice. Transnational social and economic interactions between people that would take place under this ‘economic and social constitution’ would help to create a cohesive community, an integrated transnational civil society with a post-national identity, which is a precondition for the EU’s evolution into an ever closer union of its peoples and a more effective system of governance. A key part of this project is the adoption of principles, not detailed rules, of European private law that would have to be given effect in the legal systems of individual Member States. Instead of eliminating legal diversity, this conception of the future European private law would promote and protect it. The need for coordinating and maintaining legal diversity would, therefore, continue to exist even under a well-developed European private law. In order to support the creation of a cohesive European community, European private international law would have to lead to the application of the most appropriate laws to, and the jurisdiction of the most appropriate courts over, transnational relationships. The design of such choice-of-law and jurisdictional rules would have to not only take into account the interests of the parties to transnational relationships and the competing regulatory claims of different Member States but also safeguard the objectives and values of EU law from non-EU elements. European private international law, including that of employment, is therefore a crucial ingredient in this process of constitutionalisation. 56

57

See also J. Bomhoff, ‘The Constitution of the Conflict of Laws’, LSE Law, Society and Economy Working Papers 4/2014 (February 2014), available at www.lse.ac.uk/collections/law/wps/WPS2014–04_Bomhoff.pdf, p. 7 (‘the vocation of a constitution of the conflict of laws could be to enhance the capacities of private international law as a site for deliberation and contestation over the character and boundaries of the identities and responsibilities of polities’). H. Collins, ‘A Workers’ Civil Code? Principles of European Contract Law Evolving in EU Social and Economic Policy’ in M. W. Hesselink (ed.), The Politics of a European Civil Code (The Hague: Kluwer, 2006) 55; H. Collins, The European Civil Code: The Way Forward (Cambridge University Press, 2008); H. Collins, ‘The European Economic Constitution and the Constitutional Dimension of Private Law’ (2009) 5 European Review of Contract Law 71; H. Collins, ‘Why Europe Needs a Civil Code’ (2013) 21 European Review of Private Law 907. See also Study Group on Social Justice in European Private Law, ‘Social Justice in European Contract Law: A Manifesto’ (2004) 10 European Law Journal 653.

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2.1.6 Conclusion The examination of the reasons for protecting employees engaged in transnational employment shows that the individualistic view of the objective of protection of employees is oversimplified. The protection of employees in private international law is not only about special rules giving protection to individual employees and being more favourable to their interests than the general rules. It is also about adequately allocating and safeguarding the adjudicatory and legislative authority of states in the field of labour law. In other words, the protection of employees in private international law is primarily about finding and protecting the labour law system of the country or countries to which the employee ‘belongs’, in whose labour market(s) he or she participates. The systemic role of this field of law is particularly evident in the EU context. The European private international law of employment is performing a regulatory function of reconciling the competing regulatory claims of different Member States and is undergoing the process of constitutionalisation through the influence of the EU treaties and human rights. These developments mark a clear departure from classical private international law and have been rightly labelled as a real European private international law ‘revolution’.58 This section yields several insights regarding the design of special private international law rules concerning employment. These rules should safeguard the application of the law and the jurisdiction of the courts that are accessible to employees, that is, with which employees are sufficiently closely connected and presumably familiar and which the parties to transnational employment contracts can reasonably expect. They should take into account the states’ legitimate interests in applying their laws to, and adjudicating disputes arising out of, employment contracts. A state has such an interest when it is sufficiently closely connected with an employment contract and is affected by it. Finally, the rules of European private international law should not only take into account the interests of the parties to transnational relationships and the competing regulatory claims of different Member States but also safeguard the objectives and values of EU law from non-EU elements. Before examining how these considerations affect the design of choice-of-law and jurisdictional rules, the next section explores which employees should be covered by such rules.

58

R. Michaels, ‘New European Choice-of-Law Revolution’ (2008) 82 Tulane Law Review 1607.

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2.2 Employees protected in private international law The Giuliano-Lagarde Report on the Rome Convention explains the special treatment of employees by the fact that they are ‘from the socioeconomic point of view . . . the weaker [party] in the contractual relationship’.59 The CJEU justifies the protection of employees in private international law on similar grounds.60 But not all employees engaged in transnational employment are in an inferior position. Many are managerial, advisory or specialist staff, highly qualified and well paid. As Mankowski notes, ‘As an employer, you ordinarily do not order your worst and least specialised workers abroad, but to the contrary your expert workforce. We are talking about some of the most highly trained and educated (and best paid) employees available.’61 Should protective private international law rules take this fact into account and limit their scope to employees in genuine need of protection? Looking comparatively, we can distinguish three approaches. First, the courts may be authorised to examine in each particular case whether a contractual party is in a weaker position in relation to the other party. If so, the courts should take this fact into account, along with other relevant factors, when applying private international law rules. For example, Article 3540 of the Louisiana Civil Code subjects party autonomy to the public policy of the state whose law would otherwise be applicable. That state is determined by reference to factors set out in Article 3537, one of which is the policy ‘of protecting one party from undue imposition by the other’.62 A similar approach to jurisdictional issues has been adopted by the US Supreme Court, which stated in M/S Bremen and Unterweser Reederei GmbH v. Zapata Off-Shore Co.:63 ‘There are compelling reasons why a freely negotiated [choice-of-court clause], unaffected by fraud, undue influence or overweening bargaining power . . . should be given full effect.’

59

60 61 62

63

M. Giuliano and P. Lagarde, ‘Report on the Convention on the Law Applicable to Contractual Obligations’ [1980] OJ C282/1, p. 25. See n 5. Mankowski, ‘Employment Contracts under Article 8 of the Rome I Regulation’, p. 172. Similarly, §15.360 Oregon Revised Statutes. See also §187, comment g of the Restatement of the Law Second: Conflict of Laws (St Paul, MN: American Law Institute Publishers, 1971). See n 18, 12–13 (emphasis added). See also §80 Second Restatement of the Conflict of Laws; cf. Carnival Cruise Lines, Inc. v. Shute, 499 US 585 (1991), 111 S.Ct. 1522, 113 L. Ed.2d 622 (1991). Similarly, Art. 5(2) Swiss Federal Private International Law Code.

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The merit of this solution is that it can encompass any worker who finds himself or herself in a weaker position in a particular case and relies on protective legislation. The downside is that it can also embrace independent contractors who do not receive protection in substantive labour law. Moreover, the protection of the weaker party is reduced to one of the factors that the courts should take into account. It is thus uncertain whether the weaker party will actually be protected in a particular case, since this depends on a complicated consideration of the circumstances of the case, connecting factors and state interests. Under the second approach, special private international law rules cover all employees, with the exception of certain senior workers who are deemed to be on an equal footing with their employers. This solution seems to be inspired by German labour law, in which there are two categories of workers (collectively referred to as Arbeitnehmer). There are manual workers (Arbeiter) and white-collar workers (Angestellte), on the one hand, and executive staff (leitende Angestellte), on the other. It is assumed that the problems and interests of executive staff, because of their position, are in many ways not commensurable to those of other employees. Protective legislation is, therefore, not fully applicable to the former category.64 This approach was proposed in the 1976 draft of the regulation on the provisions of conflict of laws on employment relationships within the Community.65 The 1976 draft Regulation distinguished between workers ‘with special position in the establishment’ or ‘with special nature of . . . work’66 and all other workers. Workers carrying out managerial or advisory functions and workers with a high degree of specialisation fell into the first category.67 If the courts verified that these workers were in fact ‘in a position to negotiate on an equal footing with

64

65

66 67

M. Weiss and M. Schmidt, Labour Law and Industrial Relations in Germany, 4th edn (Aalphen aan den Rijn: Kluwer, 2008), pp. 49–50. European Commission, ‘Amended Proposal for a Regulation of the Council on the Provisions of Conflict of Laws on Employment Relationships within the Community’ COM(75) 653 final, containing the text of the 1976 draft Regulation and the accompanying explanatory memorandum. Art. 7(1). Art. 7(2). The explanatory memorandum gave, at p. 10, further examples of workers falling into this category: works superintendants, legal advisors, economic planners, executive staff and highly qualified skilled workers. It went on to say that ‘In view of the many different ways in which companies are organised [these] concepts . . . cannot be defined more closely.’

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the employer’, they were free to agree on the applicable law. This freedom, however, was not absolute. The choice could not have the effect of undermining the law of the country of the place of work in respect of nine specific topics.68 For the second category, the applicable law was the law of the country of the normal or usual place of work,69 with party autonomy being allowed only exceptionally.70 The shortcomings of this solution are legal uncertainty and difficulty of application. Even if a person was employed in a managerial, advisory or specialist capacity, the courts had to verify that he or she was indeed free to negotiate the choice-of-law clause. Conversely, even in cases concerning blue-collar workers, the employer could argue that the worker should be free to choose the applicable law due to the ‘special nature of his work’. The possibility of allowing unfettered choice of court to senior executives was considered during the negotiations of the Hague Convention on jurisdiction and foreign judgments in civil and commercial matters, but rejected on the grounds of legal uncertainty and difficulty of application.71 Furthermore, this approach does not reflect the content of substantive labour laws of many countries. English law, for example, does not differentiate between managerial, advisory and specialist staff and other employees. Even in German labour law the exempted category is defined very narrowly (executives) and these workers are not completely removed from the scope of protective legislation. This approach would, therefore, not bring about the desired correspondence between substantive labour law and private international law and might enable employers to avoid protective legislation that would otherwise be applicable to senior employees. Most countries that have special private international law rules adhere to the third approach. It entails bringing all workers working under contracts for the performance of work that are classified as ‘individual employment contracts’ for the purposes of private international law within the scope of the special rules. The courts need not verify in each particular case whether the employee in question is in fact in a weaker position. This is the 68 70

71

Art. 8. 69 Art. 3(1). Arts. 5 (certain cases of intra-group transfers of employees) and 6 (certain cases in which a normal place of work did not exist). See also Art. 8. C. Kassedijan, ‘International Jurisdiction and Foreign Judgments in Civil and Commercial Matters’, Hague Conference on Private International Law, Enforcement of Judgments, Preliminary Document No 7 (April 1997, revised trans. October 1997), available at www.hcch.net/upload/wop/jdgm_pd7.pdf, [95].

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approach of Rome I, the Brussels I Recast and many national codes.72 It is also favoured in legal doctrine.73 This approach has several merits compared to the abovementioned two and is the most appropriate from the standpoint of the objective of protection of employees. First, it acknowledges that employees are in a typically weaker position in relation to their employers. This does not mean that equality cannot exist or that the roles may not be reversed, but it is certainly not the case in the vast majority of cases. There are no guarantees, as the 1976 draft Regulation concedes, that even highly paid and skilled workers are on an equal footing with their, often transnational, employers. Second, legal certainty and the ease of application are enhanced because the courts need not verify the existence of disparity of bargaining power in each particular case. This consideration is particularly pertinent for the European private international law of employment because of its administrative, less adjudicatory, view of the judicial role.74 Third, by not differentiating between different categories of employees, this approach corresponds to the vast majority of substantive labour laws and prevents employers from avoiding protective legislation that would otherwise be applicable to senior employees.

2.3 Protecting employees by choice-of-law rules The various ways in which the objective of protection of employees shapes the design of private international law rules are now described. Owing to different considerations that apply to choice of law and adjudicatory jurisdiction, these two areas are treated separately. With regard to choice of law, a further differentiation is made between the freedom of the parties to choose the applicable law and the determination of the applicable law in the absence of choice. A view has been expressed in relation to the European choice-of-law rules concerning employment 72

73

74

Art. 8 Rome I; Arts. 20–23 Brussels I Recast; Art. 43 Chinese Private International Law Act; Arts. 3118 and 3149 Quebec Civil Code; Arts. 115 and 121 Swiss Federal Private International Law Code. See also Art. 2(2) Posted Worker Directive. Mayer, ‘La protection de la partie faible’, pp. 535–40; Nygh, Autonomy, p. 143; F. Pocar, ‘La protection de la partie faible en droit international privé’ (1984-V) 188 Recueil des Cours 339, pp. 362–71; F. Vischer, ‘The Antagonism between Legal Security and the Search for Justice in the Field of Contracts’ (1974-II) 142 Recueil des Cours 1, pp. 28–30; A. T. von Mehren, ‘Adjudicatory Jurisdiction: General Theories Compared and Evaluated’ (1983) 63 Boston University Law Review 279, p. 313. R. Fentiman, ‘Choice of Law in Europe: Uniformity and Integration’ (2008) 82 Tulane Law Review 2021, p. 2046.

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that ‘it is impossible to identify one single theoretical background in private international law in employment matters, the choice of law process rather being a blend of different approaches. And, additionally, this blend is not the product of a systemic thinking, but simply the amalgamation of the different factors affecting the finding of the applicable law.’75 A purpose of this section is to examine whether the European choice-of-law rules are indeed the product of haphazardness or whether there is an underlying systemic thinking.

2.3.1

Protection of employees and party autonomy

Many legal systems impose general restrictions on party autonomy.76 This section deals with specific restrictions concerning employment contracts. There are essentially two approaches. First, party autonomy can be either completely excluded or limited to certain legal systems. Second, party autonomy can be harnessed by the operation of mandatory rules or public policy. A total exclusion of party autonomy is an exceptional measure. It seems to have been pursued in the former German Democratic Republic77 and now exists in China.78 The exclusion can be explained by the fact that communist countries do not regard labour law as part of private law, since labour is not perceived as a commodity that can be bargained for. To be employed is to enter into the collective of the workers of a socialist enterprise.79 This measure was also proposed, with certain exceptions, in relation to blue-collar workers in the 1976 draft Regulation.80 Here, the exclusion aimed at achieving equal treatment of all workers in an establishment.81 A less radical version of this approach is adopted in Switzerland, whose Federal Private International Law Code limits party autonomy by 75

76 77

78

79 81

S. Krebber, ‘Conflict of Laws in Employment in Europe’ (2000) 21 Comparative Labour Law and Policy Journal 501, p. 519. Lando, ‘General Principles’, pp. 286–93. §27 1975 GDR Private International Law Act. Employment relations were governed either by the law of the country of the employer’s principal place of business or, if the employee there resides, of the place of work. The text of the act with comment by F. K. Juenger can be found in (1977) 25 American Journal of Comparative Law 332. Art. 43 Chinese Private International Law Act. Labour contracts are governed by the laws of the working locality of labourers. If it is difficult to determine the working locality of a labourer, the laws at the main business place of the employer apply. See J. Liang, ‘Statutory Restrictions on Party Autonomy in China’s Private International Law of Contract: How Far Does the 2010 Codification Go?’ (2012) 8 Journal of Private International Law 77. Lando, ‘General Principles’, fn. 318. 80 Art. 3(1); cf. Arts. 5–7. European Commission, ‘1976 draft Regulation: Explanatory Memorandum’, p. 6.

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listing the laws among which the choice can be made. The parties may choose between the law of the country in which the employee is habitually resident or in which the employer has his or her place of business, domicile or habitual residence.82 The purpose of this restriction is to avoid the application of the law that is not sufficiently closely connected with the employment contract and the uncertainties concerning the determination of the habitual place of work, as well as to enable employers to submit their overseas employees to the application of one law.83 Similarly, the 1966 Polish Private International Law Code enabled the parties to choose the governing law ‘provided it has some connection with their relationship’.84 The downsides of these solutions outweigh their merits.85 The connections between the employment contract and the objectively applicable law or a listed law may be rather tenuous. Furthermore, the objectively applicable law or a listed law may contain low employment standards. In such cases, the purpose of restricting party autonomy would be defeated. The parties may end up with the law of a country that has weak links to, and no interest in regulating, the employment contract, that is an unknown factor for one or even both parties or that is unduly protective of the employers’ interests. For example, the Swiss Federal Private International Law Code allows the parties to choose the law of the country of the employer’s place of business. An English employer can, therefore, insert a valid choice-of-law clause in favour of English law even if the employee is habitually employed elsewhere. But as the employee would be neither working nor based in England in this situation, he or she would most likely fall outside the territorial scope of employment statutes forming part of English law,86 which are the primary means of protection of employees in this country. Moreover, this approach, and especially a total exclusion of party autonomy, disregards the fact that freedom of contract is the starting point in labour law. Statutes and collective agreements usually afford protection to employees by setting 82 83

84

85

86

Art. 121(3). A. Bucher, ‘Les nouvelles règles du droit international privé suisse dans le domaine du droit du travail’ in Le droit social à l’âube du XXIe siècle – mélanges Alexandre Berenstein (Lausanne: Payot, 1989) 147, p. 159. Art. 32(1). The text of the code with comment by D. Lasok can be found in (1966) 15 American Journal of Comparative Law 330. Nygh, Autonomy, pp. 155–6; Pocar, ‘La protection de la partie faible’, pp. 373–8; cf. Kropholler, ‘Das kollisionsrechtliche System’, p. 646; Lando, ‘General Principles’, pp. 298–9; Mayer, ‘La protection de la partie faible’, pp. 518, 530; Vischer, ‘The Antagonism’, pp. 42–3. See n 33.

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the floor of rights or default rules. The parties are often free to agree to more beneficial or different terms and conditions of employment. If that is so in substantive law, a corresponding possibility should exist in private international law. Many legal systems restrict party autonomy by means of the overriding mandatory rules or public policy of the forum. This solution was accepted in many EU countries before the advent of the Rome Convention. For example, many English employment statutes expressly or impliedly defined, and still define, their territorial scope.87 If a case falls within their scope, any choice of foreign law is overridden. In Germany, the courts used to determine the reach of domestic labour legislation in a particular case. If a provision of the chosen law was contrary to the ‘object and purpose’ (Sinn und Zweck) of the legislation, the general public policy exception would exclude its application.88 French courts and public bodies applied domestic labour law provisions as lois d’ordre public, lois de police or règles d’application immédiates whenever the employment contract was most closely connected with France, and these provided a more beneficial treatment to the employee than the provisions of the chosen law.89 In Nordic countries, trade unions traditionally play a crucial role in the setting and enforcement of domestic employment standards applicable to workers posted there.90 A downside of this unilateralist method of protection of employees is that foreign labour laws not chosen by the parties cannot be applied, regardless of how strongly the foreign country may be connected with, and interested in regulating, the employment contract. French law was an exception in this respect. French courts seemed willing to uphold the law of the foreign country of the place of work when it was more favourable for the employee than the chosen law.91 Another downside of the 87 88

89

90

91

Ibid. B. von Hoffmann, ‘Über den Schutz des Schwächeren bei internationalen Schuldverträgen’ (1974) 38 Rabels Zeitschrift für ausländisches und internationales Privatrecht 396, pp. 407–10; Lando, ‘General Principles’, p. 269. Cass. civ., 9 December 1960 (1961) 50 Revue critique de droit international privé 835, cited in P. Lagarde, ‘Sur le contrat de travail international: analyse rétrospective d’une évolution mal maîtrisée’ in Les transformations de droit du travail. Etudes offertes à Gérard Lyon-Caen (Paris: Dalloz, 1989) 83, p. 85; Kuipers, EU Law and PIL, pp. 125–36. Rönnmar, ‘Free Movement of Services versus National Labour Law and Industrial Relations Systems’. Royal Air Maroc, Cass. soc., 31 March 1978 (1978) 67 Revue critique de droit international privé 701, note A. Lyon-Caen; Tous Services de Personnel v. Leclerc, Cass. soc., 25 January 1984 (1985) 74 Revue critique de droit international privé 327.

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unilateralist method, which is illustrated by the Sayers92 case, is the possibility that a particular case may not fall within the scope of protective legislation of both the forum and the chosen law, in which case the employee is left without any protection. Finally, the unilateralist method often leads to over-regulation when the regulatory claims of two or more states are engaged. A solution truly mindful of the parties’ reasonable expectations and the states’ legitimate interests should, therefore, not exclude party autonomy or limit it to specific laws. The parties should be free to agree on any law, but only to the extent that the agreement improves upon the mandatory minimum standard of protection. The issue of protection thus largely depends on determining the law that sets the minimum standard. This cannot be left solely to the lex fori. The minimum standard should be set by the law of the country, home or foreign, which is both sufficiently closely connected with the employment contract and legitimately interested in regulating it and whose application the parties can reasonably expect. Two techniques for achieving this goal have been put forward. The first is to give the forum a general freedom to apply, as the case may be, domestic or foreign overriding mandatory provisions.93 This solution is accepted in Article 11(2) of the Inter-American Convention on the law applicable to international contracts, signed in Mexico on 17 March 1994.94 One should, however, recall the fate of Article 7(1) of the Rome Convention to see that this solution is not generally acceptable, certainly not in the EU, because of the legal uncertainty it creates and difficulty of application.95 The second technique is to let the objectively applicable law set the minimum standard. This approach was first introduced in the Austrian 1978 Private International Law Act96 and is today accepted in Article 8(1) of Rome I.97 The solution of the Second Restatement of the Conflict of Laws is similar. In a general manner, §187(2)(b) gives 92 94

95

96

97

See n 1. 93 von Hoffmann, ‘Über den Schutz’, pp. 407–17. 33 ILM 732. See F. Juenger, ‘Contract Choice of Law in the Americas’ (1997) 45 American Journal of Comparative Law 195, p. 204. A. Dickinson, ‘Third-country Mandatory Rules in the Law Applicable to Contractual Obligations: So Long, Farewell, Aufwiedersehen, adieu?’ (2007) 3 Journal of Private International Law 53. §44(3). The text of the act with comment by E. Palmer can be found in (1980) 28 American Journal of Comparative Law 197. As an additional means of protection, the act allowed only express choice of law in employment contracts. Similarly, choice of law pursuant to Arts. 5–7 of the 1976 draft Regulation was allowed only if made in writing or evidenced in writing. Also Art. 3118(1) Quebec Civil Code.

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preference over the chosen law to the fundamental policy of the state that has a materially greater interest than the chosen state in the determination of the particular issue and that would be the state of the applicable law in the absence of choice. Rules designed to protect employees are considered to be an expression of fundamental policy.98 The solution of Rome I has been praised and criticised by many.99 While it does eliminate many of the pitfalls to which the abovementioned approaches lead, it also gives rise to criticism because of the increased legal uncertainty and difficulty of application. Given that only the mandatory provisions of the objectively applicable law are taken into account under this solution, its effectiveness ultimately depends on the formulation of the default rules. Before turning to the design of choice-of-law rules for determining the objectively applicable law, it should be noted that the fundamental economic freedoms guaranteed by the TFEU give covered employers a significant amount of autonomy to determine the applicable labour laws. Such employers are allowed to establish themselves in the Member State of their choosing and hire local labour force under local laws. Furthermore, such employers are allowed to temporarily post their workers to other Member States for the purpose of providing services there. Although the contracts of such workers remain subject, as a matter of 98

99

§187, comment g. See Rühl, ‘Party Autonomy’, section II.B.4.ii (the domain of the fundamental public policy doctrine covers almost all contractual rights and duties arising out of employment contracts). See also Art. 3537 Louisiana Civil Code; §15.360 Oregon Revised Statutes. In favour are Kropholler, ‘Das kollisionsrechtliche System’, pp. 648–54; Mayer, ‘La protection de la partie faible’, p. 332; Nygh, Autonomy, p. 158; Pocar, ‘La protection de la partie faible’, pp. 382–3; S. Symeonides, ‘Party Autonomy in Rome I and IΙ from a Comparative Perspective’ in K. Boele-Woelki and others (eds.), Convergence and Divergence in Private International Law: Liber Amicorum Kurt Siehr (Zurich: Schulthess, 2010) 513. Compare: M. Franzen, ‘Conflicts of Laws in Employment Contracts and Industrial Relations’ in R. Blanpain (ed.), Comparative Labour Law and Industrial Relations in Industrialized Market Economies, 9th edn (The Hague: Kluwer, 2007) 215, pp. 227–8; F. Gamillscheg, ‘Rules of Public Order in Private International Labour Law’ (1983-III) 181 Recueil des Cours 285, pp. 319–20; B. Hepple, ‘Conflict of Laws on Employment Relationships within the EEC’ in K. Lipstein (ed.), Harmonization of Private International Law by the EEC (London: Institute of Advanced Legal Studies, 1978) 39, pp. 44–5; Lando, ‘General Principles’, p. 303; F. A. Mann, ‘Contracts: Effect of Mandatory Rules’ in Lipstein (ed.), Harmonization of Private International Law by the EEC, 31, p. 35; C. G. J. Morse, ‘Contracts of Employment and the E.E.C. Contractual Obligations Convention’ in P. M. North (ed.), Contract Conflicts: the E.E.C. Convention on the Law Applicable to Contractual Obligations: A Comparative Study (Amsterdam: North-Holland, 1982) 143, pp. 172–3.

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principle, to the law of the home Member State, primary EU law and the Posted Workers Directive allow and even mandate, under certain conditions, the application of certain employment standards of the host Member State.

2.3.2

Protection of employees and the law applicable in the absence of choice

Numerous solutions have been developed for determining the law applicable to employment contracts in the absence of choice. Some rely on hard and fast rules, whereas others adopt flexible connecting factors; some seem to be concerned primarily with the parties’ interests, whereas others seem to emphasise public interests.100 This diversity is a reflection of different approaches in the private international law of contract to the determination of the objectively applicable law101 and of various factual situations that such rules have to accommodate. Some authors have suggested that the objective of protection of employees requires giving the courts the power to consider the laws of all or some of the states with which a particular employment contract is connected and to apply the law that is the most favourable for the employee. Pocar advocates the comparison of the labour laws of all the states connected with an employment contract.102 Leclerc would limit the comparison to the law of the country of the place of work and the law of the country of the employer’s place of business.103 But the appropriateness of these solutions is questionable.104 The states whose laws are to be considered under this exercise may have weak links to, and no legitimate interest in regulating, the employment contract. In addition, the position of the parties and the judge, who would have to determine and compare the content of a range of different laws, would become extremely difficult. This would result in a high level of legal uncertainty. Moreover, there is 100

101 102 103

104

F. Gamillscheg, ‘Labour Contracts’ in K. Lipstein (ed.), International Encyclopedia of Comparative Law (Tübingen: Mohr Siebeck, 1972), vol. III, Ch. 28, pp. 18–30; F. Morgenstern, International Conflicts of Labour Law: A Survey of the Law Applicable to the International Employment Relation (Geneva: International Labour Office, 1984), pp. 21–43. Lando, ‘General Principles’, pp. 318–93. Pocar, ‘La protection de la partie faible’, pp. 404–8. F. Leclerc, La protection de la partie faible dans les contrats internationaux (Brussels: Decitre, 1995). Keller, ‘Schutz des Schwächeren’, p. 178; Kropholler, ‘Das kollisionsrechtliche System’, p. 657; Mayer, ‘La protection de la partie faible’, pp. 528–9; Nygh, Autonomy, p. 159.

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no reason why employees engaged in transnational employment should be better protected than other employees. The task of private international law should not be to favour employees unreservedly over employers. It should consist in ensuring the application of the law of the state which is both sufficiently closely connected with the employment contract and legitimately interested in regulating it and whose application the parties can reasonably expect.105 It comes as no surprise that the CJEU has rejected this approach.106 It should be noted in this respect that under Leflar’s better law approach, the ‘application of the better rule of law’ is one of the five policies underlying the choice-of-law process.107 Others are the predictability of results, maintenance of interstate and international order, simplification of the judicial task and the advancement of the forum’s governmental interests. The state whose law applies pursuant to this analysis has to be substantially connected with, and legitimately interested in regulating, a particular case. The better law is not necessarily the one most beneficial for the weaker party in terms of its substantive content. A connecting factor that usually accords with the mentioned considerations is the habitual (normal, usual, ordinary) place of work. In a typical employment relationship the employee works and resides for the entire period of employment in one place, in which the employer is also established. In such cases, there is usually no reason to look at another law. The employee is integrated into the working community at the place of work and is entitled to equal treatment with his or her coworkers. The employer is assured that the employment contracts with the employees working at a certain place will usually be governed by the law of that place and that it will not be easily exposed to the application of foreign laws. Both parties can be seen as acquiescing to the application of this law: the employer by setting up the place of work, the employee by agreeing to work there. Public interests are also ordinarily satisfied, since the protective legislation of a country is primarily enacted for the benefit of employees who habitually work in that country and is intended to equally burden all employers employing workers there. Equal treatment

105

106 107

Similarly, Keller, ‘Schutz des Schwächeren’, pp. 179–82; Kropholler, ‘Das kollisionsrechtliche System’, p. 641; Mayer, ‘La protection de la partie faible’, p. 529; Nygh, Autonomy; Vischer, ‘The Antagonism’, pp. 27–8; cf. Pocar, ‘La protection de la partie faible’, pp. 392–4. Schlecker (n 5), [34]. R. Leflar, American Conflicts Law, 3rd edn (Indianapolis: Bobbs-Merrill, 1977), pp. 212–15.

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of all workers in an establishment also promotes labour peace. The courts for the place of work will normally have jurisdiction and should be enabled to apply their own law. Not surprisingly, this is the presumptive solution in Rome I and many national codes.108 It is also the cornerstone of Article 45 of the TFEU on the free movement of workers within the European Union, which entails the abolition of any discrimination on the basis of nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment. Transnational employment relationships, however, are very diverse. The application of the law of the country of the habitual place of work will not be the most suitable in all cases. Sometimes there are good reasons for the application of the law of the country of the employer’s principal place of business. Transnational employers often transfer their managerial, advisory or specialist employees from one of the countries in which they do business to another or to their foreign branches, subsidiaries or affiliates. It is in the employers’ interest that such employment relationships are governed by the law of the country of their principal place of business, since this avoids them having to consider new laws every time a transfer occurs. Moreover, it is from the employer’s principal place of business that such employees usually receive their salary, briefings and instructions, to which they are obliged to report, that is, to which their employment is oriented. Given the nature of such employment relationships, one might argue that the employees should reasonably expect the application of the employer’s law. The application of this law is particularly justified if the parties share the nationality of, or if both are domiciled or habitually resident in, the country in which they enter into the employment contract for work abroad. In such cases, the parties may not reasonably contemplate the application of any other law, especially if the work is performed in a country whose law is based on fundamentally different notions or contains low employment standards. The state to which the parties belong usually also has a legitimate interest in having its law applied.109 Similarly, there is a strong argument for applying the law of the country of the parties’ joint nationality in cases of employees who work in diplomatic missions abroad or are members of the armed forces stationed abroad. 108

109

Art. 8(2) Rome I; Art. 43 Chinese Private International Law Act; Art. 3118(2) Quebec Civil Code; Art. 121(1) Swiss Federal Private International Law Code. Some US statutes expressly extend their application to US corporations employing US workers and operating overseas: see n 36.

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There are also situations in which the application of the law of the country of the employee’s domicile or habitual residence is the most suitable option. An employer may actively seek out an employee in the latter’s home country and conclude or negotiate the contract of employment with him or her there. The parties may foresee that the employee would retain strong links with his or her homeland and that he or she will return there after the termination of employment. In such cases, the application of the law of the employee’s country may accord with the parties’ reasonable expectations. That country may also be legitimately interested in having its labour law applied, since any adverse consequences of the employment relationship (unemployment, injury) would ultimately be felt there.110 A parallel can be made with consumer contracts in this regard. The consumer’s habitual residence is often used as the relevant connecting factor when the supplier seeks out the consumer in his or her home country.111 Employees whose employment contracts are governed by the law of the country of the habitual place of work or of the employer’s principal place of business or of the employee’s domicile or habitual residence can be temporarily posted to the employer’s foreign place of business, branch, subsidiary or affiliate. In such cases, the country to which the employee is posted may also have an interest in the application of certain aspects of its labour legislation. For instance, in order to protect local employers and workers from competition from abroad, the host country may impose on foreign employers posting workers to its territory the application of certain local labour law provisions that are of immediate interest during the period of posting, for example, provisions concerning health and safety, minimum wage or anti-discrimination. The interests of the host country in the application of its labour law frequently conflict with those of the home country, as well as with the interests of home country employers. The interests of posted workers are ambiguous. On the one hand, local employment standards may give them more protection than the home country law. On the other hand, the costs that their employers would have to bear if local employment standards were applied might eventually drive the employers out of the host country’s market and lead to the loss of jobs for posted workers. The Posted Workers Directive attempts to strike a balance between the competing interests in the EU context. 110 111

Weintraub, ‘Functional Developments’, pp. 286–7. Art. 6(1) Rome I; Arts. 3117(1) and 3117(2) Quebec Civil Code; Art. 120(1) Swiss Federal Private International Law Code.

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Employment relationships without a habitual place of work cause considerable problems. Commercial representatives, for instance, may be covering the territories of several countries. Depending on the circumstances of a particular case, the applicable law may be the law of the country from which such a parapathetic employee works, the law of the country of the employer’s principal place of business or even the law of a third country (e.g. the law of the country of the place of engagement).112 Another example is international transport workers, such as seamen, aircrew members or lorry drivers. Various solutions have been proposed for them, most widespread being the laws of the countries of the ship’s flag or of the place of registration of the aircraft, of the employer’s principal place of business, of the place of engagement and of the base from which the work is performed.113 The shortcoming of the first solution is obvious if the vessel flies a flag of convenience. The second and the third solution may point to the law of a country that is not particularly closely connected, such as where the country of the employer’s principal place of business or of the place of engagement is not the country from which the vessel operates. The fourth solution seems to be the most suitable in most cases, except where the connections between the international transport worker’s work and his or her base are very weak. Similar problems arise where there is a fixed place of work, but which is not located in any particular country, for example, offshore installations.114 Parapathetic workers cause particular problems in Europe, where some employers have developed a business model that depends, in part, on a formalistic interpretation of the relevant connecting factors, the registration of the vessel or the vehicle and the manipulation of the hiring process in a way designed to achieve the application of lax labour laws.115 Such employers (ab)use private international law to undercut service providers from other Member States.

112

113 115

Morgenstern, International Conflicts of Labour Law, pp. 28–30. Rome I uses ‘the place of business through which the employee was engaged’ as the relevant connecting factor in case ‘the country in which or, failing that, from which’ the work is habitually carried out cannot be determined: Arts. 8(2) and 8(3). The Swiss Federal Private International Law Code provides for the application of the law of the country of the employer’s place of business, domicile or habitual residence: Art. 121(2). Similarly, Art. 43 Chinese Private International Law Act; Art. 3118(2) Quebec Civil Code. Morgenstern, International Conflicts of Labour Law, pp. 28–32. 114 Ibid., pp. 32–3. See A. van Hoek, ‘Private International Law: An Appropriate Means to Regulate Transnational Employment in the European Union?’ (2014) 7 Erasmus Law Review 157, p. 164 (example of Ryanair).

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2.4 protecting employees by jurisdictional rules

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The diversity of factual patterns shows that the determination of the objectively applicable law is a delicate matter. In the words of KahnFreund, The need for flexibility in the criteria used for the determination of the proper law of the contract of employment arises from the generality of the concept of the contract of employment: it covers so many social phenomena that any formula of conflict of laws seeking to treat all cases alike would force an infinite variety of factual relations into too rigid a legal mould.116

Appropriate default choice-of-law rules must be flexible and take into account the various interests involved. The combination of Rome I (with its primary and subsidiary rules, exception clause and the possibility of applying overriding mandatory provisions of the forum and even, under certain conditions, of third countries)117 and the Posted Workers Directive represents one attempt in this regard. Another attempt is the solution of the Second Restatement of the Conflict of Laws and its progeny.118 The following chapters examine in detail the rules of Rome I (Chapter 5) and the Posted Workers Directive (Chapter 8). In addition, Chapters 6 and 7 explore the extent to which the law applicable to the employment contract under Rome I impacts the determination of the territorial scope of employment statutes forming part of English law and the choice of law for torts arising out of an employment relationship. It is shown that the gravitational pull of the lex contractus is very strong, which is explained as a facet of the regulatory function of Rome I, which seeks to channel the legislative authority over a transnational employment contract, in principle, to one country only, that of the employee’s origin.

2.4 Protecting employees by jurisdictional rules There are several factors that make a forum more attractive to one party than the other in a transnational employment dispute: the operation of choice-of-law rules, existence of specialised labour courts or tribunals, 116

117

118

O. Kahn-Freund, ‘Notes on the Conflict of Laws in Relation to Employment in English and Scottish Law’ in Selected Writings (London: Stevens, 1978) 259, p. 262. Arts. 8 and 9. For similar solutions that provide for a broader possibility of applying overriding mandatory provisions of third countries, see Arts. 3079, 3082 and 3118 Quebec Civil Code; Arts. 15, 18, 19 and 121 Swiss Federal Private International Law Code. §§6 and 196 Second Restatement of the Conflict of Laws; Art. 3537 Louisiana Civil Code; §15.630 Oregon Revised Statutes.

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system of legal fees, availability of legal aid, methods of obtaining and location of evidence, geographical proximity, neutrality (or even bias, actual or perceived, towards a party), cultural and legal tradition and the like.119 Parties normally seek to bring their claims or defend their cases in the forums that are most advantageous for them according to these factors. Since it is claimants who ordinarily select the forum when initiating proceedings, the parties’ litigational positions ultimately depend upon the number and diversity of available jurisdictional bases. The more available and diverse the bases, the greater the chance that the claimant will bring his or her claim in an advantageous forum, but also that the defendant will have to defend his or her case in a disadvantageous forum. As von Mehren rightly noted, ‘The highest ideal of procedural justice in civil matters is that, insofar as possible, each party should be treated equally . . . [W]here the parties are considered essentially equal in litigational capacity and neither’s claim to corrective justice is thought to be stronger than the other’s, neither should be accorded a jurisdictional preference.’120 Where the parties are of essentially unequal litigational capacity, however, there are compelling reasons to protect the weaker party by granting him or her a jurisdictional preference. Otherwise, equal treatment could lead to unjust results. The manner of achieving corrective justice in employment matters depends on whether employees, as a typically weaker category of litigants, act as claimants or as defendants. In the former situation, one or more jurisdictional bases could be made available to them in addition to those available to claimants in general. In the latter situation, employers could be denied the use of some generally available jurisdictional bases.121 Furthermore, the judgment of a foreign court that has unjustifiably assumed jurisdiction over an employee could be refused recognition and enforcement. The purpose of such measures is to ensure that employees are able to present their claims in favourable forums and do not have to defend their cases in inaccessible and unfamiliar forums. Rules of jurisdiction in employment matters should also accord with the following two considerations: proportionality and the vindication of legitimate state interests.122 Proportionality seeks to ensure that the 119

120 122

A. T. von Mehren, ‘Theory and Practice of Adjudicatory Authority in Private International Law: A Comparative Study of the Doctrine, Policies and Practices of Common- and Civil-Law Systems’ (2002) 295 Recueil des Cours 9, pp. 194–6. Ibid., pp. 196–7. 121 Ibid., pp. 200–3. Ibid., p. 68. See also R. Michaels, ‘Two Paradigms of Jurisdiction’ (2006) 27 Michigan Journal of International Law 1003, p. 1017.

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jurisdictional preference given to employees is not overly burdensome for employers. The forums made available to employees should be appropriate in terms of having sufficient connection with the parties or the claim, but also no more numerous than is required to achieve justice. Moreover, barring employers from accessing certain forums should not exceed what is necessary for this purpose. The second consideration arises from the states’ legitimate interests in having their courts adjudicate the disputes that touch significantly upon their policies. As discussed, choice-of-law rules for employment contracts should be designed in a way to ensure, among other things, the application of the law of the country that is sufficiently closely connected with the employment contract in question and legitimately interested in regulating it. It follows that, in principle, choice-of-law rules for employment contracts and rules of jurisdiction in employment matters should be complementary and, where possible, point to the law and courts of the same country.123 This is an especially important concern given that many states have set up specialised labour courts or tribunals, typically composed of representatives of workers and employers, which are not experienced in applying foreign law. However, the importance of this concern should not be exaggerated. There are many employment disputes where the forum and the ius do not coincide.124 Many countries have special jurisdictional rules for employment disputes that seek to accommodate at least some of the mentioned concerns. The current situation is one of great diversity. A study on residual jurisdiction of the Member State courts conducted in 2007 illustrates the multitude of existing approaches.125 Out of the then twenty-seven Member States, only seven did not have a jurisdictional rule of this kind. Jurisdiction is usually conferred on the courts for the habitual place of work. In some countries, jurisdiction is asserted on other bases, such as the place of conclusion of the contract, the place of business that engaged 123

124

125

Koelzsch (n 5), Opinion of AG Trstenjak, [80]; Nygh, Autonomy, p. 166; M. Polak, ‘“Laborum dulce lenimen”? Jurisdiction and Choice of Law Aspects of Employment Contracts’ in J. Meeusen, M. Pertegás and G. Straetmans (eds.), Enforcement of International Contracts in the European Union: Convergence and Divergence between Brussels I and Rome I (Antwerp, Oxford, New York: Intersentia, 2004) 323, [12–01], [12–23], [12–51]. Mulox (n 5), Opinion of AG Jacobs, [26]–[28]; B. Hess, T. Pfeiffer and P. Schlosser, ‘Report on the Application of Regulation Brussels I in the Member States’, available at http://ec.europa.eu/civiljustice/news/docs/study_application_brussels_1_en.pdf, [350]– [351]. A. Nuyts, ‘Study on Residual Jurisdiction: General Report’, available at http://ec.europa. eu/civiljustice/news/docs/study_residual_jurisdiction_en.pdf, pp. 43–6.

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the employee, the place of payment of salary, common nationality of the parties and the employee’s domicile or habitual residence. While in most Member States these jurisdictional bases were available only to employees, in some Member States they were equally available to both parties. Many countries also impose restrictions on the effects of choice-of-court agreements in employment contracts. The restrictions consist of either allowing the courts, if the objective of protection of employees so requires, to deny effect to a particular choice-of-court agreement that derogates their jurisdiction or in denying effect against employees to all choice-of-court agreements concluded before the dispute has arisen. Finally, some countries refuse to recognise and enforce foreign judgments in situations in which their courts have jurisdiction over an employment dispute. The habitual place of work is the head of jurisdiction that best satisfies the considerations of proportionality and vindication of legitimate state interests. In addition, it does not favour any party a priori. Other bases are objectionable. The shortcomings of the place of contracting rule are too well known to be repeated here. There are no guarantees that the country where an employment contract was concluded will be sufficiently closely connected with it or legitimately interested in adjudicating disputes arising out of it. Moreover, employers might easily manipulate this connecting factor and thus seek the benefit of litigating in the forums favourable for them. The same concerns apply to the place of business that engaged the employee126 and the place of payment of salary. Common nationality of the parties will frequently confer jurisdiction on the courts of the country that is sufficiently closely connected with, and legitimately interested in adjudicating disputes arising out of, employment contracts between its nationals. However, the problem arises in defining ‘nationality’ of legal persons, which the majority of transnational employers are. ‘Nationality’ of legal persons is usually determined by connecting factors such as the place of incorporation or corporate seat.127 Since these connecting factors also determine the domicile of legal persons, thus representing grounds of general jurisdiction over them,128 the common nationality rule would ordinarily not open an additional forum to claimant employees. On the other hand, this jurisdictional basis would effectively give employers access to the courts of their domicile, which 126 127

128

Mulox (n 5), Opinion of AG Jacobs, [37]. F. Vischer, ‘Connecting Factors’ in Lipstein (ed.), International Encyclopedia of Comparative Law, vol. III, Ch. 4, p. 14. See, for example, Art. 63 Brussels I Recast.

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does not accord with the objective of protection of employees. Finally, employee’s domicile or habitual residence has a rather tenuous connection in cases involving frontier workers and whenever the employee changes his or her domicile or habitual residence after the termination of employment but before the commencement of proceedings. Article 115(2) of the Swiss Federal Private International Law Code, which adopts this solution, has been criticised on the ground that any judgment rendered on this basis stands little chance of being recognised and enforced abroad, which makes the protection that it provides almost illusory.129 However, there seems to be one situation where the connecting factor of the employee’s domicile or habitual residence accords with the mentioned considerations. This situation exists when an employer actively seeks out an employee in the latter’s home country for work abroad and the parties foresee that the employee will retain strong connection with his or her home country and return there after the termination of employment. This country is arguably sufficiently closely connected with the employment relation and legitimately interested in adjudicating disputes arising out of it, since all adverse consequences of the employment relation would ultimately be felt there. Thus, the employer’s initiative to recruit the employee away from his or her home state is enough to establish jurisdiction of that state’s courts in the US under the ‘purposeful availment’ test.130 With regard to the restrictions of choice-of-court agreements, the solution which allows the courts to deny effect to such agreements, if the objective of protection of employees so requires, seems inappropriate. It leads to considerable legal uncertainty and does not guarantee that employees in a genuinely weak position will actually receive protection.131 The objective of protection of employees is better advanced by denying effect against employees to all choice-of-court agreements entered into before the dispute has arisen. On the one hand, employees are guaranteed that the number of forums which are available to them cannot be reduced in advance. The parties may even expand the list of options available to the employee. On the other hand, the number of forums which are available to employers cannot be increased in advance. This solution, however, works well only when the default jurisdictional rules satisfy the considerations of jurisdictionally preferring employees, proportionality and vindication of legitimate state interests. Since this solution is accepted in the Brussels I 129 130

131

Bucher, ‘Les nouvelles règles’, p. 149. P. Hay, P. J. Borchers and S. C. Symeonides, Conflict of Laws, 5th edn (St Paul, MN: West, 2010), pp. 449–51. See text accompanying n 63.

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Recast,132 Chapter 4 will focus on examining the available jurisdictional bases133 in this light. Yet another possibility is to ‘guide’ the parties’ choice by listing the forums among which a valid choice can be made. This solution, however, does not guarantee that the listed forums will be favourable for the employee or that they will be sufficiently closely connected with, and legitimately interested in adjudicating disputes arising out of, the employment contract in question.134 With regard to the jurisdictional defence to the recognition and enforcement of foreign judgments, it should be noted that, unlike Brussels I, the Brussels I Recast contains such a defence.135 Since this solution accords with the objective of protection of employees, it need not be examined further.

2.5 Conclusions This chapter shows that the individualistic view of the objective of protection of employees in private international law, seemingly favoured by the drafters of the Brussels I Recast and the Rome Regulations, is too narrow a view. Special private international law rules concerning employment not only give protection to individual employees and are more favourable to their interests than the general rules but also perform a systemic role of allocating and safeguarding the adjudicatory and legislative authority of states in the field of labour law. In other words, the protection of employees in private international law is primarily about finding and protecting the labour law system of the country or countries to which the employee ‘belongs’, in whose labour market(s) he or she participates. The role of the European private international law of employment in particular is to coordinate and maintain the diversity of the Member States’ domestic labour law systems, while enforcing basic principles and rights of EU law and safeguarding the objectives and values of EU law from non-EU elements. The shortcomings of party autonomy in transnational employment contracts and the states’ legitimate interests in the application of their labour laws speak strongly in favour of special private international law rules concerning employment. Employees must not be placed in a position in which they can only ‘put their faith in employers’ and ‘trust that 132 134

135

Art. 23. 133 Arts. 20–22. For arguments against a similar restriction in choice of law, see text accompanying nn 77–86. Art. 45(1)(e)(i) Brussels I Recast; cf. Art. 35(1) Brussels I.

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2.5 conclusions

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employers will play fair by them’. Special rules should safeguard the application of the law of the state that is sufficiently closely connected with the employment contract in question and legitimately interested in regulating it, with which law the parties to the contract are sufficiently closely connected and presumably familiar and whose application they reasonably expect. At the same time, the floor of protection should not be turned into the ceiling of protection. Party autonomy should be allowed as long as it benefits the employee by building upon the mandatory minimum. In addition, employees should be guaranteed the right to pursue their claims in favourable forums and not to defend their cases in unfamiliar and inaccessible forums. Jurisdictional preference accorded to employees, however, should be proportionate and take into account the states’ legitimate interests. In particular, the courts of the country that is sufficiently closely connected with, and legitimately interested in adjudicating disputes arising out of, the employment contract and whose jurisdiction the parties can reasonably expect must be available. Moreover, the rules of the European private international law of employment should not only take into account the interests of the parties to transnational relationships and the competing regulatory claims of different Member States but also safeguard the objectives and values of EU law from non-EU elements. This is a formidable list of requirements that an optimal system of private international law of employment should fulfil. There are also many ways in which these requirements can be met. The following chapters assess whether and to what extent the rules of the European private international law of employment accord with the mentioned considerations and explore the possibilities for improvement. Before exploring in detail the special jurisdictional and choice-of-law rules of the Brussels I Recast and Rome I, the question of which work relations fall within the scope of those rules will be examined.

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3 ‘Individual employment contracts’ in private international law

[I]n deciding whether jurisdiction should be claimed, it is relevant that the plaintiff is [an employee] but not that he is a pauper or a millionaire. von Mehren1

The rules of the Brussels I Recast and Rome I concerning employment apply ‘in matters relating to individual contracts of employment’,2 that is, to ‘individual employment contracts’.3 Clearly, those rules cover neither collective labour agreements nor ‘contracts for the provision of services’.4 It is unclear, however, which contracts for the performance of work do fall within the scope of those rules. Most workers work under ‘standard’ employment contracts, that is, permanent full-time contracts with a single employer that bears the chance of profit and risk of loss and has the right to control the workers who are integrated into its organisation.5 Domestic laws classify such workers as ‘typical’ employees (and the contracts under which they work as typical employment contracts) and accord them the full protection of labour and social legislation. This is because such workers are subject to a considerable degree of control by the employer and are dependent upon the employer economically and/or for the fulfilment of certain social and psychological needs.6 Work relations between such workers and their 1

2

3 4 5

6

A. T. von Mehren, ‘Adjudicatory Jurisdiction: General Theories Compared and Evaluated’ (1983) 63 Boston University Law Review 279, p. 313. Art. 20(1) Brussels I Recast. Also Art. 18(1) of Brussels I and the 2007 Lugano Convention; Arts. 5(1) and 17(5) of the Brussels and 1988 Lugano Conventions. Art. 8(1) Rome I. Also Art. 6 Rome Convention. Art. 7(1)(b) Brussels I Recast; Art. 4(1)(b) Rome I. B. Burchell, S. Deakin and S. Honey, ‘The Employment Status of Individuals in Non-Standard Employment’ (March 1999), available at http://webarchive.nationalarchives.gov.uk/ 20010516034052/http://dti.gov.uk/er/emar/emar6.pdf; A. Perulli, Economically Dependent/ Quasi-subordinate (Parasubordinate) Employment: Legal, Social and Economic Aspects (2003), available at http://ec.europa.eu/social/BlobServlet?docId=2510&langId=en. The reference to control and dependence in economic, social and psychological terms as determinative of the need of protection is derived from G. Davidov, ‘The Three Axes of

56

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‘individual employment contracts’

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employers also typically fall within the scope of the European private international law rules concerning employment. Today, a large and increasing number of work relations lack one or more features of the typical employment contract. Vertical disintegration of production7 has led to the distancing of workers from the producing enterprise, as manifested by the rising number of fixed-term, part-time, casual, home, volunteer and other types of ‘atypical’ work arrangements, as well as by the growth of both nominal and genuine entrepreneurship. The loosening of the employer’s control over such workers, their relatively low level of integration into the employer’s organisation and the assumption of many business risks have often resulted in the courts classifying such workers as self-employed, thus outside the scope of protective legislation. Furthermore, the phenomenon of decomposition of the producing enterprise into distinct legal entities connected, for instance, by bonds of ownership and control8 has created situations where a worker may be nominally employed by one legal entity (e.g. one member of a corporate group) but work, occasionally or exclusively, for one or more other legal entities (e.g. group members). A related phenomenon is the outsourcing of labour through employment agencies. But the splitting and sharing of employer functions among multiple entities is often not followed by a corresponding ascription of employer responsibilities. Given that many workers working under these and other ‘non-standard’ work relations may be subject to a considerable degree of control by, and dependence upon, their employers, domestic laws are faced with a difficult question of whether and how to adequately bring such workers within the fold of protective legislation. Some countries have responded to this challenge by widening the concept of employee to encompass some categories of atypical workers, whereas others have created intermediate legal categories of workers who are not employees but, nevertheless, fall to a certain extent within the scope of protective legislation (referred to as the ‘dependent self-employed’ in the following text). Moreover, countries differ with regard to the way they ascribe employer responsibilities among multiple employing entities. European private international law is faced with essentially the same question:

7

8

Employment Relationship: A Characterisation of Workers in Need of Protection’ (2002) 52 University of Toronto Law Journal 357. H. Collins, ‘Independent Contractors and the Challenge of Vertical Disintegration to Employment Protection Laws’ (1990) 10 Oxford Journal of Legal Studies 353. H. Collins, ‘Ascription of Legal Responsibility to Groups in Complex Patterns of Economic Integration’ (1990) 53 Modern Law Review 731.

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‘individual employment contracts’

should the rules concerning employment cover some non-standard work relations? This question goes to the core of the protection of employees in private international law. This chapter starts by exploring the use of the term ‘individual employment contracts’ in the Brussels I Recast and Rome I. It is shown that the use of this term does not imply a policy of narrowly interpreting the scope of the special rules concerning employment by confining it to typical employment contracts. Next, it is examined whether this term should be given an autonomous meaning. After concluding that an autonomous interpretation should be adopted, it is investigated how this term should be defined for the purposes of the two regulations. The third section demonstrates that the CJEU case law concerning the free movement of workers and equal pay provisions of the TFEU offers crucial guidance. Since the third section focuses on the concept of employee, that is, the person working under an ‘individual employment contract’, the fourth section examines who is the employer for the purposes of two regulations. It is shown that the wide and inclusive scope of the special rules can be perceived as an attempt both to provide private international law protection to all workers in genuine need of protection and to allocate and safeguard the regulatory authority of states that have intermediate legal categories of dependent self-employed workers or ascribe employer responsibilities to multiple employing entities. This chapter does not deal with the concept of ‘worker’ under the Posted Workers Directive. Since it is to be interpreted according to the law of the host Member State,9 no problem of classification of interest for private international law arises.

3.1 The genealogy of the term ‘individual employment contracts’ It may appear at first sight that the term ‘individual employment contracts’ that is used in the Brussels I Recast and Rome I should be equated with the notion of typical employment contract. The purpose of this section is twofold. By examining its genealogy, it is explored whether the use of the term ‘individual employment contracts’ implies, first, either an autonomous or domestic interpretation and, second, a policy of narrowly interpreting the scope of the special private international law rules concerning employment by excluding non-standard work relations from their ambit. 9

Art. 2(2).

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3.1

genealogy of ‘individual employment contracts’ 59

The original 1968 version of the Brussels Convention did not contain any special jurisdictional rules concerning employment. A preliminary draft, however, did contain such rules that, according to the Jenard Report, were to apply ‘in matters relating to contracts of employment in the broadest sense of this word’.10 The special rules were not incorporated into the final version because at that time work was in progress to harmonise choice-of-law rules within the European Economic Community. It was thought that jurisdictional rules should follow choice-of-law rules and the adoption of the special jurisdictional rules concerning employment was postponed.11 Indeed, the European Commission was then drafting two instruments containing special choice-of-law rules concerning employment. The first instrument, which never came to fruition, was the regulation on the provisions of conflict of laws on employment relationships within the Community, two drafts of which were published in 1972 and 1976.12 The 1976 draft Regulation was to apply to ‘employment relationships’.13 According to the accompanying explanatory memorandum, ‘Each Member State determines, through its own legislation, which legal relationships should be considered as employment relationships.’14 Since the interpretation of the term ‘employment relationships’ would have been domestic under this instrument, the breadth of the scope of the special choice-of-law rules would have depended on the content of the Member States’ labour laws. The second instrument started off as the 1972 draft of the convention on the law applicable to contractual and non-contractual obligations.15 The application of the choice-of-law rules for contract or tort would have depended on the legal basis of the claim. While the 1972 draft Convention contained special rules for contractual employment claims that were to apply to ‘contracts relating to labour relations’ or ‘labour 10

11 12

13 15

P. Jenard, ‘Report on the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Signed at Brussels, 27 September 1968)’ [1979] OJ C59/ 1, p. 24 (emphasis added). Ibid. European Commission, ‘Proposal for a Regulation (EEC) of the Council on the Provisions of Conflict of Laws on Employment Relationships within the Community’ [1972] OJ C49/26; European Commission, ‘Amended Proposal for a Regulation of the Council on the Provisions of Conflict of Laws on Employment Relationships within the Community’, COM(75) 653 final. Art. 1. 14 COM(75) 653 final, p. 5. The text of the 1972 draft Convention with comment by K. H. Nadelmann can be found in (1973) 21 American Journal of Comparative Law 584.

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contracts’,16 it contained no special rules for tortious employment claims. After the project of unifying choice-of-law rules for tort had been abandoned, the choice-of-law rules for contract of the 1972 draft Convention came to life in the form of the 1980 Rome Convention. Article 6 of this convention contains special rules concerning employment that apply to ‘individual employment contracts’. The Giuliano-Lagarde Report provides little guidance regarding the interpretation of this term. After stating the obvious that ‘Article 6 applies to individual employment contract and not to collective agreements’, the report notes that the ‘wording of Article 6 speaks of “contract of employment” instead of “employment relationship”’ and concludes that it ‘covers the case of void contracts and also de facto employment relationships in particular those characterised by failure to respect the contract imposed by law for the protection of employees’.17 The Rome Convention and the GiulianoLagarde Report, therefore, left room for debate whether the term ‘individual employment contracts’ should be interpreted autonomously and did not define its content. Largely inspired by the Rome Convention’s choice-of-law rules concerning employment, the CJEU carved, in the ground-breaking Ivenel case of 1982,18 a special jurisdictional rule for ‘contracts of employment’ into the Brussels Convention. But the CJEU neither said whether this term should be interpreted autonomously nor provided guidance regarding its content. Since the referring court (French Cour de cassation) had found that the contract for commercial representation between the parties had been an employment contract, the CJEU was concerned only with the jurisdictional consequences of that finding. In a subsequent case, Shenavai,19 the CJEU addressed the scope of the Ivenel rule. Mr Shenavai, a German architect, was commissioned by a Dutch client to draw up plans for the building of holiday homes. The question was whether the contract fell within the scope of the Ivenel rule. In an important paragraph, the CJEU stated that contracts of employment, like other contracts for work other than on a selfemployed basis, differ from other contracts – even those for the provision of services – by virtue of certain particularities: they create a lasting bond which brings the worker to some extent within the organizational 16 17

18 19

Art. 5. M. Giuliano and P. Lagarde, ‘Report on the Convention on the Law Applicable to Contractual Obligations’ [1980] OJ C282/1, p. 26. Case 133/81 Roger Ivenel v. Helmut Schwab [1982] ECR 1891; [1983] 1 CMLR 538. Case 266/85 Hassan Shenavai v. Klaus Kreischer [1987] ECR 239; [1987] 3 CMLR 782.

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genealogy of ‘individual employment contracts’ 61 framework of the business of the undertaking or employer, and they are linked to the place where the activities are pursued, which determines the application of mandatory rules and collective agreements.20

Since the contract between Mr Shenavai and his client had no such particularities, it fell outside the scope of the Ivenel rule. Special jurisdictional rules concerning employment were incorporated into the 1988 Lugano Convention and, by means of the 1989 Convention on the accession of Spain and Portugal,21 into the Brussels Convention. With regard to the term ‘individual employment contracts’ that was used to delineate the scope of the special rules, the Jenard-Möller Report accompanying the 1988 Lugano Convention stated, ‘The question whether a contract of employment exists is not settled by the Convention . . . 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.’22 The CJEU has not had another opportunity to express its view on the scope of the special jurisdictional rules, but it did confirm the cited paragraph of Shenavai.23 The Rome, Brussels and 1988 Lugano Conventions were replaced by Rome I, Brussels I and the 2007 Lugano Convention. Brussels I is now replaced by the Brussels I Recast. The special rules concerning employment underwent little changes of substance and continue to apply to ‘individual employment contracts’. Choice-of-law rules for tort have been unified by Rome II. There are no special rules for tortious employment claims, however. There seem to be two reasons for the use of the term ‘individual employment contracts’ in the Brussels I Recast and Rome I and their predecessors. This term prevailed over other terms (‘employment relations’, ‘labour relations’, ‘labour contracts’) with the adoption of the Rome Convention in 1980 and the CJEU decision in Ivenel in 1982. At that time the binary divide between employment contracts and services contracts was paradigmatic in the laws of the Member States.24 Domestic 20 22

23

24

Ibid., [16] (emphasis added). 21 [1989] OJ L285/1. P. Jenard and G. Möller, ‘Report on the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters Done at Lugano on 16 September 1988’ [1990] OJ C189/57, [41]. Case 32/88 Six Constructions Ltd. v. Paul Humbert [1989] ECR 341; [1990] ILPr 206, [10]; Case C-125/92 Mulox IBC Ltd. v. Hendrick Geels [1993] ECR I-4075; [1993] ILPr 668, [15]. N. Countouris, The Changing Law of the Employment Relationship (Aldershot: Ashgate, 2007), Ch. 1.

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labour laws, in principle, covered only employees working under employment contracts. The concept of employment contract was defined by reference to the following characteristics: personal subordination of the employee in the performance of work, continuity, full-time working hours and bilaterality.25 Although some Member States also brought certain categories of workers working under atypical work relations within the scope of some of their protective legislation, this was rather exceptional.26 Therefore, it must have been obvious and uncontroversial in the early 1980s that the rules of European private international law concerning employment should cover employees working under employment contracts. The second reason arguably lies in the fact that the UK and Ireland, countries familiar with the legal concept of employment contract but not employment relationship or labour relations, joined the European Economic Community in 1973. Since the concept of employment contract was also in use in other Member States, the term ‘individual employment contracts’ was arguably accepted as common to all Member States. Two conclusions can be derived from this description of the use of the term ‘individual employment contracts’ in the Brussels I Recast and Rome I. First, it has never been conclusively clarified whether the term ‘individual employment contracts’ should be interpreted autonomously.27 Second, the use of this term does not imply a policy of narrowly interpreting the scope of the special rules concerning employment.

3.2 Autonomous or domestic interpretation? An autonomous interpretation of the term ‘individual employment contracts’ is favoured by the overwhelming majority of academics and in domestic case law.28 Nevertheless, the reasons for adopting such an 25 27

28

Ibid. 26 Ibid. But see Case C-154/11 Ahmed Mahamdia v. République algérienne démocratique et populaire, 19 July 2012, nyr, [42]. A. Briggs and P. Rees, Civil Jurisdiction and Judgments, 5th edn (London: Informa, 2009), [2.103]; H. G. Beale (gen. ed.), Chitty on Contracts, 31th edn (London: Sweet & Maxwell, 2012), [30–109]–[30–110], [30–279]; G. Cavalier and R. Upex, ‘The Concept of Employment Contract in European Union Private Law’ (2006) 55 International and Comparative Law Quarterly 587; L. Collins (gen. ed.), Dicey, Morris and Collins on the Conflict of Laws, 15th edn (London: Sweet & Maxwell, 2012), [33–253]–[33–254]; J. Hill and A. Chong, International Commercial Disputes: Commercial Conflict of Laws in English Courts, 4th edn (Oxford: Hart, 2010), [15.5.25]; F. Jault-Seseke, ‘L’adoption du règlement 593/2008 (Rome I) sur la loi applicable aux obligations contractuelles: le choix

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interpretation will be examined. This is because a domestic interpretation is still preferred by a very influential minority and pursued by an occasional judge.29 Furthermore, such an interpretation used to be favoured, in relation to the rules of the Rome Convention, by the authors of Dicey, Morris and Collins on the Conflict of Laws, under the influence of Morse.30 The Brussels I Recast and Rome I are directly effective EU law and, as a matter of EU law, should, as far as possible, be accorded an autonomous interpretation.31 Furthermore, many EU labour law instruments expressly refer to domestic definitions of the terms ‘worker’, ‘employee’, ‘employment contract’ and ‘employment relationship’ that they employ; a contrario, since the Brussels I Recast and Rome I are silent in this respect, an autonomous definition should prima facie be adopted.32

29

30

31 32

de la continuité pour le contrat de travail’ [2008] Revue de droit du travail 620, pp. 621–2; A. Junker, ‘Arbeitsverträge’ in F. Ferrari and S. Leible (eds.), Ein neues Internationales Vertragsrecht für Europa: Der Vorschlag für eine Rom I-Verordnung (Munich: Sellier, 2007) 111, pp. 113–14; P. Kaye, The New Private International Law of Contracts of the European Community (Aldershot: Dartmouth, 1993), pp. 222–3; A. Layton and H. Mercer (eds.), European Civil Practice (London: Sweet & Maxwell, 2004), [18.005]; P. Mankowski, ‘Commercial Agents under European Jurisdiction Rules’ (2008) 10 Yearbook of Private International Law 19, pp. 22–4; L. Merrett, Employment Contracts in Private International Law (Oxford University Press, 2011), Ch. 3; C. Espluges Mota and G. Palao Moreno, ‘Section 5: Jurisdiction over Individual Contracts of Employment’ in U. Magnus and P. Mankowski (eds.), Brussels I Regulation, 2nd ed (Munich: Sellier, 2012) 391, p. 394; Mercury Publicity Ltd. v. Wolfgang Loerke GmbH [1993] ILPr 142; WPP Holdings Italy SRL v. Benatti [2006] EWHC 1641 (Comm); [2007] 1 All ER (Comm) 208 and [2007] EWCA Civ 263; [2007] 1 WLR 2316; Samengo-Turner v. J&H Marsh & McLennan (Services) Ltd. [2007] EWCA Civ 723; [2007] 2 All ER (Comm) 813; Duarte v. Black & Decker Corp. [2007] EWHC 2720 (QB); [2008] 1 All ER (Comm) 401; BAG, 20 August 2003, IPRspr. 2003 no. 140; AG Münster, 26 January 1999, IPRspr. 2000 No. 111. P. R. Beaumont and P. E. McEleavy, Anton’s Private International Law, 3rd edn (Edinburgh: Green, 2011), [10.371]; C. M. V. Clarkson and J. Hill, The Conflict of Laws, 4th edn (Oxford University Press, 2011), p. 244 (in relation to Rome I); R. Plender and M. Wilderspin, The European Private International Law of Obligations, 3rd edn (London: Sweet & Maxwell, 2009), [11–010]–[11–024] (in relation to Rome I); WPP Holdings Italy SRL v. Benatti [2007] EWCA Civ 263; [2007] 1 WLR 2316, [76]–[77] (per Buxton LJ) (in relation to Brussels I). Dicey, Morris and Collins on the Conflict of Laws, 14th edn (2006), [33–063]–[33–066]; C. G. J. Morse, ‘Contracts of Employment and the E.E.C. Contractual Obligations Convention’ in P. M. North (ed.), Contract Conflicts: the E.E.C. Convention on the Law Applicable to Contractual Obligations: A Comparative Study (Amsterdam: NorthHolland, 1982) 143, pp. 146–7; C. G. J. Morse, ‘Consumer Contracts, Employment Contracts and the Rome Convention’ (1992) 41 International and Comparative Law Quarterly 1, p. 13. Merrett, Employment Contracts in PIL, [3.12]–[3.15]. Ibid., [3.26]–[3.29], [3.32]. EU labour law instruments are listed in nn 101–4 below.

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Only an autonomous interpretation enables the achievement of the objectives pursued by the two regulations. According to Recital 6 of Rome I, ‘The proper functioning of the internal market creates a need, in order to improve the predictability of the outcome of litigation [and] certainty as to the law applicable, for the conflict-of-law rules in the Member States to designate the same national law irrespective of the country in which an action is brought.’ Recital 4 of the Brussels I Recast is worded in similar terms. Truly uniform jurisdictional and choice-of-law rules (as well as rules on recognition and enforcement of judgments) cannot exist unless the terms and concepts that they employ are interpreted identically in all Member States. Lack of uniformity should, as far as possible, be avoided, since it leads to legal uncertainty and unpredictability and, according to the preambles to the two regulations, therefore, hampers the sound operation of the internal market. Truly uniform rules can be achieved only if the terms and concepts that they use are interpreted autonomously, not by reference to domestic law. The following example illustrates this point. Suppose an atypical worker (W) who is domiciled and habitually resident in one Member State (MS1) habitually works in another Member State (MS2) for an employer from a third Member State (MS3). Furthermore, suppose W is classified as an independent contractor in MS1, as a dependent selfemployed in MS2 and as an employee in MS3, thus falling outside the scope of labour law of MS1, within the scope of some of the protective legislation of MS2 and within the scope of the whole of labour law of MS3. A recent CJEU case, Jan Voogsgeerd v. Navimer SA,33 shows that factual scenarios of this kind are not just fictional. Here, a Dutch national and domiciliary entered into an employment contract with a Luxembourg company to habitually work from Belgium. The following section of this chapter shows that an atypical worker can indeed be classified as an independent contractor in one country, but as a dependent self-employed or an employee in another. If the term ‘individual employment contracts’ that is used in the two regulations were interpreted by reference to domestic law, the application of their rules concerning employment would be uncertain and unpredictable. If the lex fori classification were adopted, the application of the rules of the Brussels I Recast and Rome I concerning employment would depend on where the claimant brought his claim. Those rules would not apply if the claim were brought in MS1, but would apply if the claim were 33

C-384/10 [2011] ECR I-13275.

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brought in MS3. If the claim were brought in MS2, another point of uncertainty and unpredictability would arise. Would the fact that W is classified as a dependent self-employed in MS2 be enough to also bring W within the scope of the special rules of the two regulations? Prima facie the answer would be negative, since the dependent self-employed by definition do not work under employment contracts. However, if the law of MS2 gave W the right to access the labour courts of that country, there would be a good argument in favour of bringing W at least within the scope of the special jurisdictional rules of the Brussels I Recast.34 Even the authors favouring a domestic interpretation reject the lex fori classification. As Morse notes in relation to the rules of the Rome Convention,35 after deciding that the relationship between the parties is an employment contract under the lex fori, the court may discover that this contract is governed by a foreign law that regards it as a services contract. If the court, nevertheless, applied the rules of the applicable law concerning employment, it would seriously distort the applicable law and apply it contrary to the intentions of the enacting legislature. ‘And, as a matter of logic, of course, the forum which adopts such an approach disposes of the case by applying neither the foreign law nor, for that matter, the law of any country whatsoever.’36 Morse further notes that it may appear that the distortion can be avoided if the court applies the rules of the applicable law concerning services contracts. But in this situation, ‘a choice-of-law rule deemed appropriate for contracts of employment may be used to secure the application of domestic substantive rules which are not applicable to the contracts of employment . . . Such a result might be thought to distort the [Rome] Convention itself’.37 Similar distortions occur if the lex fori does not regard the contract as one of employment, but the applicable law determined pursuant to the general choice-of-law rules does. The authors who still favour a domestic interpretation argue for the lex causae classification.38 Since choice-of-law rules for contract are uniform within the EU and aim to ‘designate the same national law irrespective of 34

35

36 38

See W. A. Allwood, ‘Characteristic Performance and Labour Disputes under the Brussels Convention: Pandora’s Box’ (1987) 7 Yearbook of European Law 131, p. 139. Morse, ‘Contracts of Employment’, pp. 146–7. See also Plender and Wilderspin, The European PIL of Obligations, [11–013]–[11–014]. Morse, ‘Contracts of Employment’, p. 147. 37 Ibid. Clarkson and Hill, The Conflict of Laws, p. 244; Plender and Wilderspin, The European PIL of Obligations, [11–015]–[11–016], [11–021]. See also Morse, ‘Contracts of Employment’, pp. 147–8; WPP Holdings Italy SRL v. Benatti [2007] EWCA Civ 263; [2007] 1 WLR 2316, [76]–[77] (per Buxton LJ).

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the country in which an action is brought’, in the view of the proponents of the lex causae classification, no uncertainty and unpredictability would arise if the applicable law were to classify the relationship between the parties. Returning to the given example, the choice-of-law rules of Rome I would lead to the application of one of the laws of MS1, MS2 and MS3 regardless of the court seised, and that applicable law would determine whether W works under an employment contract for the purposes of the European choice-of-law rules. But this argument cannot withstand closer scrutiny. Where W’s employee status is unclear, the question arises whether the general or special choice-of-law rules of Rome I should apply to designate the law that, in turn, would determine whether W works under an employment contract. If, in the given example, the general choice-of-law rules were applied, the applicable law would, absent a choice-of-law agreement and a manifestly closer connection with another country, be the law of the country of W’s habitual residence, that is, MS1.39 Since W is classified as an independent contractor in MS1, he would fall outside the scope of the rules concerning employment of the two regulations. If, on the other hand, the choice-of-law rules for employment contracts were applied, the applicable law would, absent a choice-of-law agreement and a closer connection with another country, be the law of the country of the habitual place of work, that is, MS2.40 Although W is classified as a dependent self-employed in MS2, the court might still find that he falls within the scope of the rules concerning employment of the Brussels I Recast and Rome I. It is, therefore, of crucial importance whether the law that should determine whether W works under an employment contract is determined by applying the general or special choice-of-law rules. Plender and Wilderspin attempt to solve this problem in the following way.41 The court should apply, in the first instance, the choice-of-law rules for employment contracts and then ascertain whether the law designated by those rules classifies the relationship between the parties as an employment contract. If so, the court should apply the rules of the applicable law concerning employment. If not, the court should apply the law designated by the general choice-of-law rules. The application of the special choice-of-law rules as the first step is justified by analogy with 39 41

Arts. 4(1)(b), 4(2) and 4(3) Rome I. 40 Arts. 8(2) and 8(4) Rome I. Plender and Wilderspin, The European PIL of Obligations, [11–015]–[11–016]. See also Morse, ‘Contracts of Employment’, pp. 147–8.

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Article 10 of Rome I, which provides that the existence and validity of a contract, or any term thereof, shall be determined by the law that would govern it if the contract or term were valid. Returning to the given example, the court should, as the first step, apply the law of MS2 to determine whether the relationship between the parties is an employment contract. If the court finds that a dependent self-employed falls within the scope of the rules concerning employment of the two regulations, it should apply the law of MS2. Otherwise, it should apply the law designated by the general choice-of-law rules, that is, the law of MS1. Even if one disregards the problems inherent in determining the content of foreign laws and their interpretation, this solution leads to considerable legal uncertainty and unpredictability for two reasons. Let us take a different example. Suppose W is classified as an employee in the Member State where he is domiciled and habitually resident (MS1), but as an independent contractor in the Member State where he habitually works (MS2). First, the parties to an employment contract may choose the applicable law.42 But the choice cannot deprive the employee of the protection afforded to him or her by the mandatory provisions of the objectively applicable law.43 An employment contract can, therefore, be governed by two laws. If the parties chose the law of MS1, both the law of MS1 (the chosen law) and MS2 (the objectively applicable law) would logically have to be taken into consideration for determining the nature of the relationship between the parties. Where one applicable law, but not the other, regards the worker as an employee, preference would have to be given to the view of one applicable law over the other. Second, and assuming there is no choice-of-law agreement, the court should, as the first step, apply the law of MS2 to determine whether the relationship between the parties is an employment contract. However, since W is classified as an independent contractor in MS2, the court should apply the law designated by the general choice-of-law rules, that is, the law of MS1. But the problem is that W is classified as an employee in MS1. If the court applied the rules of MS1 concerning employment, it would, in the opinion of the proponents of the lex causae classification, distort Rome I.44 If, on the other hand, the court applied the rules of MS1 concerning services contracts, it would, in their opinion, distort the applicable law.45 This is presumably why Plender and Wilderspin concede that the lex causae classification ‘presents certain logical problems’ and adopt it ‘with some hesitation’.46 42 46

Art. 8(1) Rome I. 43 Ibid. 44 See n 36. 45 See n 37. Plender and Wilderspin, The European PIL of Obligations, [11–016].

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In addition to promoting the objectives of legal certainty and predictability, an autonomous interpretation advances the objective of protection of employees. As discussed in the following section, many Member States’ labour laws cover not only typical employees but also, completely or partially, some other categories of workers who are subject to a considerable degree of control by, and dependence upon, their employers. If the term ‘individual employment contracts’ is interpreted autonomously, it can be given a wide meaning that encompasses all workers who are in genuine need of protection. An autonomous interpretation thereby allows the European private international law of employment to take into consideration, and develop under the influence of, legal, economic, social and political trends that shape the scope of domestic labour laws and perform a progressive social function of providing jurisdictional and choice-of-law protection to all workers who genuinely need it. An autonomous interpretation puts the European private international law of employment in a position to adequately perform its regulatory function. Only an autonomous and wide interpretation enables the allocation and safeguarding of the regulatory authority of states that have intermediate legal categories of dependent self-employed workers or ascribe employer responsibilities to multiple employing entities. The following two sections examine which work relations fall within the scope of the rules concerning employment of the Brussels I Recast and Rome I. Before proceeding further, however, an argument that has been advanced against an autonomous interpretation should be addressed: [W]ere an autonomous meaning to be attributed to the concept of contract of employment one might reach the result that a particular State’s employment law would be applied to a particular contract even though that State would regard the contract as not being one of employment . . . or, alternatively, that a particular State’s employment law would not be applied to the particular contract because although that State’s law regarded the particular contract as one of employment, the autonomous definition would place it under another heading . . . In either situation, there is a danger of distorting the applicable law.47

The purpose of choice-of-law rules for contract is to designate a law to govern a particular contractual relationship. The role of the choice-of47

Dicey, Morris and Collins on the Conflict of Laws, 14th edn (2006), [33–064]. See also Beaumont and McEleavy, Anton’s PIL, [10.372]; Plender and Wilderspin, The European PIL of Obligations, [11–012], [11–021]; Morse, ‘Contracts of Employment’, pp. 148–9.

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law rules is exhausted once the applicable law has been determined. The relationship is governed by the rules of the applicable law which, according to that law, are applicable to the relationship. In other words, if the applicable law regards the relationship as an employment contract, the rules of the applicable law concerning employment apply. Similarly, if the applicable law regards the relationship as a services contract, the rules of the applicable law concerning services contracts apply. An autonomous and wide interpretation of the term ‘individual employment contracts’ enables the European private international law of employment to adequately perform its regulatory function. But if the law that is objectively applicable pursuant to the special rules of Rome I regards the worker in question as self-employed and thus outside the scope of protective legislation, there is no reason to safeguard the application of the protective legislation of that law. A choice-of-law agreement in favour of a foreign law should be given full effect. Absent such an agreement, the rules concerning services contracts of the objectively applicable law will be applied. In sum, only an autonomous and wide interpretation of the term ‘individual employment contracts’ enables the achievement of the objectives of legal certainty, predictability and protection of employees. This term should also, as far as possible, be interpreted consistently between the two regulations.48

3.3 Who is the employee? A number of methods of interpretation, namely verbal, historic, systematic, teleological and comparative interpretations, are used to interpret autonomous terms and concepts of European law.49 The wording and evolution of the term ‘individual employment contracts’ were explored in Section 3.1. This section examines whether the elements of an autonomous definition can be found, first, in a comparative analysis of the scope of the Member States’ labour laws and, second, in substantive EU law. The focus here is on the concept of employee, that is, the person working under an ‘individual employment contract’ for the purposes of the Brussels I Recast and Rome I. 48

49

Recital 7 Rome I. See also Recital 7 Rome II; Case C-29/10 Heiko Koelzsch v. État du Grand Duchy of Luxemburg [2011] ECR I-1595, [33]; Voogsgeerd (n 33), Opinion of AG Trstenjak, [83]. P. Mankowski, ‘Introduction’ in Magnus and Mankowski (eds.), Brussels I Regulation 4, pp. 34–9.

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3.3.1 Elements of an autonomous definition: comparative analysis The Member States’ labour laws differ considerably with regard to their scope. As the following text demonstrates, the differences are such that, as in the examples used in the previous section, a worker may indeed find himself or herself outside the scope of labour law of one Member State but, completely or partially, within the scope of labour law of another Member State. This section presents briefly how some Member States, namely England, France and Germany, delineate the scope of their labour laws.50 In all Member States, the concept of employment contract forms the paradigm of the kind of contract that falls within the ambit of, and receives protection in, labour law. On the other side of the binary divide is the concept of services contract that is regulated by commercial or contract law. But these concepts are not perceived and defined identically in the Member States. In England, the common law of employment applies to employment contracts, also labelled as contracts of service. Furthermore, only employees who work under employment contracts and meet the qualifying conditions are given all statutory employment rights.51 There is no statutory definition of the concept of employee. The statutes using this concept refer to the common law definition.52 The basic principle of the common law is freedom of contract. An employer can employ the work of another under an infinite variety of contractual arrangements. To determine whether it is an employment contract or a contract for services, each contract for the provision of work must be analysed carefully. Classification under the common law is, therefore, an inherently complex and uncertain process, exacerbated by the fact that there are several tests 50

51

52

For a more detailed account see Cavalier and Upex, ‘The Concept of Employment Contract’; N. Countouris, ‘The Employment Relationship: A Comparative Analysis of National Judicial Approaches’ in G. Casale (ed.), The Employment Relationship: A Comparative Overview (Oxford: Hart, 2011) 35. Statutory employment rights given only to employees include the right to statement of employment particulars; right to itemised pay statement; right to guarantee payment; right not to suffer detriment in employment in various cases; right to time off work for various reasons; right to sick pay; rights relating to maternity, adoption, parental and paternity leave; right to flexible working; right to minimum period of notice; right to written statement of reasons for dismissal; right not to be unfairly dismissed; right to redundancy payment; rights on insolvency of employer and rights relating to transfer of undertaking: Employment Rights Act 1996, passim; Transfer of Undertakings (Protection of Employment) Regulations SI 2006/246. See section 230 ERA 1996.

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for distinguishing between employment and services contracts under which numerous factors have to be considered. Pursuant to the ‘control test’, one essentially has to consider whether the employer has the right to give orders regarding the worker’s activities.53 But the control test cannot be decisive in cases concerning skilled employees, professionals and managers who enjoy considerable discretion in performing their work. The more inclusive ‘integration’ or ‘organisation test’ considers the extent to which the worker is integrated into the employer’s organisation, that is, subject to the organisation’s rules and procedures.54 However, the organisation test may not be decisive in some cases of flexible forms of employment. Pursuant to another inclusive test, the ‘economic reality test’, one essentially has to consider whether the worker takes the chance of profit and risk of loss.55 But the economic reality test may not be decisive, for example, in cases concerning employees whose payment is tied to personal performance and business profits. Moreover, for an employment contract to exist, there has to be a ‘mutuality of obligations’, that is, the employer must promise to provide work in exchange for pay and the worker must promise to perform work.56 In other words, it is the overall quantity and quality of the relevant factors under the four tests, rather than the (non)existence of a particular factor, that enables one to determine whether the contract in issue is an employment contract or a services contract.57 In France, the employee status also brings a person within the fold of protective legislation. Since there is no statutory definition of the concept of employment contract, this concept is interpreted and developed by the courts and legal doctrine. An employment contract presupposes three elements: personal performance of work (or promise to personally perform work), remuneration (or promise to pay remuneration) and a relationship of subordination.58 Only legal subordination arising out of

53 54

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Lane v. Shire Roofing Company (Oxford) Ltd. [1995] IRLR 493, 495 (per Henry LJ). Stevenson, Jordan & Harrison v. MacDonald & Evans [1952] 1 TLR 101, 111 (per Denning LJ). Market Investigations Ltd. v. Minister of Social Security [1969] 2 QB 173, 184–5 (per Cooke J). O’Kelly v. Trusthouse Forte [1984] QB 90; Nethermere (St Neots) Ltd. v. Gardiner [1984] ICR 612; Carmichael v. National Power plc [1999] 1 WLR 2042. Ready Mixed Concrete (South East) Ltd. v. Minister of Pensions and National Insurance [1968] 2 QB 497, 515 (per MacKenna J). J. Pélissier, A. Supiot and A. Jeammaud, Droit du travail, 22nd edn (Paris: Dalloz, 2008), pp. 381, 387–90.

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the contract between the parties, not economic dependence, is relevant.59 Legal subordination implies the performance of work under the authority of the employer that has the right to direct, supervise and discipline the employee.60 This requirement has been interpreted widely enough to encompass workers who enjoy considerable discretion in performing their work, provided that the employer has a requisite degree of control concerning matters such as the place of work, working hours or discipline.61 But in a 2000 decision, the Cour de cassation departed from the traditional approach when it found there had been an employment contract between a taxi company and a taxi driver, notwithstanding the fact that the company had leased the vehicle to the driver and had no right to control the driver, who had been free to determine his zone of work and working hours.62 In any event, the existence of an employment contract does not depend on the will of the parties or the terms of the contract, but on the actual content of the parties’ relationship in practice.63 To determine whether there is an employment contract, the courts take into consideration a number of factors: the behaviour of the parties; the personal relationship between the parties; the place of work; working hours; the fact that the employee works alone or with the support of another; the ownership of material, tools and equipment; the existence or absence of the employer’s direction and supervision; the extent of the employee’s integration into the employer’s organisation; and the existence and methods of remuneration.64 In Germany, although there is no statutory definition of the concept of employee, there is a statutory definition of the term ‘self-employed’. Pursuant to §84(1) sentence 2 of the Commercial Code (Handelsgesetzbuch), which deals with self-employed commercial representatives, self-employed is ‘anyone who essentially is free to organise his work and to determine his working time’. Despite the narrow scope of application of this section, the courts and academics perceive it as expressing a general principle.65 Personal freedom is considered to be the main 59 60

61 62

63 65

Bardou, Cass. civ., 6 July 1931, Grands arrêts No. 1. Société Générale, Cass. soc., 15 November 1996 [1996] Droit social 1067, note J.-J. Dupeyroux. Pélissier, Supiot and Jeammaud, Droit du travail, p. 389. Labbane, Cass. soc., 19 December 2000 [2001] Droit social 227, note A. Jeammaud; cf. Copagau, Cass. soc., 1 December 2005 [2006](2) Revue de jurisprudence sociale No. 147. Pélissier, Supiot and Jeammaud, Droit du travail, pp. 394–5. 64 Ibid., pp. 394–404. R. Wank, ‘Germany’ in R. Blainpain, T. Araki and S. Ouchi (eds.), ‘Labour Law in Motion’ (2005) 53 Bulletin of Comparative Labour Relations 19; M. Weiss and M. Schmidt, Labour

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characteristic of self-employed workers.66 The concept of employee, traditionally opposed to that of self-employed workers, implies the lack of such freedom. An ‘employee’ is, therefore, defined as a person who is obliged to work for another in return for salary on the basis of a private contract in a relationship of personal subordination.67 Like in France, the requirement of subordination is interpreted widely. The freedom to organise one’s work and working time is not decisive, since there are employees who enjoy considerable discretion in this respect.68 German courts take into consideration a number of different factors when examining whether a worker is an employee. The most important are whether the employer expects the worker to be always ready to accept new tasks, whether the worker is free to refuse new tasks, the extent to which the worker is integrated into the employer’s organisation and the length of time required by the worker for performing the task for the employer.69 Like their French counterparts, German courts place more weight on the actual performance of the contract than its terms.70 This synoptic comparative account of the concept of employment contract shows that a person may indeed be regarded as an employee in one Member State, but as self-employed in another. For example, the taxi driver from the 2000 Cour de cassation decision would probably have been regarded as self-employed by English courts.71 Similarly, freelance journalists classified as employees by the German Bundesarbeitsgericht would probably have been regarded as self-employed in England.72 English courts place more emphasis on the terms of the contract than their continental counterparts. This can be explained by the central place that the common law of employment accords to freedom of contract. Indeed, English employers, in pursuit of numerical flexibility of their internal labour market or of reducing compliance costs, often avail themselves of this freedom by shaping their contracts for the provision of work in a way that appears to bring the worker outside the employee category. The employer may insert clauses that, for example, shift many

66 68 71 72

Law and Industrial Relations in Germany, 4th edn (Aalphen aan den Rijn: Kluwer, 2008), p. 45. Weiss and Schmidt, Labour Law and Industrial Relations in Germany, p. 45. 67 Ibid. Ibid., pp. 45–6. 69 Ibid., pp. 46–7. 70 Ibid., p. 46. Mingely v. Pennock (t/a Amber Cars) [2004] EWCA Civ 328; [2004] ICR 727. BAG, 13 January 1983, Arbeitsrechtliche Praxis BGB §611 Abhängigkeit No. 42; cf. R (on the Application of BBC) v. Central Arbitration Committee [2003] EWHC 1375 Admin; [2003] ICR 1542.

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business risks onto the worker (e.g. by employing him or her as a casual worker, on a ‘zero-hours’ basis, or by linking the payment to personal performance and business profits), enable the worker to refuse future offers of work (‘obligations clause’), entitle the worker to employ a substitute or oblige him or her to do so if unable to perform the work personally (‘substitution clause’), prescribe that the worker is to provide his or her own tools and equipment, provide that the worker is responsible for paying national insurance contributions and taxes and expressly designate the contract in question as a services contract. Unless the contract containing such clauses is a sham,73 the courts are likely to regard it as a services contract.74 In cases concerning casual workers, particularly those entitled to refuse future offers of work, the courts may also find that there is no continuous contract between the parties because of the lack of a mutuality of obligations.75 However, workers working under such contractual arrangements may be in genuine need of protection. They may be subject to a considerable degree of control by, and dependence upon, their employers. They may be unable to negotiate the change of the contract or to expand their base of clients and customers. In order to advance the objectives of, and to preclude employers from avoiding, protective legislation, many pieces of employment legislation forming part of English law extend their scope to certain categories of workers whom the common law regards as self-employed. The legislatures in Germany and, to a certain extent, in France have also extended the scope of some of their protective legislation to workers who would not be regarded as employees pursuant to the described tests, as shown below. 73 74

75

Autoclenz Ltd. v. Blecher [2011] UKSC 41; [2011] 4 All ER 745. Ready Mixed Concrete (South East) Ltd. v. Minister of Pensions and National Insurance (n 57) (lorry drivers who owned the vehicles and were paid by task not employees); O’Kelly v. Trusthouse Forte (n 56) and Carmichael v. National Power plc (n 56) (casual workers not employees); Express & Echo Publications Ltd. v. Tanton [1999] ICR 693 (a substitution clause incompatible with an employment contract); cf. MacFarlane v. Glasgow City Council [2001] IRLR 7 (a limited or partial right of substitution not incompatible with an employment contract). O’Kelly v. Trusthouse Forte (n 56) (no overall, global or umbrella employment contract linking separate hirings), affirmed in Carmichael v. National Power plc (n 56); cf. Nethermere (St Neots) Ltd. v. Gardiner (n 56) (there was an overall employment contract since there was in fact a mutuality of obligations between home workers and their employer). In Carmichael v. National Power plc, Lord Hoffmann suggested obiter that casual workers probably worked under short-term employment contracts when they actually performed the work; similarly, in McMeechan v. Secretary of State for Employment [1997] ICR 549, a temporary agency worker was held to be an employee of the agency when he actually performed the work for the end-user.

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Some English statutes, or at least some of the rights they confer, apply to ‘workers’. Employment Rights Act 1996 gives ‘workers’ the right not to suffer unauthorised deductions from wages,76 the right not to have to make payments to the employer77 and the right not to suffer detriment in employment in working time cases.78 The scope of the National Minimum Wage Act 1998,79 Working Time Regulations SI 1998/1833 (WTR 1998), Part-time Workers (Prevention of Less Favourable Treatment) Regulations SI 2000/1551,80 the right to be accompanied to a disciplinary hearing of the Employment Relations Act 199981 and the right not to suffer detriment by reason of union membership of the Trade Union and Labour Relations (Consolidation) Act 199282 also extend to ‘workers’. A ‘worker’ is defined as an individual who has entered into or works under (or, where the employment has ceased, worked under): a) a contract of employment, or b) any other contract, whether express or implied and (if it is expressed) whether oral or in writing, whereby the individual undertakes to do or perform personally any work or services for another party to the contract whose status is not by virtue of the contract that of a client or customer of any profession or business undertaking carried on by the individual.83

The courts have added a gloss to this definition. In order to qualify as a ‘worker’, a person must work under a contract whose ‘dominant purpose’ is the personal performance of work.84 The scope of anti-discrimination legislation is expressed in different terms. The provisions of the Equality Act 2010 concerning employment apply to ‘employment under a contract of employment, a contract of apprenticeship or a contract personally to do work’.85 The wording of this definition, and in particular the lack of an express profession or business undertaking exclusion, suggests that EqA 2010 covers not only 76 80

81 83

84 85

Section 13(1). 77 Section 15(1). 78 Section 45A(1). 79 Section 1(2)(a). Cf. Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations SI 2002/2034. Section 13(1). 82 Section 146. Section 230(3) ERA 1996; section 54(3) NMWA 1998; reg.2(1) WTR 1998; reg.1(2) Parttime Workers (Prevention of Less Favourable Treatment) Regulations; section 13(1) Employment Relations Act 1999; section 296 TULR(C)A 1992. James v. Redcats (Brands) Ltd. [2007] ICR 1006 (interpreting the scope of NMWA 1998). Section 83(2). EqA 2010 consolidated, revised and replaced the following antidiscrimination legislation concerning employment which defined its scope in essentially identical words: Equal Pay Act 1970, Sex Discrimination Act 1975 (SDA 1975), Race Relations Act 1976, Disability Discrimination Act 1995, Employment Equality (Religion or Belief) Regulations SI 2003/1660, Employment Equality (Sexual Orientation) Regulations SI 2003/1661 and Employment Equality (Age) Regulations SI 2006/1031.

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‘employees’ and ‘workers’ but also some other individuals working under a contract personally to do work. However, the courts have interpreted this statutory definition very restrictively. There has to be a mutuality of obligations.86 The personal performance of work must be the ‘dominant purpose’ of the contract.87 Most importantly, in Jivraj v. Hashwani,88 the Supreme Court treated the first two words of the definition (‘employment under’) as imposing a crucial restriction, confining the scope of EqA 2010 to relations of ‘employment’. It seems that Jivraj effectively limits the scope of anti-discrimination legislation to employees working under employment contracts ‘either in the traditional sense or in a slightly but not crucially extended sense’.89 Finally, it should be mentioned that ERA 1996 contains a special, wide definition of the concept of ‘worker’ for the purposes of the right not to suffer detriment in employment for making protected disclosures, that is, ‘whistle-blowing’.90 Certain statutes contain provisions that apply to particular categories of workers, such as, apprentices, trainees, agency and home workers. Legislation concerning health and safety at work has the widest personal scope and extends not only to employees and the dependent self-employed but also to independent contractors.91 In France, the Labour Code (Code du travail) extends the protection of labour law to particular categories of workers who are not legally subordinated but are economically dependent upon their employers. It is presumed that the following categories of workers are employees: sales representatives (voyageurs, représentants ou placiers – VRPs),92 journalists,93 artists94 and models.95 Unlike for VRPs, the presumptions that the contracts entered into by the other three categories of workers are employment contracts are rebuttable. Furthermore, the code accords

86

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90 92 95

Mingely v. Pennock (t/a Amber Cars) (n 71) (interpreting the scope of the Race Relations Act 1976). Gunning v. Mirror Group Newspapers Ltd. [1986] 1 WLR 546 (interpreting the scope of SDA 1975). [2011] UKSC 40; [2011] 1 WLR 1872 (interpreting the scope of the Employment Equality (Religion or Belief) Regulations). M. Freedland and N. Countouris, ‘Employment Equality and Personal Work Relations: A Critique of Jivraj v. Hashwani’ (2012) 41 Industrial Law Journal 56, pp. 56–9; cf. C. McCruden, ‘Two Views of Subordination: The Personal Scope of Employment Discrimination Law in Jivraj v. Hashwani’ (2012) 41 Industrial Law Journal 30. Section 45K(1). 91 Sections 3 and 4 Health and Safety at Work Act 1974. Art. L7313–1. Art. L7311–3 defines VRPs. 93 Art. L7112–1. 94 Art. L7121–3. Art. L7123–3.

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some other particular categories of workers such as home workers some employment rights without according them the employee status. In Germany, some workers who are not in a relationship of personal subordination, but are economically dependent upon their employers, labelled as ‘employee-like persons’ (arbeitnehmerähnliche Personen), are also accorded some employment rights. Pursuant to §12a of the Collective Agreements Act (Tarifvertragsgesetz), a person is economically dependent and in need of social protection comparable to that of an employee if: (1) he or she has to perform the work personally and essentially without the help of others and (2) either the major part of his or her work is performed for one person or on average more than half of his or her income is received from one person. For artists, writers and journalists, it is sufficient that more than one third of their income is received from one person. Employment rights of ‘employee-like persons’ include the right to access labour courts,96 right to annual and public holidays,97 right not to be discriminated against,98 right to collective bargaining99 and the rights relating to health and safety at work.100 Two particular categories of ‘employee-like persons’ are treated separately, namely commercial agents and home workers. Furthermore, there are some special rules that apply, for example, to agency workers and apprentices. In conclusion, employees working under employment contracts are completely covered by the Member States’ labour laws. There are also certain categories of workers who fall outside the concept of employee but are, nevertheless, accorded some employment rights. However, Member States differ significantly with regard to the definition of the concepts of employee and, in particular, the dependent self-employed. A worker may, therefore, be regarded as an employee in one Member State, but as a dependent self-employed or an independent contractor in another. Given these differences, the definition of the person working under an ‘individual employment contract’ for the purposes of the Brussels I Recast and Rome I should not be derived directly from domestic concepts of employee and the dependent self-employed. Any such definition would run the risk of being reduced to the lowest common denominator. The comparative analysis is, nevertheless, useful for 96 97 98 99 100

§5(1) sentence 2 Labour Courts Act (Arbeitsgerichtsgesetz). §2 sentence 2 Federal Holidays Act (Bundesurlaubsgesetz). §6(1)(3) General Act on Equal Treatment (Allgemeines Gleichbehandlungsgesetz). §12a Collective Agreements Act (Tarifvertragsgesesetz). §2(2)(3) Occupational Health and Safety Act (Arbeitsschutzgesetz).

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disclosing a trend of enlarging the scope of the Member States’ labour laws. European private international law should acknowledge this trend and give the rules concerning employment of the Brussels I Recast and Rome I a scope wide enough to encompass not only employees but also the dependent self-employed.

3.3.2 Elements of an autonomous definition: substantive EU law Some instruments of secondary EU law use the terms ‘worker’,101 ‘employee’102 and ‘contract of employment or employment relationship’103 to define their scope. Since these instruments refer to domestic definitions of these terms,104 the definition of the person working under 101

102

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Council Directive 89/391/EEC of 12 June 1989 on the introduction of measures to encourage improvements in the safety and health of workers at work [1989] OJ L183/1 and the health and safety directives following on from this directive; Posted Workers Directive. Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses [2001] OJ L82/16; Directive 2002/14/EC of the European Parliament and of the Council of 11 March 2002 establishing a general framework for informing and consulting employees in the European Community [2002] OJ L80/29; Directive 2008/94/EC of the European Parliament and of the Council of 22 October 2008 on the protection of employees in the event of the insolvency of their employer (codified version) [2008] OJ L283/36; Directive 2009/38/EC of the European Parliament and of the Council of 6 May 2009 on the establishment of a European Works Council or a procedure in Community-scale undertakings and Community-scale groups of undertakings for the purposes of informing and consulting employees (recast) [2009] OJ L122/28. Council Directive 91/533/EEC of 14 October 1991 on an employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship [1991] OJ L288/32; clause 1(2) of the Annex of Council Directive 97/81/EC of 15 December 1997 concerning the Framework Agreement on part-time work concluded by UNICE, CEEP and the ETUC [1998] OJ L14/9; clause 1(2) of the Annex of Council Directive 1999/70/EC of 28 June 1999 concerning the Framework Agreement on fixedterm work concluded by ETUC, UNICE and CEEP [1999] OJ L175/43; Art. 1(1) Directive 2008/104/EC of the European Parliament and of the Council of 19 November 2008 on temporary agency work [2008] OJ L327/9; clause 1(2) of the Annex of Council Directive 2010/18/EU of 8 March 2010 implementing the revised Framework Agreement on parental leave concluded by BUSINESSEUROPE, UEAPME, CEEP and ETUC and Repealing Directive 96/34/EC [2010] OJ L68/13. Art. 1(1) Directive 91/533/EEC; clause 2(1) of the Annex of Directive 97/81/EC; clause 2(1) of the Annex of Directive 1999/70/EC; Art. 2(1)(d) Directive 2001/23/EC; Art. 2(d) Directive 2002/14/EC; Art. 2(2)(1) Directive 2008/94/EC; Art. 3(1) Directive 2008/104/ EC; clause 1(2) of the Annex of Directive 2010/18/EU; Art. 2(2) Posted Workers Directive; cf. Arts. 3(a) and 3(b) Directive 89/391/EC and the health and safety directives following on from this directive.

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an ‘individual employment contract’ for the purposes of the Brussels I Recast and Rome I cannot be derived directly from them. The term ‘worker’ is defined autonomously for the purposes of the free movement and equal pay provisions of the TFEU. Since neither Article 45 of the TFEU concerning free movement nor Article 157 of the TFEU concerning equal pay defines the term ‘worker’, the CJEU case law is crucial. The CJEU has held that this term should be given a broad autonomous interpretation in accordance with objective criteria.105 According to Lawrie-Blum and Allonby, ‘the essential feature of an employment relationship . . . is that for a certain period of time a person performs services for and under the direction of another person in return for which he receives remuneration’.106 Therefore, the autonomous concept of ‘worker’ presupposes three elements: (1) personal performance of work, (2) a degree of control and (3) remuneration. A person is to be regarded as a worker if he or she carries on genuine and effective economic activities, to the exclusion of activities on such a small scale as to be regarded as purely marginal and ancillary.107 EU law does not impose additional conditions such as the existence of a formal contract between the worker and the employer. To determine whether a person is a ‘worker’, all factors and circumstances characterising the arrangement between the parties have to be considered, ‘such as, for example the sharing of the commercial risks of the business, the freedom for a person to choose his own working hours and to engage his own assistants’.108 The fact that a person is classified as self-employed under domestic law does not prevent that person from being regarded as a ‘worker’ for the purposes of the TFEU ‘if his independence is merely notional, thereby disguising an employment relationship in the meaning of [the TFEU]’.109 The concept of ‘worker’ has been interpreted widely enough to encompass certain categories of workers that might not be covered by some of

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Case 66/85 Deborah Lawrie-Blum v. Land Baden-Württemberg [1986] ECR 2121; [1987] 3 CMLR 389, [16]–[17]; Case C-256/01 Debra Allonby v. Accrington & Rossendale College, Education Lecturing Services, t/a Protocol Professional and Secretary of State for Education and Employment [2004] ECR I-873; [2004] 1 CMLR 35, [66]. Lawrie-Blum, ibid, [17]; Allonby, ibid, [67]. Case 53/81 D. M. Levin v. Staatssecretaris van Justitie [1982] ECR 1035; [1982] 2 CMLR 454, [17]. Case C-3/87 The Queen v. Ministry of Agriculture, Fisheries and Food, ex parte Agegate Ltd. [1989] ECR 4459; [1990] 1 CMLR 366, [36]. Allonby (n 105).

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the Member States’ labour laws such as professional sportsmen,110 trainees and apprentices,111 members of religious communities,112 casual workers113 and agency workers not having a formal contract with the end-user.114 Deriving the definition of the person working under an ‘individual employment contract’ for the purposes of the Brussels I Recast and Rome I from the autonomous concept of ‘worker’ in EU law accords with the objectives pursued by the European private international law of employment. Such an approach leads to legal certainty and predictability. Since this concept is interpreted widely, it can bring a wide range of workers who are in genuine need of protection within the scope of the special rules, thereby putting the European private international law of employment in a position to adequately perform its regulatory function. Although the reports accompanying the two regulations and their predecessors and the CJEU case law are inconclusive115 regarding the manner of interpretation of the term ‘individual employment contracts’, they provide some support for an autonomous interpretation along these lines. The Jenard Report notes that the preliminary draft of the Brussels Convention contained special jurisdictional rules which were to apply ‘in matters relating to contracts of employment in the broadest sense of this word’.116 According to the Jenard-Möller Report, ‘it may be considered that [an employment contract] presupposes a relationship of subordination of the employee to the employer’.117 The CJEU referred in Shenavai to ‘contracts of employment’ and ‘other contracts for work other than on a self-employed basis’.118 Moreover, in her opinion in Voogsgeerd, dealing with the interpretation of the connecting factor of the engaging place of business for the purposes of the Rome Convention, Advocate General 110

111

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114 116 117

Case C-415/93 Union royale belge des sociétés de football association ASBL v. Jean-Marc Bosman, Royal club liégeois SA v. Jean-Marc Bosman and Union des associations européennes de football (UEFA) v. Jean-Marc Bosman [1995] ECR I-4921; [1996] 1 CMLR 645, [73]. Lawrie-Blum (n 105) (trainee teacher); Case C-188/00 Bülent Kurz, né Yüce v. Land Baden-Württemberg [2002] ECR I-10691 (apprentice); Case C-109/04 Karl Robert Kranemann v. Land Nordrhein-Westfalen [2005] ECR I-2421; [2005] 2 CMLR 15 (trainee lawyer). Case 196/87 Udo Steymann v. Staatssecretaris van Justitie [1988] ECR 6159; [1989] 1 CMLR 449. Case C-357/89 V.J.M. Raulin v. Minister van Onderwijs en Wetenschappen [1992] ECR I1027; [1994] 1 CMLR 227. Allonby (n 105), [72]. 115 But see Mahamdia (n 27), [42]. Jenard Report, p. 24 (emphasis added). Jenard–Möller Report, [41] (emphasis added). 118 See n 19, [16] (emphasis added).

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Trstenjak assumed that the term ‘individual employment contracts’ should be defined by reference to the autonomous concept of ‘worker’ in EU law.119 In her view, It follows from [the CJEU case-law on Article 45 of the TFEU] that the fact that the employee acts under direction is a characteristic feature of any employment relationship which, in essence, requires that the person concerned should work under the direction or supervision of another person who determines the services to be performed by him and/or his working hours and with whose instructions or rules the employee must comply.120

English case law confirms that the autonomous concept of ‘worker’ in EU law informs the definition of the person working under an ‘individual employment contract’ for the purposes of the Brussels I Recast and Rome I. The leading case is WPP Holding Italy SRL v. Benatti.121 This case concerned a contract between Mr Benatti, an Italian national and domiciliary, and an Italian member of a corporate group, under which Mr Benatti was appointed as a consultant to the employer and the group’s UK parent company in respect of their business activities in Italy. Mr Benatti was to provide his services to the employer and any other group member whenever requested to do so, be subject to the directions and instructions of the parent company’s board and report to the parent company’s CEO. He was entitled to use the services of another person in the performance of his duties, although this entitlement had not been exercised. Mr Benatti was further entitled not to work on average more than one and a half days per week, although he had in fact been working full time when the contract was terminated. His remuneration consisted of a fixed fee, the amount of which increased on two occasions, and a commission. Mr Benatti was also entitled to a personal assistant and an office. He was responsible for paying his own taxes and national insurance contributions. Furthermore, he was free to have interests in almost eighty listed companies not forming part of the employer’s group, many of which were in competition with the group. The contract included English law and exclusive jurisdiction clauses. Following the termination of the contract, the employer, the parent company and a Dutch group member commenced proceedings in England for breach of contract and 119 121

See n 33, [88]. 120 Ibid. See n 28. See also Mercury Publicity Ltd. v. Wolfgang Loerke GmbH (n 28) (an agency contract is not an employment contract); Samengo-Turner (n 28) and Duarte v. Black & Decker Corp. (n 28), [50]–[53] (a bonus agreement is an employment contract).

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breach of fiduciary duties. Mr Benatti challenged the English courts’ jurisdiction on the basis that the contract was one of employment and that, pursuant to Brussels I, he could only be sued in Italy. Field J referred to the CJEU decisions in Lawrie-Blum and Shenavai in order to create his own test for distinguishing between employment and services contracts: the objective criteria of an employment contract for the purposes of . . . [Brussels I] are: (i) the provision of services by one party over a period of time for which remuneration is paid; (ii) control and direction over the provision of services by the counterparty; (iii) integration to some extent of the provider of the services within the organisational framework of the counterparty. In applying these broad criteria . . . regard must be had particularly to the terms of the contract; the conduct of the parties is relevant too.122

Toulson LJ in the Court of Appeal added that ‘these are not “hard edged” criteria which can be mechanistically applied. For example . . . there may be degrees of control and degrees of integration within the organisational framework of the company.’123 On the facts of the case, the court found that the contract was not one of employment. Of weight in reaching this conclusion were the method of remuneration, the nature of Mr Benatti’s duties, his various entitlements and the fact that he was registered for value-added tax (VAT) and submitted VAT invoices. These factors outweighed the fact that Mr Benatti worked under a long-term contract effectively five days a week under the directions and instructions of the employer and was integrated to a significant extent into the employer’s organisation. Although this case has been rightly criticised for its focus on the terms of the contract rather than its actual performance,124 it is an authority for the proposition that the definition of the person working under an ‘individual employment contract’ for the purposes of the Brussels I Recast and Rome I should be derived from the autonomous concept of ‘worker’ in EU law.

3.3.3 Conclusion This section has shown that the definition of the person working under an ‘individual employment contract’ for the purposes of the Brussels I Recast and Rome I should be derived from the autonomous concept of 122 123 124

[2006] EWHC 1641 (Comm); [2007] 1 All ER (Comm) 208, [69]. [2007] EWCA Civ 263; [2007] 1 WLR 2316, [47]. Merrett, Employment Contracts in PIL, [3.54].

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‘worker’ in EU law. This approach accords with the objectives pursued by European private international law, most importantly that of protection of employees. This approach is capable of encompassing a wide range of workers who are in genuine need of protection and puts the European private international law of employment in a position to adequately perform its regulatory function. This approach accords with the existing division of legislative competence within the EU and supports the diversity of the Member States’ labour laws. At the moment, Member States retain most of the legislative competence in the field of labour law. While some Member States exercise their legislative autonomy by according the benefit of protective legislation only to employees working under employment contracts, other Member States also protect, to a certain extent, the dependent self-employed. Although the term ‘individual employment contracts’ that is used in the two regulations covers a wide range of workers, it does not oblige Member States to extend their protective legislation beyond the boundaries they deem appropriate. But because of the breadth of the scope of the rules concerning employment of the Brussels I Recast and Rome I, European private international law is able to safeguard, in appropriate circumstances, the application of the law and jurisdiction of the courts of states that have intermediate legal categories of dependent self-employed workers.

3.4 Who is the employer? This section deals with the flipside of the autonomous definition of the term ‘individual employment contracts’ that is used in the Brussels I Recast and Rome I. It examines who is to be regarded as an employer for the purposes of two regulations. In principle, the employer is a natural or legal person at the other end of the employment contract.125 Typically, employees work for, under the control and within the organisation of a single employer, so the employer’s identity is rarely an issue. But where employer functions are divided among multiple legal entities, the ascription of employer responsibilities becomes problematic. This is illustrated by cases involving triangular employment relationships. Triangular relationships arise in the context of employment within a corporate group and agency employment. In a triangular relationship, the employee enters into an employment contract with one person, a 125

In this section, the terms ‘employment contract’ and ‘employee’ are used in their broadest sense.

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group member or an employment agency, but works for, and under the control of, a third person, another group member or the end-user of the employee’s services (the client of the employment agency). While the two group members/the employment agency and the end-user normally enter into a contract regulating their rights and obligations regarding the ‘hiring-out’ of workers, the employee does not ordinarily enter into an employment contract with the group member/end-user to which he or she is ‘hired-out’. But the contract that the employee has with the engaging group member/employment agency normally obliges him or her to work like an employee of the third person. Sometimes the employee may enter into an employment contract with the person to whom he or she is ‘hired-out’, particularly when this is mandated by the immigration and other laws of the country where the services are provided. Triangular relationships can take a variety of forms depending on the way employer functions are divided among multiple employing entities. At the far end of the spectrum are cases in which the engaging group member/employment agency merely administers the employment contract and the employee works for one or more third persons. At the other end are cases in which the employee works for the engaging group member but also occasionally for another group member(s). Cases involving triangular relationships have caused difficulties in domestic labour laws, since they do not fit easily with the perception of the typical employment relationship as a personal and binary relationship. Domestic laws are faced with the question of how to distribute employer responsibilities among multiple entities performing employer functions. With regard to agency employment, there are four alternatives.126 Some countries place employer responsibilities, in principle, exclusively either on the employment agency or on the end-user; some divide employer responsibilities between the two entities; a fourth group of countries makes both entities jointly and severally responsible. Similarly, countries allocate employer responsibilities among different group members in a variety of ways.127 In cases concerning transnational employment, these problems are exacerbated. A worker may be engaged by a group member/employment agency in one country but work for a third person in another country and the two countries may differ with regard to how they ascribe employer responsibilities to multiple 126

127

G. Davidov, ‘Joint Employer Status in Triangular Employment Relationships’ (2004) 42 British Journal of Industrial Relations 727, pp. 731–6. A. Supiot and others, Beyond Employment: Changes in Work and the Future of Labour Law in Europe (Oxford University Press, 2001), p. 44.

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employing entities. A private international law system which aims to uphold the objectives of legal certainty, predictability and particularly protection of employees must be able to accommodate the various substantive law systems of ascription of employer responsibilities. The CJEU decision in Voogsgeerd128 touched upon the question of who is the employer for the purposes of the Rome Convention, the predecessor of Rome I. Mr Voogsgeerd entered into an employment contract with Navimer SA, a Luxembourg company. The contract was concluded at the headquarters of Naviglobe NV, a Belgian subsidiary. Mr Voogsgeerd worked as a seaman on board ships belonging to Navimer. He received his salary from Navimer. But he was obliged to report to, and received briefings and instructions from, Naviglobe in Belgium, where all of his voyages commenced and terminated. Although this case primarily concerned the interpretation of the connecting factor of the engaging place of business for the purposes of the Rome Convention, both the opinion of Advocate General Trstenjak and the CJEU judgment provide guidance regarding the concept of employer in the context of a triangular relationship. The advocate general seems to have adopted a strict approach in stating the following: The fact that the third party is entitled, with the employer’s consent, to control the employee’s activities by issuing instructions and carrying out supervisory duties does nothing, from a legal point of view, to alter the fact that the employee ultimately performs his contractual obligations for the employer. In so far as Mr Voogsgeerd usually took instructions directly from Naviglobe, he clearly did so in performance of his contractual obligations towards Navimer.129

According to the advocate general, the privity of contract precluded any party other than Navimer from being regarded as the employer. This approach would have allowed Mr Voogsgeerd to rely on the jurisdictional and choice-of-law rules concerning employment only against Navimer. Even if the law applicable to the putative relationship between Mr Voogsgeerd and Naviglobe had imposed employer responsibilities on this company, the strict approach adopted by the advocate general would have disabled Mr Voogsgeerd from relying on the special private international law rules in a dispute against this company. In contrast, the CJEU seems to have adopted a more relaxed approach in stating the following: 128

See n 33.

129

Ibid., AG Opinion, [90].

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‘individual employment contracts’ it is a matter for the referring court to assess what is the real relationship between the two companies in order to establish whether Naviglobe is, indeed, the employer of the personnel engaged by Navimer. The court seised must, in particular, take into consideration all the objective factors enabling it to establish the actual situation which differs from that which appears from the terms of the contract . . . In making this assessment . . . the absence of a transfer of [the employer’s] authority to Naviglobe, constitutes one of the factors to be taken into consideration, but it is not, in itself, decisive.130

According to the CJEU, it is possible to regard a person other than the nominal employer as the employer for the purposes of the special private international law rules. But it is not clear whether, in cases of triangular relationships, the CJEU would allow both the engaging group member/employment agency and the group member/end-user to which the employee is ‘hired-out’ to be regarded as employers. Such a possibility should be allowed. For example, if the law of the country in which the employee works for the group member/end-user to which he or she is ‘hired-out’ imposes employer responsibilities on that group member/end-user, the relationship between the employee and that group member/end-user must not fall outside the scope of the special private international law rules. The alternative would be for this relationship to fall within the scope of the general rules, which must be rejected as being contrary to the scheme and objectives of the Brussels I Recast and Rome I. This relationship exhibits all the features justifying the special treatment of employees in private international law. Possible arguments to the contrary based, for instance, on the principle of legal certainty and foreseeability are not compelling. The group member/end-user to which the employee is ‘hired out’ should not be allowed to evade the jurisdiction of the courts and the application of the law designated by the rules concerning employment of the Brussels I Recast and Rome I. After all, it is that group member/end-user that has chosen to procure labour by means of ‘hiring-out’ of workers and is, as a typically stronger party, in a relatively good position to obtain information on the legal pros and cons of procuring labour in this way. The autonomous definition of the concept of employer for the purposes of the two regulations should be derived from the autonomous definition of the person working under an ‘individual employment contract’ and, generally speaking, cover entities which in fact benefit from the employee’s work, which control the employee and upon which the employee is 130

Ibid., CJEU judgment, [62]–[63].

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dependent. Furthermore, European private international law should prevent any attempt to evade the special rules concerning employment and not permit members of the corporate group which are not the employee’s nominal employers to bring proceeding against the employee outside the forums available to employers under the special rules of the Brussels I Recast. This view is supported by both the CJEU and English case law. In Allonby,131 the employment agency supplied part-time workers as independent contractors to the end-user. The CJEU did not limit the scope of the autonomous concept of ‘worker’ in EU law to the cases where there was a formal contract between the agency worker and the end-user. On the contrary, the CJEU regarded the agency workers as the ‘workers’ of the end-user for the purposes of the equal pay provisions of TFEU. As discussed, WPP Holding Italy SRL v. Benatti132 concerned a consultancy agreement between Mr Benatti and an Italian member of a corporate group, under which Mr Benatti provided services to the group in Italy. Following the termination of the agreement, the nominal employer, the group’s UK parent company and a Dutch group member commenced proceeding in England. The nominal employer relied on the English choice-of-court clause contained in the agreement. The other two claimants argued that they could also enforce the agreement pursuant to the Contracts (Rights of Third Parties) Act 1999 and, alternatively, that English courts had jurisdiction over their claims for breach of fiduciary duties under Article 5(1) or Article 5(3) of Brussels I, the equivalents of Articles 7(1) and 7(2) of the Brussels I Recast, respectively. Mr Benatti challenged the English courts’ jurisdiction on the basis that the agreement was an employment contract and that, pursuant to Brussels I, he could only be sued in Italy. Although Field J held that the agreement was not an employment contract, he did indicate that, had it been otherwise, none of the claimants could have relied on the choice-ofcourt clause and, furthermore, that the claims for breach of fiduciary duties would have been regarded as claims brought by the employer for the purposes of Brussels I.133 Another relevant case is Samengo-Turner.134 The claimants were reinsurance brokers employed in England by the first defendant, the English service company for a corporate group, whose business was to 131 133

134

See n 105. 132 See n 28. [2006] EWHC 1641 (Comm); [2007] 1 All ER (Comm) 208, [105], [109]. This point was not addressed by the Court of Appeal. See n 28.

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employ persons to work for other group members. The second defendant was the American group member for which the claimants in fact worked. The third defendant was the group’s American parent company. During their employment, the claimants became eligible to participate in an executive incentive scheme administered by the group’s parent company and each received a bonus. The terms and conditions of the bonus agreement included an obligation on the part of the claimants to repay the bonus if they engaged in detrimental activity and to provide information to enable the ‘Company’ to determine whether they were in compliance with their obligations. The ‘Company’ was defined as encompassing the parent company or any of its affiliates and subsidiaries. The bonus agreement included a New York law and exclusive jurisdiction clauses. After the claimants had handed in the notice and disclosed their intention to join a competitor, the two American companies brought an action in New York for breach of contract. The claimants then commenced proceedings in England with the view of obtaining an anti-suit injunction to restrain the New York proceedings. The basis of the claim before the English court was that the bonus agreement was an ‘individual employment contract’ in the meaning of Brussels I, that the New York proceedings were brought by the employers and that the claimants, therefore, had the right not to be sued outside of England. After deciding that the agreement was an ‘individual employment contract’, the Court of Appeal held that the two American companies were the claimant’s employers for the purposes of Brussels I. According to Tuckey LJ, their claim in New York . . . is an employment claim against the employees and one would expect such a claim to be made by an employer . . . [The two American companies] as companies in the same group [as the English company] have an economic interest in the contracts containing those terms and their enforcement and should be subject to the same jurisdictional restraint as [the English company]. I do not think that this is a strained construction. It simply recognises the reality of the situation without adopting an over formalistic approach. Nor does this construction pierce the corporate veil in any real way. [Brussels I] is only concerned with the allocation of jurisdiction. The fact that [the two American companies] should be treated as employers for such purposes does not mean that they should be so treated for any other purpose.135

135

Ibid., [33]–[34].

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3.5

conclusions

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3.5 Conclusions Many domestic labour laws extend their scope beyond standard or typical employment contracts to cover certain categories of workers traditionally classified as self-employed or ascribe employer responsibilities to multiple employing entities. Nevertheless, many domestic labour laws remain underinclusive, in the sense of not covering certain categories of workers in genuine need of protection. Calls have been made to redefine labour law around wider, more inclusive concepts. For example, Freedland, an influential participant in this debate, has put forward the concepts of ‘personal employment contract’ and, more recently, ‘personal work contract’, ‘personal work nexus’ and ‘personal work relations’.136 Supiot argued in favour of the concept of the ‘membership of the labour force’.137 The autonomous definition of the term ‘individual employment contracts’ that is used in the Brussels I Recast and Rome I seems to converge towards those wide and inclusive concepts. From the point of view of their scope, the rules concerning employment of the two regulations largely meet the proclaimed objectives. The objectives of legal certainty and predictability are largely fulfilled, since the term ‘individual employment contracts’ is interpreted uniformly within the EU. The objective of protection of employees is also met given the breadth and inclusivity of this term. The special rules encompass a wide range of workers who are in genuine need of protection. By enabling the allocation and safeguarding of the regulatory authority of states that have intermediate legal categories of dependent self-employed workers or ascribe employer responsibilities to multiple employing entities, an autonomous and wide interpretation of the term ‘individual employment contracts’ also puts the European private international law of employment in a position to adequately perform its regulatory function. This approach accords with the existing division of legislative competence within the EU and supports the diversity of the Member States’ labour laws. European private international law, as a matter of 136

137

M. Freedland, The Personal Employment Contract (Oxford University Press, 2003); M. Freedland, ‘From the Contract of Employment to the Personal Work Nexus’ (2006) 35 Industrial Law Journal 1; M. Freedland, ‘Application of Labour and Employment Law beyond the Contract of Employment’ (2007) 146 Industrial Law Journal 3; see also M. Freedland and N. Countouris, ‘Towards a Comparative Theory of the Contractual Construction of Personal Work Relations in Europe’ (2008) 37 Industrial Law Journal 49; M. Freedland and N. Countouris, The Legal Construction of Personal Work Relations (Oxford University Press, 2011). Supiot and others, Beyond Employment.

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principle, does not oblige Member States to extend the scope of their protective legislation beyond the boundaries they deem appropriate, but is able to safeguard, in appropriate circumstances, the application of their laws and jurisdiction of their courts. In other words, the special rules concerning employment of the Brussels I Recast and Rome I, because of their wide and inclusive scope, are capable of leading to ‘unity in diversity’. The following sections explore whether the European private international law of employment does in fact adequately perform its regulatory function by assessing whether and to what extent its rules accord with the considerations identified in the previous chapter. This assessment commences with the jurisdictional rules of the Brussels I Recast.

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4 Jurisdiction

[Brussels I], in its current version, notwithstanding the objective of protection referred to . . . in the Preamble thereto, does not afford particular protection to an employee in a situation such as [the claimant employee’s]. CJEU, the GlaxoSmithKline case1

The structure of Section 5 of Chapter II of the Brussels I Recast2, which contains special rules of jurisdiction in employment matters, is simple. There is one set of jurisdictional rules applicable when employees act as claimants. In general terms, an employee may commence proceedings in the European Union in any of the following courts: • in the courts of the Member State in which the employer is domiciled;3 • in the courts for the habitual place of work;4 • absent a habitual place of work, in the courts of the engaging place of business;5 • as regards a dispute arising out of the operations of the employer’s branch, agency or other establishment, in the courts for the place of that establishment;6 • on a counterclaim, in the court in which the original claim is pending;7 • where there is more than one defendant employer, in the courts of the Member State in which any one of them is domiciled.8

1

2

3 6

7

Case C-462/06 Glaxosmithkline and Laboratoires Glaxosmithkline v. Jean-Pierre Rouard [2008] ECR I-3965; [2008] ICR 1375, [34]. The relevant provisions of Brussels I, the Brussels and 1988 and 2007 Lugano Conventions are mentioned to the extent to which they differ from those of the Brussels I Recast. Chapter 8, Section 8.3.1, deals with the jurisdictional rules of the Posted Workers Directive. Art. 21(1)(a). See also Art. 20(2). 4 Art. 21(1)(b)(i). 5 Art. 21(1)(b)(ii). Arts. 20(1) and 7(5). Although, in theory, claimant employers can also invoke this jurisdictional rule, this is not practically possible, since employees do not have ancillary establishments. Art. 22(2). 8 Arts. 20(1) and 8(1).

91

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“Employees may invoke the rules of jurisdiction based on the habitual place of work and the engaging place of business against all employers, regardless of their domicile, whereas the other jurisdictional bases are available only against employers who are EU domiciliaries.”9 There is another set of jurisdictional rules applicable when employees domiciled in a Member State act as defendants. An employer may commence proceedings: • in the courts of the Member State in which the employee is domiciled;10 or • on a counterclaim, in the court in which the original claim is pending.11 A jurisdiction agreement entered into before the dispute has arisen is not given effect if it reduces the number of forums available to the employee or increases the number of forums available to the employer.12 Otherwise, jurisdiction agreements are, in principle, effective. Submission to the court’s jurisdiction by entering an appearance is also allowed.13 These rules apply ‘in matters relating to individual contracts of employment’ and seem to cover all claims arising out of an employment relationship. Regardless of whether a party to an employment contract advances a contractual, statutory or tortious claim related to the contract during or after the termination of employment and regardless of whether it concerns employment in the private or public sector, the special jurisdictional rules of the Brussels I Recast are engaged.14 Thus, a claim against an employee for conspiracy to harm the employer’s business by soliciting fellow employees is a matter relating to the employment contract.15 So is a claim for breach of copyright, misuse of confidential 9 14

15

Arts. 6(1) and 21(2). 10 Art. 22(1). 11 Art. 22(2). 12 Art. 23. 13 Art. 26. L. Merrett, Employment Contracts in Private International Law (Oxford University Press, 2011), [4.07]–[4.17], [4.46]–[4.57] (according to Merrett, a claim based on specific regulation made under the Health and Safety at Work Act 1974 possibly falls under the general rule of jurisdiction in tort because a civil action for breach of a duty imposed by the act does not depend on the employment contract). See also A. Briggs and P. Rees, Civil Jurisdiction and Judgments, 5th edn (London: Informa, 2009), [2.103]; B. Hess, T. Pfeiffer and P. Schlosser, ‘Report on the Application of Regulation Brussels I in the Member States’, available at http://ec.europa.eu/civiljustice/news/docs/study_application_brussels_1_en.pdf, [352]–[356]. CEF Holdings Ltd. v. Mundey [2012] EWHC 1524 (QB); [2012] IRLR 912, disapproving Swithenbank Foods Ltd. v. Bowers [2002] EWHC 2257 (QB); [2002] 2 All ER (Comm) 974, (a claim for conspiracy to unlawfully interfere with the employer’s contractual relationship with a supplier not a matter ‘relating to’ the employment contract). CEF Holdings Ltd. v. Mundey was decided under Schedule 4 of the Civil Jurisdiction and Judgments Act 1982, which allocates adjudicatory jurisdiction among the constituent parts of the UK.

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jurisdiction

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information and unfair competition against an employee who obtained the employer’s design drawings by bribing a fellow employee for the purpose of facilitating unlawful competition against the employer.16 But if the claim concerns precontractual liability, for example, discrimination for not offering employment, the special jurisdictional rules of the Brussels I Recast do not seem to apply.17 The objective of these rules and a justification for their wide subject matter scope is the protection of employees. Recital 18 of the Brussels I Recast is clear: ‘In relation to . . . employment contracts, the weaker party should be protected by rules of jurisdiction more favourable to his interests than the general rules.’18 However, as the quote from the GlaxoSmithKline case19 at the beginning of the chapter shows, the CJEU cast doubt on the achievement of this objective under Brussels I, the predecessor of the Brussels I Recast. Mr Rouard, who had originally signed an employment contract with a company forming part of a transnational corporate group, concluded a new employment contract with another company belonging to the same group. The former company was domiciled in France, the latter in the UK. The work was performed in Africa. Following his dismissal, Mr Rouard brought proceedings in France. The French courts had jurisdiction over the French company. He further sought to join the UK company under the general rule of jurisdiction over co-defendants. Had Mr Rouard not been an employee, but an ordinary claimant, this jurisdictional rule would have undoubtedly been available. But the CJEU interpreted Brussels I in a literal and strict fashion. Since the provisions of Section 5 of Chapter II of Brussels I, which laid down rules of jurisdiction in employment matters, neither referred to the general rule for codefendants nor prescribed such a rule, the CJEU held that Mr Rouard could not invoke it. Evidently, the special rules did not afford the employee any protection and were not more favourable to his interests than the general rules. On the contrary, they were less favourable.

16

17

18

The case is, nevertheless, relevant for the present discussion, since the act is a modified version of Brussels I. Alpha Laval Tumba AB v. Separator Spares International Ltd. [2012] EWCA Civ 1569; [2013] 1 WLR 1110. See Case C-334/00 Fonderie Officine Mecchaniche Tacconi SpA v. Heinrich Wagner Sinto Maschinenfabrik GmbH [2002] ECR I-7357; Recital 30 and Art. 12 Rome II; cf. Gerhard Fahey v. McKinsey & Co. Inc. EE/2001/146 (Irish Equality Tribunal). See also Recital 14. 19 See n 1.

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GlaxoSmithKline was met with strong criticism across Europe.20 The European Commission also acknowledged the problem and proposed an amendment to Brussels I that would make the rule of jurisdiction over co-defendants available to claimant employees.21 Such a proposal was indeed adopted in Article 20(1) of the Brussels I Recast, which refers to the general rule for co-defendants contained in Article 8(1). The only other change to the rules of jurisdiction in employment matters that was contemplated by the Commission during the drafting of the Brussels I Recast was to protect employees from unwitting submissions by entering an appearance. The overall satisfaction with the general operation of these rules was echoed in the conclusions of the Heidelberg Report on the application of Brussels I: ‘No major problems [in relation to the rules of jurisdiction in employment matters] could be discovered’;22 ‘None of the open issues [regarding the rules of jurisdiction in employment matters] are of a dimension justifying the conclusion that an amendment being drafted is selfsuggesting.’23 This chapter explores whether satisfaction was and is justified, and in particular whether and to what extent the Brussels I Recast achieves the objective of protection of employees. The following section presents the evolution of the special jurisdictional rules. It is shown that the reason for the present structure and content of these rules lies in their haphazard evolution. Next, the importance of according a balanced jurisdictional preference to claimant employees is underlined, followed by a demonstration of how the Brussels I Recast fails in this respect. Finally, possibilities for improvement are discussed.

20

21

22 23

S. Frodl, ‘Rechtssicherheit vor Arbeitnehmerschutz? Zur Frage des (zureichenden) Arbeitnehmerschutzes im System der europäischen Zuständigkeitsordung’ (2009) 21 Österreichische Juristen-Zeitung 935; J. Harris, ‘The Brussels I Regulation, the ECJ and the Rulebook’ (2008) 124 Law Quarterly Review 523; F. Jault-Seseke, ‘GlaxoSmithKline’ (2008) 97 Revue critique de droit international privé 853; S. Krebber, ‘Einheitlicher Gerichtsstand für die Klage eines Arbeitnehmers gegen mehrere Arbeitgeber bei Beschäftigung in einem grenzüberschreitenden Konzern’ (2009) 29 Praxis des Internationalen Privat- und Verfahrensrecht 409. European Commission, ‘Proposal for a Regulation of the European Parliament and of the Council on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters (Recast)’, COM(2010) 748 final, pp. 11–12. Hess, Pfeiffer and Schlosser, ‘Report on the Application of Regulation Brussels I’, [311]. Ibid., [359].

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4.1 Evolution of the European rules of jurisdiction in employment matters Unlike for employment matters, the original 1968 version of the Brussels Convention contained protective jurisdictional rules for matters relating to insurance (Section 3 of Title II) and instalment sales and loans (Section 4 of Title II). The drafters of this convention did consider prescribing special rules for employment disputes: the preliminary draft contained a provision giving exclusive jurisdiction to the courts either for the place in which the undertaking concerned was situated or for the place in which the work was or was to be performed.24 This provision was omitted from the final version for two reasons. At that time, work to harmonise choice-of-law rules within the European Economic Community was in progress and the adoption of the special jurisdictional rules concerning employment was postponed.25 Second, there was no agreement between the drafters on the question whether and to what extent party autonomy should be allowed.26 Consequently, the general jurisdictional rules were made applicable to employment disputes. The lack of jurisdictional protection of employees led to certain problems in practice. First, jurisdiction agreements were given full effect in employment disputes irrespective of the shortcomings of party autonomy in transnational employment relationships. Second, the general rule of jurisdiction in contractual matters of Article 5(1) of the convention proved to be ill-suited for employment disputes. The problem with jurisdiction agreements was revealed by Sanicentral.27 Mr Collin, a Frenchman domiciled in France, worked for Sanicentral, a German company. The employment contract, which contained a jurisdiction clause in favour of German courts, was concluded and terminated before the entry into force of the 1968 Brussels Convention. The employee brought proceedings in France after its entry into force. He invoked a provision of French employment law invalidating jurisdiction agreements in employment contracts such as the one at hand. After concluding that the dispute fell within the subject 24

25 27

P. Jenard, ‘Report on the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters (Signed at Brussels, 27 September 1968)’ [1979] OJ C59/1, p. 24. Ibid. 26 Ibid. Case 25/79 Sanicentral GmbH v. René Collin [1979] ECR 3423; [1980] 2 CMLR 164. See also Case 150/80 Elefanten Schuh GmbH v. Pierre Jacqmain [1981] ECR 1671; [1982] 3 CMLR 1.

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matter and temporal scope of the convention,28 the CJEU held that the provisions of this instrument took precedence over the provisions of domestic procedural laws.29 Since the requirements of the convention were satisfied, the jurisdiction clause was upheld and the French courts had to decline jurisdiction. This judgment put employees in an unfavourable position, since it enabled employers to (ab)use their typically superior position and impose the jurisdiction of the courts favourable for them on their employees. It also enabled employers to confer jurisdiction on the courts of the country not sufficiently closely connected with, or legitimately interested in regulating, the employment relationship in question and disputes arising out of it. The only requirements that such jurisdiction agreements had to fulfil were the formal requirements of Article 17 of the convention.30 The unsuitability of Article 5(1) of the 1968 Brussels Convention for employment disputes was discussed in the ground-breaking Ivenel case.31 This case concerned a dispute between Mr Ivenel, a French commercial representative, and his German employer over payment of commission and other sums of money. Mr Ivenel performed his work in France, but the commission and other sums were payable in Germany. The proceedings were brought in France. Article 5(1) conferred jurisdiction in contractual matters on the courts ‘for the place where the obligation was, or was to be, performed’. The jurisdiction of the French courts thus depended on which obligation (to work or to pay) was the jurisdictionally relevant one and on its place of performance. The CJEU had held that the obligation to be taken into account for the purposes of Article 5(1) was the obligation forming the basis of the claim,32 and that its place of performance was to be determined under the law applicable to the contract under the choice-of-law rules of the forum.33 Since the basis of Mr Ivenel’s claim was the employer’s obligation of payment and since under both French and German laws the commission and other sums were payable at the address of the debtor, it seemed that Article 5(1) could only give jurisdiction to German courts. However, the CJEU found 28 30

31 32

33

Ibid., [3]. 29 Ibid., [5]. Compare Arts. 12 and 15 of the 1968 version of the Brussels Convention regarding the requirements for validity of jurisdiction agreements in insurance and instalment sales and loans contracts. Case 133/81 Roger Ivenel v. Helmut Schwab [1982] ECR 1891; [1983] 1 CMLR 538. Case 14–76 A. De Bloos, SPRL v. Société en commandite par actions Bouyer [1976] ECR 1497; [1977] 1 CMLR 60. Case 12–76 Industrie Tessili Italiana Como v. Dunlop AG [1976] ECR 1473; [1977] 1 CMLR 26.

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that this interpretation would contravene the convention’s objectives of proximity and protection of weaker parties. It would give jurisdiction to the courts of the country where the work was not performed and that were not closely connected with the dispute,34 the courts of the country whose law was not applicable35 and where the employer had its domicile. The CJEU, therefore, departed from the language of Article 5(1) and the preceding case law and held that the jurisdictionally relevant obligation regarding employment contracts was always the obligation that characterised the contract, namely the obligation to perform work.36 It was also implicit in Ivenel that the place of work was to be determined autonomously, not by reference to the law applicable under the choice-of-law rules of the forum.37 Thus, the French courts had jurisdiction. These deficiencies of the 1968 version of the Brussels Convention were remedied in the 1988 Lugano Convention, which expanded the ‘Brussels regime’ to the Member States of the European Free Trade Association. First, the problem concerning jurisdiction agreements in employment disputes was resolved through the insertion of a rule that denied effect to such agreements entered into before the dispute had arisen.38 Second, Article 5(1) of the 1988 Lugano Convention introduced a special rule of jurisdiction in employment matters alongside the general rule of jurisdiction in contractual matters. This special rule incorporated the CJEU case law, in particular Ivenel. Since the ruling in this case was largely influenced by the fact that Article 5(1) of the 1968 version of the Brussels Convention did not give jurisdiction to the courts of the country whose law was applicable pursuant to Article 6 of the Rome Convention, the drafters of the 1988 Lugano Convention decided that the special rule of jurisdiction in employment matters should follow this article of the Rome Convention.39 The new jurisdictional rule thus provided not only that ‘in matters relating to individual contracts of employment, [the place of performance of the obligation in question] is that where the employee habitually carries out his work’ but also that ‘if the employee does not 34 36

37

38 39

Ivenel (n 30), [15]. 35 Ibid., [13]–[15], [19]. Ibid., [20]; see also Case 266/85 Hassan Shenavai v. Klaus Kreischer [1987] ECR 239; [1987] 3 CMLR 782. Confirmed in Case C-125/92 Mulox IBC Ltd. v. Hendrick Geels [1993] ECR I-4075; [1993] ILPr 668, [12]–[16]. Art. 17(5) 1988 Lugano Convention. P. Jenard and G. Möller, ‘Report on the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters Done at Lugano on 16 September 1988’ [1990] OJ C189/57, [37]–[38], [40].

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habitually carry out his work in any one country, this place shall be the place of business through which he was engaged’. However, the jurisdictional rules of the 1988 Lugano Convention had shortcomings of their own. First, this instrument denied any effect in employment disputes to jurisdiction agreements entered into before the dispute had arisen, irrespective of whether they were beneficial for employees or not. Second, the rule of the engaging place of business was introduced without any assessment of its appropriateness.40 Moreover, this jurisdictional rule was equally available to both employers and employees. A further step in the evolution occurred in 1989, when the convention on the accession of Spain and Portugal to the Brussels Convention was concluded.41 Although this convention came along less than a year after the conclusion of the 1988 Lugano Convention, it significantly departed from the provisions of the latter instrument. First, the solution of the 1988 Lugano Convention regarding jurisdiction agreements in employment disputes was considered ‘too radical’ by the drafters of the 1989 Accession Convention.42 Thus, Article 17(5) of the 1989 version of the Brussels Convention provided that a jurisdiction agreement was effective in an employment dispute not only if it was entered into after the dispute had arisen but also if it was invoked by the employee to seise courts other than those specified in non-consensual jurisdictional bases. Second, Article 5(1) of the Brussels Convention was amended along the lines of Article 5(1) of the 1988 Lugano Convention, with one significant difference: the rule of the engaging place of business could be invoked only by employees, not by employers. Furthermore, it was clarified that the jurisdictionally relevant place was not only where the business that engaged the employee was situated at the moment of engagement but also where it was situated at the moment of commencement of proceedings. The next stage in the evolution came with the adoption of Brussels I in 2001. This instrument introduced several important changes. First, the 40

41 42

See Swiss Institute of Comparative Law, Convention de Lugano: Convention concernant la compétence judiciaire et l’exécution des décisions en matière civile et commerciale faite à Lugano le 16 septembre 1988 (Zurich: Schulthess, 1991), pp. 164–5. [1989] OJ L285/1. A. Cruz, D. Real and P. Jenard, ‘Report on the Convention on the Accession of the Kingdom of Spain and the Portuguese Republic to the 1998 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters’ [1990] OJ C189/35, [27](d).

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rules of jurisdiction in employment matters were laid down in a separate, self-contained section. This meant that the parties to an employment dispute could only invoke the special rules of jurisdiction in employment matters contained in that section or the general jurisdictional rules referred to in it. The GlaxoSmithKline case43 shows, for example, that the parties were unable to rely on the general rule of jurisdiction over codefendants because that general jurisdictional rule was not referred to in the section concerning employment contracts. Second, the rule extending the notion of the employer’s domicile was introduced, according to which employers who were not domiciled in a Member State but had a branch, agency or other establishment in a Member State would be deemed to be domiciled in that Member State in disputes arising out of the operations of that establishment.44 Third, employers lost the right to invoke the rule of the habitual place of work.45 It would appear that the drafters of Brussels I were of the opinion that the objective of protection of employees could be achieved only if the rules of jurisdiction in employment matters followed closely the existing rules of jurisdiction for consumer and insurance disputes.46 However, they failed to examine the exact impact that these changes would have on the jurisdictional position of employees. Similarly, the jurisdictional rules of Brussels I were simply transposed into the 2007 Lugano Convention without an assessment of their impact.47 The rules of jurisdiction in employment matters are currently contained in the Brussels I Recast, which was adopted in 2012 and applies as of 10 January 2015. The recast introduces three major changes. First, the international scope of the special jurisdictional rules has been extended. Unlike the generally applicable rules of special jurisdiction of Articles 7 and 8, the rules of the habitual place of work and of the engaging place of business can be invoked not only against employers domiciled in the EU 43 46

47

See n 1. 44 Art. 18(2) Brussels I. 45 Art. 20 Brussels I. The rules applicable in these two types of dispute had been contained in separate, selfcontained sections (3 and 4 of Title II) since the adoption of the Brussels Convention. Consumers and insured persons could normally be sued only in the courts of their domicile (Arts. 11(1) and 14(2) Brussels Convention). There was also a rule extending the notion of the insurer’s domicile (Art. 18(2) Brussels Convention). See European Commission, ‘Proposal for a Council Regulation (EC) on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters: Explanatory Memorandum’, COM(1999) 348 final, p. 17. See F. Pocar, ‘Convention on Jurisdiction and the Recognition and Enforcement of Judgments in Civil and Commercial Matters, signed in Lugano on 30 October 2007: Explanatory Memorandum’ [2009] OJ C319/1, [85]–[90].

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but also against employers that are non-EU domiciliaries.48 Second, employees are restored the right to invoke the general rule of jurisdiction over co-defendants.49 Third, it has been clarified that an employee can confer jurisdiction on a court by entering an appearance.50 In sum, the reason for the present structure and content of the rules of jurisdiction in employment matters of the Brussels I Recast lies in their haphazard evolution. These rules were introduced and amended with the objective of protection of employees in mind. The following text examines whether they really achieve this goal.

4.2

Importance, in practice, of jurisdictionally preferring claimant employees

Indisputably, the Brussels I Recast protects employees domiciled in a Member State whenever they act as defendants. Article 22(1) prescribes that an employer may bring proceedings only in the courts of the employee’s domicile.51 Employees are guaranteed that they will not have to defend their cases in foreign, potentially inaccessible and unfamiliar courts. An employee can be sued outside his or her home country only if he or she consents to the jurisdiction of a foreign court after the dispute has arisen. Article 23 is explicit in this regard: a jurisdiction agreement purporting to confer jurisdiction over an employment dispute on the courts of a foreign country is given effect only if entered post litem natam or if it allows the employee to bring proceedings in courts other than those indicated by the default rules. It does not matter whether the designated court is in a Member State or not.52 The general requirements of Article 25 concerning formal and material validity of jurisdiction agreements must also be satisfied.53 In practice it may be difficult to determine when 48 50 51

52

53

Arts. 6(1) and 21(2) Brussels I Recast. 49 Arts. 20(1) and 8(1) Brussels I Recast. Art. 26 Brussels I Recast. According to Art. 62, the domicile of individuals is determined by reference to the Member States’ domestic laws. In the UK, the rules for determining the domicile of individuals for the purposes of the European jurisdictional instruments are contained in the Civil Jurisdiction and Judgments Order SI 2001/3928, Schedule 1, para. 9. Under the Brussels and 1988 Lugano Conventions, an employer was not confined to suing the employee in the courts of the employee’s domicile. Case C-154/11 Ahmed Mahamdia v. République algérienne démocratique et populaire, 19 July 2012, nyr. See P. Schlosser, ‘Report on the Convention of 9 October 1978 on the Association of the Kingdom of Denmark, Ireland and the United Kingdom of Great Britain and Northern

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an employment dispute has arisen. The Jenard Report suggests that this occurs ‘as soon as the parties disagree on a specific point and legal proceedings are imminent or contemplated’.54 The rationale behind this rule is that an employee who has a specific dispute with his or her employer is in a position to assess the pros and cons of litigation in various countries. The employee will not easily give up the privilege of defending in his or her home country and will accept the jurisdiction of a foreign court only if he or she considers that to be in his or her interest. It should be noted, however, that this rule disfavours defendant employees in one respect: an employee who is sued in the courts of his or her domicile cannot invoke a jurisdiction agreement in favour of a foreign court entered into before the dispute has arisen.55 The idea of consent is also behind the employer’s right to bring a counterclaim in the court of the Member State in which the original claim is pending.56 By commencing proceedings in a foreign court, the employee accepts the jurisdiction of that court to entertain a counterclaim against him or her. The court in which the original claim against the employer is pending must have jurisdiction specifically under Section 5 of Chapter II. In addition, the general requirements of Article 8(3) have to be satisfied: the counterclaim must arise from the same contract or facts on which the original claim was based. The same rationale underlies the rule that an employee can confer jurisdiction on a court by entering an appearance. The Brussels I Recast, however, protects employees from unwitting submissions. Article 26(2) provides that, where the employee is the defendant, the court shall, before assuming jurisdiction on the basis of submission by entering an appearance, ensure that the defendant is informed of his or her right to contest the jurisdiction of the court and of the consequences of entering or not entering an appearance. The strength of the idea of the jurisdictional protection of defendant employees is demonstrated by Samengo-Turner.57 Here, the employer,

54

55 57

Ireland to the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters and to the Protocol on Its Interpretation by the Court of Justice’ [1979] OJ C59/71, [161a]; Simpson v. Intralinks Ltd. [2012] ICR 1343, [32]. Jenard Report, p. 33; cf. Merrett, Employment Contracts in PIL, [4.97]: ‘The date of the facts giving rise to the alleged breach may be a more logical and precise date. However, the agreement has to be about the, extant, dispute and the dispute must be sufficiently identifiable as a dispute to be described in the agreement’ (footnote omitted). Cruz-Real-Jenard Report, [27](e)(2). 56 Art. 22(2). Samengo-Turner v. J&H Marsh & McLennan (Services) Ltd. [2007] EWCA Civ 723; [2007] 2 All ER (Comm) 813. This case is described in Chapter 3, Section 3.4.

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relying on jurisdiction clauses contained in employment contracts with its employees, commenced proceedings in New York for breach of contract. The Court of Appeal interpreted the European rules of jurisdiction in employment matters as giving the employees a statutory right to be sued exclusively in the Member State of their domicile, that is, England, a right that could be protected by an anti-suit injunction. According to Tuckey LJ, Doing nothing is not an option in my judgment. The New York court cannot give effect to [the European rules of jurisdiction] and has already decided in accordance with New York law on conventional grounds that it has exclusive jurisdiction. The only way to give effect to the English claimants’ statutory rights is to restrain those proceedings. A multinational business must expect to be subject to the employment laws applicable to those they employ in different jurisdictions. Those employed to work . . . in London who are domiciled here are entitled to be sued only in the English courts and to be protected if that right is not respected.58

This judgment has been criticised on a number of grounds, in particular that the European rules of jurisdiction direct the Member State courts to either assume or decline jurisdiction in certain circumstances, without conferring rights or imposing obligations on individuals.59 However, looking at the objective of protection of employees from a systemic perspective, the role of the European rules of jurisdiction is to adequately allocate and safeguard the adjudicatory authority of the Member States in employment matters. The European legislator made a policy decision that employees domiciled in the EU can, as a matter of principle, be sued only in the courts of their domicile. There is no reason why the Member State courts should not use the mechanisms at their disposal under their domestic procedural laws to enforce the European rules of jurisdiction, thus safeguarding their adjudicatory authority and, at the same time, the 58 59

Ibid., [43]. A. Briggs, ‘Who Is Bound by the Brussels Regulation?’ [2007] Lloyd’s Maritime and Commercial Law Quarterly 433, pp. 437–8; A. Dickinson, ‘Resurgence of the Anti-suit Injunction: The Brussels I Regulation as the Source of Civil Obligations?’ (2008) 57 International and Comparative Law Quarterly 465, pp. 469–71; P. Goulding and M. Vinall, ‘The English Approach to Jurisdiction and Choice of Law in Employment Covenants Not to Compete’ (2010) 31 Comparative Labour Law and Policy Journal 375, pp. 383–4; J. Hill and A. Chong, International Commercial Disputes: Commercial Conflict of Laws in English Courts, 4th edn (Oxford: Hart, 2010), [11.2.24]; cf. Merrett, Employment Contracts in PIL, [9.37]–[9.39]; T. Hartley, Choice-of-Court Agreements under the European and International Instruments (Oxford University Press, 2013), [14.26]–[14.31].

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objectives of EU law in this field. Section 37(1) of the Senior Courts Act 1981 and the flexible common law principles for granting injunctions provide a sufficient basis on which English courts may grant anti-suit injunctions for this purpose.60 Moreover, EU law provides that all remedies normally available under domestic law must be open to litigants to enforce claims under EU law without discrimination and even requires Member States to create or improve remedies of their own law that are ‘sufficient’ for the effective protection of directly effective EU rights.61 It should be noted, however, that English courts cannot restrain proceedings in other Member States that fall within the scope of the lis pendens rules of the European jurisdictional instruments.62 Since the Member State courts are bound by the Brussels I Recast, they must decline jurisdiction over an employee domiciled in another Member State, unless the employee validly submits to their jurisdiction. Imagine for a moment that this is the only jurisdictional preference that employees receive – in other words, that the jurisdictional preference consists only in denying claimant employers the use of certain otherwise available jurisdictional bases. Would this type of jurisdictional imbalance (favouring solely defendant, but not claimant employees), in and of itself, lead to the achievement of the objective of protection of employees? The answer largely depends on the relative practical importance of situations where employees act as defendants compared to those where they act as claimants. The relative practical importance of the two types of situation can be ascertained by looking at the CJEU case law on Brussels I and the Brussels Convention. So far employees have initiated proceedings in thirteen cases.63 60

61

62

63

Section 37(1) Senior Courts Act 1981 provides: ‘The High Court may by order (whether interlocutory or final) grant an injunction or appoint a receiver in all cases in which it appears to the court to be just and convenient to do so.’ For the position in common law, see Mercedes-Benz AG v. Leiduck [1996] AC 284, 308 (‘the jurisdiction to grant an injunction, unfettered by statute, should not be rigidly confined to exclusive categories by judicial decision’, per Lord Nicholls). Hartley, Choice-of-Court Agreements, [14.29]; N. Reich, General Principles of EU Civil Law (Cambridge, Antwerp, Portland: Intersentia, 2014), pp. 91, 97–99. Case C-159/02 Gregory Paul Turner v. Felix Fareed Ismail Grovit, Harada Ltd. and Changepoint SA [2004] ECR I-3565; [2005] 1 AC 101. Sanicentral (n 26); Elefanten Schuh (n 26); Ivenel (n 30); Case 32/88 Six Constructions Ltd. v. Paul Humbert [1989] ECR 341; [1990] ILPr 206; Mulox (n 36); Case C-383/95 Petrus Wilhelmus Rutten v. Cross Medical Ltd. [1997] ECR I-57; [1997] All ER (EC) 121; Case C37/00 Herbert Weber v. Universal Ogden Services Ltd. [2002] ECR I-2013; [2002] QB 1189; Case C-437/00 Giulia Pugliese v. Finmeccanica SpA, Betriebsteil Alenia Aerospazio [2003] ECR I-3573; [2004] All ER (EC) 154; Turner v. Grovit, ibid.; Case C-555/03 Magali

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In only two cases have employers done so.64 This suggests that situations where employees act as claimants are much more frequent than those where they act as defendants. This is hardly surprising. ‘Employers rarely sue employees, not because they cannot do so . . . but because they have a whole armoury of weapons from gradings, salaries, promotions, through disciplinary process ultimately to dismissal, to enforce the contract upon the employee.’65 This impression is corroborated by data from certain national jurisdictions. In Germany, for example, it is estimated that more than 95 per cent of employment disputes are commenced by employees.66 For employees, therefore, the jurisdictional rules applicable when they act as claimants are of a crucial practical importance. This impression is shared by the European Commission. We must now turn briefly to the area of recognition and enforcement of judgments. Brussels I did not allow the court in which the recognition and enforcement of a judgment concerning employment was sought to review the jurisdiction of the court of origin. This was in striking contrast to the rule that allowed such review in matters relating to insurance and consumer contracts.67 The explanation provided by the Commission was that any review of the foreign courts’ jurisdiction would only affect employees, since it was they who generally sought the recognition and enforcement of foreign judgments.68 This argument clearly implied that disputes in which employees acted as defendants are so rare that the protection from wrongful assumption of jurisdiction over them was unnecessary.

64

65

66

67 68

Warbecq v. Ryanair Ltd. [2004] ECR I-6041; GlaxoSmithKline (n 1); Case C-413/07 Haase v. Superfast Ferries [2008] OJ C51/40; Mahamdia (n 51). See also Case C-29/10 Heiko Koelzsch v. État du Grand Duchy of Luxemburg [2011] ECR I-1595, Case C-384/10 Jan Voogsgeerd v. Navimer SA [2011] ECR I-13275 and Case C-64/12 Anton Schlecker v. Melitta Josefa Boedeker, 12 September 2013, nyr, dealing with Art. 6 Rome Convention. Case 288/82 Ferdinand M.J.J. Duijnstee v. Lodewijk Goderbauer [1983] ECR 3663; [1985] 1 CMLR 220. In Turner v. Grovit, ibid., an action brought by the employee in England was followed by a vexatious action brought by the employer in Spain. R. Smith and V. Cromack, ‘International Employment Contracts – the Applicable Law’ (1993) 22 Industrial Law Journal 1, p. 6. A. Junker, ‘Vom Brüsseler Übereinkommen zur Brüsseler Verordnung – Wandlungen des Internationalen Zivilprozessrechts’ (2002) 48 Recht der Internationalen Wirtschaft 569, p. 575. Art. 35(1) Brussels I; compare Art. 45(1)(e)(i) Brussels I Recast. European Commission, ‘Proposal for Brussels I: Explanatory Memorandum’, p. 23.

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Furthermore, judging from English case law, disputes in which employees act as defendants usually concern senior employees and the enforcement of restrictive covenants and the employee’s duty of fidelity and confidentiality.69 Samengo-Turner,70 for instance, concerned the enforcement of a contractual obligation on the part of reinsurance brokers to repay the bonus they had received if they engaged in activities detrimental to their employers. Other cases concerned managers, consultants and solicitors.71 The reasons for jurisdictionally protecting senior employees are not as strong as the reasons for protecting other employees. Consequently, since situations where employees act as claimants are of a significantly greater practical importance, giving a jurisdictional preference solely to defendant employees cannot suffice. Furthermore, the theoretical considerations discussed in Section 2.4 of Chapter 2 show that the objective of protection of employees requires more than just denying employers the use of some otherwise available jurisdictional bases. This objective supports favouring claimant employees by making available to them one or more jurisdictional bases in addition to those available to claimants in general. Rules of jurisdiction in employment matters must also accord with the considerations of proportionality and vindication of legitimate state interests. Given these practical and theoretical considerations, in order for the objective of protection of employees to be achieved, it is not enough that the special rules accord a jurisdictional preference solely to defendant employees. These rules must also accord a balanced jurisdictional preference to claimant employees. Only thereby can the jurisdictional rules of European private international law adequately perform their systemic role, one of allocating and safeguarding the adjudicatory authority of the Member States in employment matters. The following section examines whether this is the case.

69 71

See Merrett, Employment Contracts in PIL, Ch 9. 70 See n 56. CEF Holdings Ltd. v. Mundey (n 14) (managers); Swithenbank Foods Ltd. v. Bowers (n 14) (managers); OJSC TNK-BP Holding v. Lazurenko [2012] EWHC 2781 (Ch) (manager); Turner v. Grovit (n 61) (solicitor); WPP Holdings Italy SRL v. Benatti [2006] EWHC 1641 (Comm); [2007] 1 All ER (Comm) 208 and [2007] EWCA Civ 263; [2007] 1 WLR 2316 (although the consultant in this case was held not to be an employee, this case illustrates the type of dispute in which employers usually act as claimants). See also Duijnstee v. Goderbauer (n 63) (manager).

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4.3 Claimant employees versus claimants in general: is the objective of protection of employees yet to be attained? In order to ascertain whether the Brussels I Recast achieves the objective of protection of employees, the position of claimant employees will be compared with that of claimants in general. Specifically, the jurisdictional bases available to claimant employees will be compared with those available to claimants in general in comparable situations. The bulk of this section will deal with the two rules of jurisdiction that are based on the connecting factors of the habitual place of work and the engaging place of business. These connecting factors are also at the centrepiece of the choice-of-law rules for employment contracts of Rome I. The following examination of these connecting factors focuses on the CJEU case law under the European jurisdictional instruments, whereas the following chapter takes a different approach by investigating how the choice-of-law rules apply to some of the factual patterns under which transnational employment relationships typically arise, namely to cases of posting of employees abroad, intra-group transfers and ‘transnational occupations’.

4.3.1

Employer’s domicile versus domicile of defendants in general

Article 21(1)(a) provides that an employee may commence proceedings in the courts of the Member State of the employer’s domicile.72 Article 20(2) expands the notion of the employer’s domicile by prescribing that an employer domiciled outside the EU will be deemed to be domiciled in the Member State where it has a branch, agency or other establishment (‘ancillary establishment’) regarding disputes arising out of the operations of that establishment.73 Similarly, claimants in general may commence proceedings in the Member State where the defendant is domiciled.74 However, there is no extension of the notion of the 72

73

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The domicile of legal persons is defined autonomously in Art. 63. See Powell v. OMV Exploration & Production Ltd. [2014] ICR 63. According to Art. 62, the domicile of individuals is determined by reference to the Member States’ domestic laws. See Mahamdia (n 51) (the terms ‘branch, agency or other establishment’ must be interpreted in accordance with Art. 7(5); an embassy can be an ancillary establishment). See also Wright v. Deccan Chargers Sporting Ventures Ltd. [2011] EWHC 1307 (QB); [2011] ILPr 37, [47]–[56]. The Brussels and 1988 Lugano Conventions did not contain a rule extending the notion of the employer’s domicile. Art. 4(1).

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defendant’s domicile on which general claimants can rely. The following text examines whether the rule extending the notion of the employer’s domicile accords claimant employees a jurisdictional preference. In general, the jurisdictional rules of the Brussels I Recast apply when the defendant is domiciled in the EU.75 The Member State courts can normally assume jurisdiction over non-EU domiciliaries only pursuant to the Member States’ traditional jurisdictional rules, regardless of any ancillary establishment that such defendants may have in the EU. There are, however, several exceptions to this rule, two of which concern employment disputes. First, the rules of the habitual place of work and of the engaging place of business can be invoked not only against employers domiciled in the EU but also against employers that are non-EU domiciliaries.76 These rules will be examined in Sections 4.3.2 and 4.3.3. Second, the rule extending the notion of the employer’s domicile brings non-EU employers with European ancillary establishments within the international scope of the Brussels I Recast regarding employment disputes arising out of the operations of those establishments. This rule aims to protect employees by guaranteeing that they will be able to commence proceedings against such non-EU employers in at least one Member State. Otherwise (the theory goes) the operation of the Member States’ traditional rules might result in employees not being able to sue such non-EU employers anywhere in the EU. What is, however, the practical result of the rule extending the notion of the employer’s domicile? This rule applies in situations such as the one that arose in Six Constructions.77 Six Constructions was a company domiciled in the United Arab Emirate of Sharjah. Mr Humbert was a worker of French nationality and domicile. He was engaged through Six Constructions’ Belgian branch to work outside the EU. Following his dismissal, Mr Humbert commenced proceedings in France. If the mentioned rule had been applied in this case, Six Constructions would have been deemed to be domiciled in Belgium: the employment dispute arose out of the operations of that company’s Belgian branch because Mr

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Arts. 4 and 5. Arts. 6(1) and 21(2). Other exceptions mentioned in Art. 6(1) are: jurisdiction of the courts of the consumer’s domicile over a professional (Art. 18(1)), exclusive jurisdiction (Art. 24) and jurisdiction agreements (Art. 25). The Brussels I Recast has introduced the exceptions concerning consumer and employment disputes in Arts. 18(1) and 21(2). These two exceptions do not exist under other European jurisdictional instruments. See n 62.

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Humbert was engaged through that branch.78 The French courts would, therefore, have been entitled and obliged to apply the jurisdictional rules of the Brussels I Recast. Since Mr Humbert’s work was habitually performed outside the EU, this legal instrument would have provided no basis for the jurisdiction of the French courts. Mr Humbert would then have been left with the option of bringing proceedings in Belgium (the country where the employer would have been deemed to be domiciled), Sharja (the country where the employer was in fact domiciled) or possibly in Libya, Zaire or Abu Dhabi, another of the United Arab Emirates (nonEU countries where the work was performed). If the rule extending the notion of the employer’s domicile did not exist, the Member States’ traditional jurisdictional rules would be applicable in this situation. The French traditional rules would confer jurisdiction on the French courts, possibly on two accounts.79 First, Article 14 of the French Civil Code enables the claimants of French nationality to sue foreign parties in France. Second, the second indent of Article R517–1 of the French Labour Code gives employees domiciled in France the right to commence proceedings in France when the work is performed outside any establishment. It is not clear whether the work in Six Constructions was performed in an establishment. In any event, Article 14 of the Civil Code would be sufficient to give jurisdiction to the French courts.80 In addition, the Belgian traditional rules would confer jurisdiction on Belgian courts: Article 5(2) of the Belgian Private International Law Code mirrors Article 7(5) of the Brussels I Recast.81 The question whether the rule extending the notion of the employer’s domicile accords a jurisdictional preference to claimant employees 78

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Six Constructions was decided under the Brussels Convention. It is interesting to note that, since the CJEU had to assume for procedural reasons that Six Constructions was domiciled in Belgium, the outcome was the same as if the Brussels I Recast, with its rule extending the notion of the employer’s domicile, had been applied. For a discussion of the requirement that a dispute must arise out of the operations of the ancillary establishment, see text accompanying nn 148–51. For the French traditional rules of jurisdiction in employment matters, see P. Mayer, ‘Les clauses relatives à la compétence internationale insérées dans le contrat du travail’ in Mélanges dédiés à Dominique Holleaux (Paris: LGDJ, 1990) 263. Both jurisdictional bases can be excluded by a jurisdiction agreement in favour of a foreign court: see cases cited by Mayer, ‘Les clauses relatives à la compétence internationale insérées dans le contrat du travail’, pp. 264 (for derogability of Art. 14 of the Civil Code), 266–7, 271–2 (for derogability of the second indent of Art. R517–1 of the Labour Code). No valid jurisdiction agreement existed in Six Constructions (n 62): see [4]–[5]. F. Rigaux and M. Fallon, Droit international privé, 3rd edn (Brussels: Larcier, 2005), p. 995. Art. 7(5) is discussed in Section 4.3.4.

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cannot be answered in the abstract. This rule would not, for example, have benefitted Mr Humbert. On the one hand, it would have given jurisdiction to Belgian courts, which would anyway have been competent under the Belgian traditional rules. On the other hand, it would have precluded Mr Humbert from bringing proceedings in France pursuant to the French traditional rules. In different circumstances, this rule could confer jurisdiction on the courts that would otherwise not have it. This is most likely to occur where the existence of a non-EU employer’s ancillary establishment in a Member State does not give jurisdiction to that Member State’s courts pursuant to that country’s traditional rules, even over employment disputes arising out of the operations of that ancillary establishment. Given that Greece and Poland seem to be the only Member States that would not give jurisdiction to their courts on this basis,82 the rule extending the notion of the employer’s domicile more often than not actually disfavours claimant employees since it shields non-EU employers with European ancillary establishments from the Member States’ traditional, often exorbitant, jurisdictional rules.

4.3.2 Habitual place of work versus place of provision of services The primary rule of jurisdiction in employment matters (conferring jurisdiction on the courts for the habitual place of work) will be compared with the rule of jurisdiction in matters relating to contracts for the provision of services. This comparison is justified given the similar nature of the two types of contract.

4.3.2.1 Habitual place of work Article 21(1)(b)(i) prescribes that an employer domiciled in the EU may be sued in the courts for the place where or from where the employee habitually carries out his or her work or for the last place where he or she did so. Article 21(2) extends the international scope of this provision, which can now also be invoked against employers that are non-EU domiciliaries.83 This rule is of practical importance only if there is a 82

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A. Nuyts, ‘Study on Residual Jurisdiction: General Report’, available at http://ec.europa. eu/civiljustice/news/docs/study_residual_jurisdiction_en.pdf, p. 36. Under the Brussels and Lugano Conventions and Brussels I, the rule of the habitual place of work determines the jurisdiction of the Member State courts only over employers domiciled in the EU. Furthermore, the relevant provisions of these instruments are slightly different from those of the Brussels I Recast in that they do not refer to the place ‘from where’ the employee habitually carries out his or her work. Moreover,

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habitual place of work in a Member State.84 If the employee does not or did not habitually carry out his or her work in any one country, the fallback rule of the engaging place of business applies. If there is a habitual place of work outside the EU, neither the primary rule of the habitual place of work nor the fall-back rule of the engaging place of business applies.85 The habitual place of work is easily identifiable where the work is performed in one place. Where the work is carried out in more than one place, determining the habitual place of work is problematic. The CJEU dealt with this problem in the following four cases: Mulox, Rutten, Weber and Pugliese. Mulox86 concerned a dispute between Mulox, an English company, and Mr Geels, a Dutch national with French domicile. Mr Geels, who was employed as a commercial representative, used his French home as an office and base of operations. In the first fourteen months of his employment, he sold Mulox products in Germany, Belgium, the Netherlands and Scandinavia (but not France), to which countries he travelled frequently. In the last five months, he worked solely in France. Following his dismissal, Mr Geels brought proceedings in France. The employer argued that the place of performance was not confined to France, that it covered the whole of Europe and that, consequently, the French courts had no jurisdiction. The CJEU held that, where the work was performed in more than one country, the multiplication of courts having jurisdiction should be avoided. Jurisdiction should not be conferred on the courts of each Member State in which the work was performed.87 Jurisdiction over the whole dispute should be concentrated at ‘the place where or from which the employee principally discharges his obligations towards his employer’.88 The most important factor in determining this place was

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the relevant provisions of the Brussels and 1988 Lugano Conventions do not refer to the courts for the last place where the employee habitually carried out his or her work. Work carried out on fixed or floating installations positioned on or above the part of the continental shelf adjacent to a Member State for the purposes of prospecting and exploiting its natural resources is regarded as work in the territory of that Member State: Weber (n 62). Six Constructions (n 62); Shell International Ltd. v. Liem, Cass., 21 January 2004 [2004] ILPr 18; Cruz-Real-Jenard Report, [23](e); H. Gaudemet-Tallon, Compétence et exécution des jugements en Europe, 4th edn (Paris: LGDJ, 2010), p. 309; T. Kruger, Civil Jurisdiction Rules of the EU and Their Impact on Third States (Oxford University Press, 2008), [2.274], [2.291]; cf. Briggs and Rees, Jurisdiction and Judgments, [2.105]; R. Kidner, ‘Jurisdiction in European Contracts of Employment’ (1998) 27 Industrial Law Journal 103, pp. 111–12; Merrett, Employment Contracts in PIL, [4.84]. See n 36. 87 Ibid., [20]–[23]. 88 Ibid., [24].

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that ‘the work entrusted to the employee was carried out from an office . . . from which he performed his work and to which he returned after each business trip’.89 Other relevant factors were that Mr Geels was domiciled in France and that the work was carried out solely in France when the dispute arose. The French courts, therefore, had jurisdiction. The facts of Rutten90 were strikingly similar.91 Mr Rutten, a commercial representative of Dutch nationality and domicile, commenced proceedings in the Netherlands against Cross Medical, his English employer. Mr Rutten performed some two thirds of his work in the Netherlands, the rest being divided among the UK, Belgium, Germany and the United States. The work was carried out from an office established in Mr Rutten’s home. The CJEU had an easy task: after referring to Mulox,92 it held, in line therewith, that the habitual place of work was ‘the place where the employee has established the effective centre of his working activities and where, or from which, he in fact performs the essential part of his duties vis-à-vis his employer’.93 The most important factors in identifying this place were that Mr Rutten carried out two thirds of his work in the Netherlands and that he had an office there.94 Mulox and Rutten clarify that the most important factors for determining the habitual place of work are the location of the employee’s office and the distribution of the working time among various countries. Since the ‘office’ and ‘time’ factors coincided in these two cases (i.e. the employees had their offices in the countries where they spent most of their working time), the CJEU had no problem in identifying the habitual place of work. However, which of the two factors is to be given greater weight if they do not coincide? This question was discussed before the CJEU. Advocate General Jacobs, who delivered opinions in both Mulox and Rutten, argued that the main purpose of the rule of jurisdiction in employment matters (conferring jurisdiction on the courts with a particularly close connection with the dispute) was best satisfied if the ‘office factor’ was given preference.95 In his view, this was because the existence of an office in a place 89 91

92 95

Ibid., [25]. 90 See n 62. The reference for a preliminary ruling was made because Mulox was decided under the original 1968 version of the Brussels Convention, which did not contain a special rule of jurisdiction for employment disputes. Rutten had to be decided under the 1989 version of the convention, which did contain such a rule. The referring court was not sure whether the introduction of the special rule meant a change in the law. Rutten (n 62), [12]–[19]. 93 Ibid., [23]. 94 Ibid., [25]. Mulox (n 36), AG Opinion, [29], [33]; Rutten (n 62), AG Opinion, [34].

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where the work was performed indicated that that place of work was more important than the others. In other words, the advocate general equated the term ‘habitual place of work’ with the ‘principal place of employment’.96 The European Commission, on the other hand, argued that preference should be given to the ‘time factor’.97 It indicated that the term ‘habitual’ referred to the temporal organisation of work and that it could not be equated with the term ‘principal’ which referred to the central point of work. It suggested that jurisdiction should be given to the courts of the country where ‘a clear majority of days was spent’.98 Although the CJEU refrained from addressing this issue directly, it did indirectly express its preference for the advocate general’s approach. As previously noted, Mr Geels’ activities did not cover France until fourteen months into his employment and then did so for approximately five months. Nevertheless, the CJEU did not compare the amount of time Mr Geels had spent in various countries. It did, however, refer to the ‘place where or from which the employee principally discharges his obligations towards his employer’99 and then mentioned the location of the office, but not the distribution of the working time, as the relevant factor for determining this place.100 Furthermore, in Rutten the CJEU referred to ‘the place where the employee has established the effective centre of his working activities and where, or from which, he in fact performs the essential part of his duties vis-à-vis his employer’.101 If an employee has an office, the effective centre of his or her working activities will rarely be somewhere else. The existence of an office in a country, therefore, creates a strong presumption that the habitual place of work is in that country.102 This presumption is to be rebutted only in exceptional cases where other relevant factors (the subject matter of the dispute; the amount, value, nature and importance of the work performed in another country; the employee’s domicile or residence in another country etc.) establish a particularly strong connection with the courts of another country. Weber103 concerned an employee who did not have an office that could constitute the effective centre of his working activities. Mr Weber, a Mulox, ibid., AG Opinion, [32]; Rutten, ibid., AG Opinion, [25]; cf. P. Mankowski, ‘Der gewöhnliche Arbeitsort im Internationalen Privat- und Prozeßrecht’ (1999) 19 Praxis des Internationalen Privat- und Verfahrensrecht 332. 97 For the Commission’s view see Rutten (n 62), AG Opinion, [33]. 98 Ibid. 99 Mulox (n 36), [24] (emphasis added). 100 Ibid., [25]. 101 Rutten (n 62), [23] (emphasis added). 102 Mulox (n 36), AG Opinion, [33]; Rutten, ibid., AG Opinion, [34]. See also Pitzolu v. Banca Gesfid SA, Corte di Cassazione, 9 January 2008 [2009] ILPr 27. 103 See n 62. 96

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German national domiciled in Germany, was employed by Universal Ogden Services, a Scottish company, as a cook. He performed his work on board various vessels and sea installations, initially in the Netherlands, thereafter in Denmark. The CJEU held that, in this situation, which involved a change of the place of work, the habitual place of work ‘is, in principle, the place where [the employee] spends most of his working time’; this place is to be determined by looking at the whole period of employment.104 Since Mr Weber spent the majority of his working time in the Netherlands, Dutch courts had jurisdiction. The CJEU acknowledged that the sole application of the quantitative, temporal criterion in this type of case might point to a court that did not have a particularly close connection with the dispute. That is why it stated that the place where the majority of work was performed was ‘in principle’ the habitual place of work.105 All the circumstances of the case should be taken into account to ascertain whether there is another place with a stronger connection.106 In particular, the intentions of the parties should be considered. The fact that the parties intended to shift the place of work permanently from one place to another might indicate that the former had ceased and the latter had become the habitual place of work, irrespective of the fact that overall the majority of work had been performed in the former place.107 The importance of the intentions of the parties should, however, not be limited to the Weber type of case. It is potentially relevant whenever an employee (irrespective of whether his or her work is performed from an office or not) is posted abroad by his or her employer, either to a foreign place of work, branch, subsidiary or affiliate or to another company under a cooperation agreement or a contract of ‘hiring-out’ of workers. The fact that the parties intend the posting to be temporary (i.e. limited to the completion of a certain task or to a certain period of time) supports the conclusion that there is no change of the habitual place of work. The fact that the parties intend the posting to be permanent supports a different conclusion.108 The intentions of the parties do not need to be recorded in a particular form. 104

105 108

Ibid., [50]–[52] (emphasis added). See also Re Employment in More Than One State, BAG, 29 May 2002 [2003] ILPr 33. Ibid., [50]. 106 Ibid., [53], [58]. 107 Ibid., [54]. For the importance of the intentions of the parties, see Mankowski, ‘Der gewöhnliche Arbeitsort’, pp. 334–5; P. Mankowski, ‘Europäisches Internationales Arbeitsprozessrecht: Weiteres zum gewöhnlichen Arbeitsort’ (2003) 23 Praxis des Internationalen Privat- und Verfahrensrecht 21, pp. 23–5; see also Harada Ltd. (t/a Chequepoint UK Ltd.) v. Turner

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In Pugliese,109 the CJEU addressed a related question: whether the habitual place of work under an employment contract with employer B from one country (in this case Germany) was relevant in a dispute arising under an employment contract with employer A from another country (in this case Italy), where employers A and B were related through membership in the same corporate group and the employment with employer A was suspended owing to the employee’s transfer to employer B. The CJEU held that the habitual place of work under the second employment contract was relevant provided that employer A had an interest in the employee’s work for employer B in a place decided on by the latter.110 The existence of that interest must be determined in an overall manner taking into consideration all the facts of the case, and in particular: the fact that the conclusion of the second contract was envisaged when the first was being concluded; the fact that the first contract was amended on account of the conclusion of the second contract; the fact that there is an organisational or economic link between the two employers; the fact that there is an agreement between the two employers providing a framework for the coexistence of the two contracts; the fact that the first employer retains management powers in respect of the employee and the fact that the first employer is able to decide the duration of the employee’s work for the second employer.111 In conclusion, the CJEU has interpreted the term ‘habitual place of work’ narrowly in certain respects but widely in others. The term is given a narrow interpretation in the sense that there cannot be more than one habitual place of work. This is considered necessary for avoiding the multiplication of competent courts.112 The term ‘habitual place of work’ is thus effectively equated to the ‘principal place of employment’. The term is interpreted widely in that the determination of the habitual place of work is essentially a search for the place that is most closely connected with the employment dispute.113 The ‘office’ and ‘time’ factors create presumptions that the habitual place of work is the place where the office is located or, if none, where the employee spends most of his or her working time. If another place of work is, in light of all the relevant

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(No 1) [2000] ILPr 574, [26]; Four Winds Charter (Société) v. Latoja, Cass., 31 March 2009 [2009] ILPr 50; X v. Royal Bank of Scotland, Cass., 27 November 2013 [2014] ILPr 22. See n 62. 110 Ibid., [23]. 111 Ibid., [24]. Mulox (n 36), [21], [23]; Rutten (n 62), [18]; Weber (n 62), [42], [55]; Pugliese (n 62), [22]. Mulox, ibid., [17]; Rutten, ibid., [16]; Weber, ibid., [39]; Pugliese, ibid., [17]. See also Ivenel (n 30), [14]–[15].

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objective and subjective factors, more closely connected, the presumption will be rebutted in favour of that place.114 The following text compares the rule of the habitual place of work with the rule concerning services contracts.

4.3.2.2 Place of provision of services Article 7(1)(a) of the Brussels I Recast lays down the general rule of jurisdiction in contractual matters. A defendant domiciled in a Member State may be sued in another Member State, in matters relating to a contract, in the courts for the place of performance of the obligation in question. The ‘obligation in question’ is the obligation forming the basis of the claim;115 the ‘place of performance’ is determined by reference to the law applicable under the choice-of-law rules of the forum.116 With regard to services contracts, the second indent of Article 7(1)(b) contains an exception to the general rule. It prescribes that ‘unless otherwise agreed, the place of performance of the obligation in question shall be . . . the place in a Member State where, under the contract, the services were provided or should have been provided’. Therefore, even if the claim under a services contract concerns nonpayment, the jurisdictionally relevant obligation is ordinarily the obligation to provide services. Furthermore, the place of provision of services is ordinarily defined autonomously and is determined by reference to the provisions of the contract and the facts of the case, not the applicable law.117 In this respect, the rule concerning services contracts largely corresponds to the primary rule of jurisdiction in employment matters. However, there are significant differences between the two rules. First, the primary rule of jurisdiction in employment matters can be invoked not only against employers domiciled in the EU but also against employers that are non-EU domiciliaries. The rule concerning services contracts applies only to defendants domiciled in the EU. Second, the jurisdictionally relevant obligation regarding employment contracts is always the obligation to perform work and the term ‘habitual 114

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Mulox, ibid., [25]; Weber, ibid., [58]; Mulox, ibid., AG Opinion, [33]; Rutten, ibid., AG Opinion, [34]; Weber, ibid., Opinion of AG Jacobs, [49]–[50]. De Bloos v. Bouyer (n 31). Tessili v. Dunlop (n 32). Art. 5(1) of the Brussels and 1988 Lugano Conventions is identical to Art. 7(1)(a) Brussels I Recast. It does not contain special rules for sales and services contracts. Case C-381/08 Car Trim GmbH v. KeySafety Systems Srl [2010] ECR I-1255; [2010] 2 All ER (Comm) 770, [53]–[57]; Case C-87/10 Electrosteel Europe SA v. Edil Centro SpA [2011] ECR I-4987.

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place of work’ is always defined autonomously. In contrast, the parties to a services contract may agree that the exception contained in the second indent of Article 7(1)(b) does not apply. In other words, they may agree that the jurisdictionally relevant obligation is the obligation forming the basis of the claim, whose place of performance is to be determined by reference to the law applicable under the choice-of-law rules of the forum. This agreement need not satisfy the general requirements concerning jurisdiction agreements of Article 25.118 Thus, if A contracts with B to provide services in one Member State in return for payment in another Member State, the courts of the first Member State shall normally have jurisdiction over the whole dispute. However, if the parties agree that the exception contained in the second indent of Article 7(1)(b) does not apply, the courts of the second Member State shall have jurisdiction over claims for nonpayment pursuant to the general rule of Article 7(1)(a). In contrast, the rule of the habitual place of work does not enable an employee to sue his or her employer for the nonpayment of salary in a Member State other than that where the work was habitually performed. Therefore, the primary rule of jurisdiction in employment matters is narrower in this respect than the rule concerning services contracts. The third difference stems from the fact that the exception contained in the second indent of Article 7(1)(b) does not apply where the services were provided or should have been provided outside the EU. In that situation, a ‘place in a Member State where . . . the services were provided or should have been provided’ does not exist and a requirement for the application of the second indent of Article 7(1)(b) is not met. The general rule of Article 7(1)(a) regains applicability.119 Thus, if A contracts with B to provide services in a non-EU country in return for payment in a Member State, the mentioned exception does not apply. A may rely on the general rule and sue B for nonpayment in the Member State where the payment should have been performed. In contrast, if the work under an employment contract is habitually performed outside the EU, the rule of the habitual place of work does not enable an employee to sue his or her employer for unpaid salary in the Member State where the salary should have been paid. 118

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T. Hartley, International Commercial Litigation: Text, Cases and Materials on Private International Law (Cambridge University Press, 2009), p. 48. Art. 7(1)(c); see C-19/09 Wood Floor Solutions Andreas Domberger GmbH v. Silva Trade SA [2010] ECR I-2121, Opinion of AG Trstenjak, [86]; cf. K. Takahashi, ‘Jurisdiction in Matters Relating to Contract: Article 5(1) of the Brussels Convention and Regulation’ (2002) 27 European Law Review 530, p. 540.

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This is another situation where the primary rule of jurisdiction in employment matters is narrower than the rule concerning services contracts. With regard to the determination of the place of provision of services for the purposes of the second indent of Article 7(1)(b), there is no problem if the services were provided or should have been provided in one place. The courts for that place shall have jurisdiction. As with employment contracts, the problem arises where the services were provided or should have been provided in more than one place. The CJEU dealt with it in Rehder120 and Wood Floor.121 These two cases concerned the determination of the place of provision of services where there were several places of performance in different Member States. The CJEU held that, in such cases, it was necessary to identify the court with the closest connection with the dispute, which it said was the court for ‘the place where, pursuant to [the] contract, the main provision of services is to be carried out’.122 Thus, with regard to commercial agency contracts, the relevant place is determined first by reference to the provisions of the contract.123 In the words of the CJEU, the search is for ‘the place where the agent was to carry out his work on behalf of the principal, consisting in particular in preparing, negotiating and, where appropriate, concluding the transactions for which he has authority’.124 A commercial agent normally performs these activities in his or her office. If the contract does not enable the determination of the place of the main provision of services (e.g. because several places or none were specified) and if the agent has already provided services in accordance with the contract, account should be taken of the place where the agent has in fact for the most part carried out his or her activities in performance of the contract.125 The relevant factors, such as the time spent and the importance of the activities carried out in various places, will also normally point to the agent’s office. If the two abovementioned criteria are not helpful, the place where the agent is domiciled (again ordinarily the place where his or her office is located) will be deemed to be the relevant place.126 Sometimes, however, the place of the main provision of services cannot be determined. For example, the relevant services in 120 121

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Case C-204/08 Peter Rehder v. Air Baltic Corp. [2009] ECR I-6073; [2009] ILPr 44. See n 118. For a general discussion of this problem, see U. Grušić, ‘Jurisdiction in Complex Contracts under the Brussels I Regulation’ (2011) 7 Journal of Private International Law 321. Rehder (n 119), [37]–[38]; Wood Floor (n 118), [33]. Wood Floor, ibid., [38]–[39]. See also P. Mankowski, ‘Commercial Agents under European Jurisdiction Rules’ (2008) 10 Yearbook of Private International Law 19, pp. 31–42. Ibid., [38]. 125 Ibid., [40]. 126 Ibid., [42].

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cases concerning passenger air transport are, by their very nature, performed in an indivisible and identical manner from the place of departure to that of arrival of the aircraft. One place of the main provision of services does not, therefore, exist.127 In such cases, jurisdiction is conferred on the courts for each place of provision of services, provided there is a sufficiently close connection between those places and the dispute.128

4.3.2.3 Conclusion The criteria for determining the habitual place of work and the place of provision of services for the purposes of the jurisdictional rules of the Brussels I Recast are inherently the same. The habitual place of work is interpreted as the principal place of employment and the place of provision of services as the place of the main provision of services. In both situations, the purpose of determining these places is to confer jurisdiction on the court most closely connected with the dispute. The fact that the search for the habitual place of work is facilitated by the existence of presumptions created by the ‘office’ and ‘time’ factors reflects the relatively specific nature of the rule of jurisdiction for employment contracts. The more general nature of the rule concerning services contracts (which covers a range of widely distinct contracts) does not allow an a priori elevation of one or more factors to the status of presumptions. However, with regard to commercial agency contracts, which are akin to transnational employment contracts entered into by commercial representatives, the location of the agent’s office weighs more than other factors. This supports the conclusion that the criteria for determining the two places are inherently the same. Therefore, the primary rule of jurisdiction in employment matters and the rule concerning services contracts correspond closely. However, there are four differences between the two rules. First, the international scope of the primary rule of jurisdiction in employment matters is wider. It can be invoked not only against employers domiciled in the EU but also against employers that are non-EU domiciliaries. Second, the relevant obligation for establishing jurisdiction over an employment dispute is always the

127 128

Rehder (n 119), [42]. Ibid., [44]–[45], [47]. If the services consist in a negative obligation not subject to any geographical limits, there is no jurisdictionally relevant place of provision of services: Case C-256/00 Besix SA v. Wasserreinigungsbau Alfred Kretzschmar GmbH & Co. KG (WABAG) and Planungs- und Forschungsgesellschaft Dipl. Ing. W. Kretzschmar GmbH & KG (Plafog) [2002] ECR I-1699; [2003] 1 WLR 1113 (the parties undertook to act exclusively and not to commit themselves to other parties anywhere in the world).

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obligation to perform work and the term ‘habitual place of work’ is always defined autonomously. In contrast, the parties to a services contract may agree that the exception contained in the second indent of Article 7(1)(b) does not apply. If so, the general rule of Article 7(1)(a) allows the service provider to bring the claim for nonpayment in the place where the payment should have been performed. Third, the fact that the place of payment of salary is in a Member State is always irrelevant for jurisdictional purposes. In contrast, if the services were provided or should have been provided outside the EU, the exception contained in the second indent of Article 7(1)(b) does not apply. If the place of payment happens to be in the EU, the general rule of Article 7 (1)(a) then allows the service provider to bring the claim for nonpayment in that place. Fourth, if the habitual place of work cannot be determined, the fall-back rule of the engaging place of business applies. In contrast, if the place of the main provision of services cannot be identified, the service provider can sue the other party in the courts for each place of provision of services. Do the differences between the two rules result in claimant employees being in a better or worse jurisdictional position than claimant service providers? The first difference works in favour of claimant employees in those rare situations where the traditional jurisdictional rules of the Member State of the habitual place of work would not confer jurisdiction on its courts in this situation.129 The second difference may open an additional forum to service providers. However, this depends on the agreement of the parties. Since the parties to an employment contract may also agree to expand the number of forums available to the employee, the second difference has no practical importance apart from the fact that a jurisdiction agreement must satisfy the general requirements of Article 25, while an agreement on not applying the exception contained in the second indent of Article 7(1)(b) need not. The third and fourth differences are of practical importance. They open additional forums to service providers but not to employees in comparable situations. The primary rule of jurisdiction in employment matters is, therefore, overall slightly less favourable for claimant employees than the generally applicable rule concerning services contracts is for claimant service providers. 129

It seems that not all Member States’ traditional rules give jurisdiction to their courts on the basis of the habitual place of work being in that country: Nuyts, ‘Study on Residual Jurisdiction’, pp. 43–6.

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4.3.3

Engaging place of business

Article 21(1)(b)(ii) provides that an employee who does not or did not habitually carry out his or her work in any one country may sue the employer domiciled in the EU in the courts for the place where the business which engaged him or her is or was situated. Article 21(2) extends the international scope of this provision, which now also serves to determine the jurisdiction of the Member State courts over employers that are non-EU domiciliaries.130 This rule is not applicable where there is a habitual place of work outside the EU.131 It is also not applicable where the whole of the employee’s work is carried out in a single Member State, but not habitually in any one place within that Member State. By analogy with Color Drack GmbH v. Lexx International Vertriebs GmbH,132 the courts for each place of work seem to have jurisdiction over the whole employment dispute in that situation. The recent CJEU judgment in Voogsgeerd133 sheds light on the meaning of the concept of the engaging place of business. Although this decision concerned the interpretation of Article 6(2)(b) of the Rome Convention, it is relevant for the present discussion, since the concepts used in the European private international law instruments should be interpreted consistently. ‘Place of business’ refers not only to the employer’s domicile but also to any establishment, regardless of whether it possesses legal personality, over which the employer exercises effective control so that its actions are attributable to the employer, which possesses a sufficient degree of permanence and which has been set up in accordance with the relevant provisions of the country in which it has

130

131 132 133

Under the Brussels and Lugano Conventions and Brussels I, the rule of the engaging place of business determines the jurisdiction of the Member State courts only over employers domiciled in the EU. Furthermore, the wording of the relevant provision of the Brussels Convention is slightly different. It states that an employee who ‘does not habitually carry out his work in any one country . . . may also [sue his or her employer in the courts of the engaging place of business]’. The use of the word ‘also’ led some authors to the wrong conclusion that the courts of the engaging place of business were available alongside the courts for the habitual place of work: A. E. Anton and P. R. Beaumont, Private International Law: A Treatise from the Standpoint of Scots Law, 2nd edn (Edinburgh: W. Green, 1990), p. 183, fn. 29; A. Briggs, ‘Mulox’ (1993) 13 Yearbook of European Law 520, pp. 523–4; H. Tagaras, ‘Mulox’ [1995] Cahiers de droit européen 188, p. 190. See n 84. Case C-386/05 [2007] ECR I-3699; [2010] 1 WLR 1909; cf. Jenard-Möller Report, [39]. See n 62. This case is discussed in detail in Chapter 5, Section 5.3.2.

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been established.134 Some authors argue that the term ‘place of business’ also refers to independent employment agencies.135 But the fact that jurisdiction is given to the courts for both the place where the engaging place of business is located at the moment of commencement of proceedings and the place where it was located at the moment of engagement136 goes against such a broad interpretation. An employer cannot be exposed to litigation in foreign countries just because an employment agency, which might have been used a long time ago, is transferred from one Member State to another. ‘Place of business’, therefore, seems to encompass the employer’s domicile and ‘branch agency and other establishment’ in the meaning of Article 7(5) of the Brussels I Recast.137 The term ‘engaged’ refers to active engagement of employees, manifested by the conclusion and negotiation of the employment contract.138 Given that the CJEU has widely interpreted the term ‘habitual place work’, equating it to the ‘principal place of employment’, there are not many situations where the fall-back rule of the engaging place of business applies. It is of practical importance primarily where the employee’s work is not carried out from an office (e.g. construction workers) and the distribution of the working time spent in various countries and the parties’ intentions do not establish a habitual place of work. This rule is also applicable where an employee maintains two or more offices of equal importance in different countries. In Portec (UK) v. Mogensen,139 for example, the employee worked in Paris and Ruabon, Wales, maintained offices in both places and divided his time more or less equally between both places (in 1973–4 he worked eighty-three days inside and 134

135

136

137

138

Ibid., [54]–[57]; ibid., Opinion of AG Trstenjak, [78]–[81]. See also Jenard-Möller Report, [43]. C. Espluges Mota and G. Palao Moreno, ‘Section 5: Jurisdiction over Individual Contracts of Employment’ in U. Magnus and P. Mankowski (eds.), Brussels I Regulation, 2nd edn (Munich: Sellier, 2012) 391, p. 406. This results from the wording ‘where the business which engaged the employee is or was situated’. A problem of interpretation might arise if the relevant business moves from country A (where the employee was engaged) to country B and then to country C (where it is situated at the moment of commencement of proceedings). Can the employee then sue the employer in country B? The wording of Art. 21(1)(b)(ii) is wide enough to support this conclusion. However, this should not be allowed, as the courts of country B would more often than not have no connection with the dispute. See Kidner, ‘Jurisdiction’, p. 112. Voogsgeerd (n 62), AG Opinion, [83]. See also Cruz-Real-Jenard Report, [23](c), fn. 1; A. Layton and H. Mercer (eds.), European Civil Practice (London: Sweet & Maxwell, 2004), [18.023], fn. 50. Voogsgeerd, ibid., [45]–[50]; ibid., AG Opinion, [65]–[70]. 139 [1976] 3 All ER 565.

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eighty-seven days outside Britain). The court held that the employee ordinarily worked, for the purposes of the Trade Union and Labour Relations Act 1974, both in Britain and abroad. Yet another example may be employees working outside the territory of any country (e.g.) Antarctica140 or oil rigs on the high seas), provided they do not have a base in the territory of a particular country. Does the work of international transport workers fall under the rule of the engaging place of business? Two jurisdictional cases involving the work of this kind have been referred to the CJEU. Warbecq141 concerned a dispute between an air hostess of Belgian nationality and domicile and an Irish airline. The referring court (the Tribunal du travail de Charleroi) wanted to know whether a habitual place of work existed where the work was performed partly on the ground and partly on an aircraft flying the flag of the employer’s country. Another case, Haase v. Superfast Ferries,142 concerned a dispute brought by a seaman who worked on a ship used for regular passenger services between Germany and Finland. The referring court (the Landesarbeitsgericht Mecklenburg-Vorpommern) wanted to know if a habitual place of work existed in such a situation. Since the references in these two cases had not been made by authorised courts, the CJEU had no jurisdiction to render preliminary rulings.143 Although the employees in these two cases had no offices, they seem to have had effective centres of their working activities. In the first case this was Charleroi airport, where Ms Warbecq performed her ground duties and returned after each flight. Given that an aircrew member typically works on aircrafts flying from one airport (i.e. one place of departure) to various destinations (i.e. various places of arrival), the essential part of such an employee’s working activities is performed at the place of departure.144 In the second case, the effective centre of the employee’s working activities was arguably the place in Germany from which the ferry was departing to Finland and to which the employee returned after each trip. Admittedly, 140

141 143

144

These cases are not merely fictional: see the decision of the German Bundesfinanzhof, 14 June 1991 (1991) 37 Recht der Internationalen Wirtschaft 966, concerning the taxation of wages of a cartographer working in Antarctica. See n 62. 142 Ibid. Pursuant to the then extant version of Art. 68(1) TEC, only the highest court of a Member State could make a reference for a preliminary ruling for the interpretation of Brussels I. The Tribunal du travail de Charleroi and the Landesarbeitsgericht Mecklenburg-Vorpommern did not meet these criteria. However, there are conflicting court decisions regarding this issue across the EU and within individual Member States such as Belgium: see F. Hendrickx, ‘Editorial’ (2013) 4 European Labour Law Journal 248.

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the employee in Haase v. Superfast Ferries worked on a ship connecting only two places in two different countries. However, the facts that the employee’s activities were directed from the place in Germany, that the employee had his domicile there and that the ship seems to have had its home port there point to that place as the effective centre of the employee’s working activities. As discussed in more detail in the following chapter, the CJEU has adopted, in the context of Article 6(2)(a) of the Rome Convention, a wide interpretation of the term ‘habitual place of work’ in disputes involving an international lorry driver and a seaman.145 The practical relevance of the rule of the engaging place of business, therefore, seems limited to cases where the connection between the international transport worker’s work and his or her base are very weak (e.g. some globetrotting seamen). The CJEU has interpreted the term ‘habitual place of work’ widely, and thereby marginalised the rule of the engaging place of business, because this rule does not meet the objectives of proximity and jurisdictionally preferring claimant employees. First, there is no guarantee that the courts of the engaging place of business will have a sufficiently close connection with the dispute. Suppose an English company uses its Belgian business to engage European employees for work on a cruise ship. If a dispute arises some time after the engagement, the likelihood that Belgian courts will have a sufficiently close connection with the dispute will be low, particularly if the employees have no other connection with Belgium. The likelihood will be even lower if the business that engaged the employees is transferred from one country to another (e.g. from Belgium to France). The employee may then commence proceedings either at the place where the business that engaged him or her was situated at the moment of engagement (Belgium) or at the place where it is situated at the moment of commencement of proceedings (France). The courts for neither place will be particularly likely to have a sufficiently close connection with the dispute.146 Second, the engaging place of business is ordinarily determined unilaterally by the employer and usually corresponds with the employer’s domicile. That is why this rule is not in the interest of employees. The downsides of the rule of the engaging place of business are particularly evident in the context of the EU internal market, where employers are guaranteed the freedoms of establishment and to provide services. 145 146

Koelzsch (n 62); Voogsgeerd (n 62). See Mulox (n 36), AG Opinion, [37]; Rutten (n 62), AG Opinion, [37].

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In conclusion, by interpreting widely the term ‘habitual place of work’, the CJEU reduced the application of the rule of the engaging place of business to a few situations of relatively marginal importance. Even when it is applicable, this rule results in the concentration of the entire employment dispute in the courts of the engaging place of business.147 This is clearly less favourable for the interest of employees than the multiplication of competent courts to which the rule concerning services contracts leads in comparable situations (i.e. where the place of the main provision of services does not exist).

4.3.4

Branches, agencies and other establishments

Article 20(1) refers to the general rule of jurisdiction over branches, agencies and other establishments of Article 7(5). An employee may, therefore, sue an employer domiciled in one Member State, regarding a dispute arising out of the operations of that employer’s ancillary establishment, in another Member State in the courts for the place where that establishment is situated. Claimant employees are in the same position in this regard as claimants in general, since this jurisdictional basis is equally available to both categories. The CJEU defined the concept of ancillary establishment in Mahamdia148 as implying a centre of operations which has the appearance of permanence, such as the extension of a parent body, has a management and is materially equipped to negotiate business with third parties, so that they do not have to deal directly with the parent body. The requirement that the dispute must arise out of the operations of an ancillary establishment is discussed here in more detail. Initially, the CJEU interpreted this requirement rather strictly. It held that the concept of ‘operations’ comprised three types of actions: (1) actions concerning the management of the ancillary establishment ‘such as . . . the local engagement of staff to work [at the place where the establishment was situated]’; (2) actions relating to contractual obligations entered into in the name of the parent at the place and to be performed in the country where the establishment was situated and (3) actions relating to 147 148

Jenard-Möller Report, [40]. Mahamdia (n 51), [48]. See also L. Collins (gen. ed.), Dicey, Morris and Collins on the Conflict of Laws, 15th edn (London: Sweet & Maxwell, 2012), [11–297]–[11–298]; J. J. Fawcett and J. M. Carruthers, Cheshire, North and Fawcett: Private International Law, 14th edn (Oxford University Press, 2008), pp. 258–60.

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non-contractual obligations arising out of the local activities of the ancillary establishment.149 It is remarkable that the courts for the place where the ancillary establishment was situated would have had jurisdiction in these three situations on other bases as well.150 It is, therefore, not surprising that the CJEU has subsequently given a wider interpretation to this requirement. With regard to the second type of action, it held in Lloyd’s Register of Shipping v. Société Campenon Bernard151 that it was not necessary for the contractual obligations entered into by the ancillary establishment to be performed in the Member State where the establishment was situated. In order for a contractual claim to be regarded as arising out of the operations of the ancillary establishment, it is enough that the contract was either concluded or negotiated152 through that establishment. Such a wide interpretation means that, whenever an employer’s ancillary establishment concludes or negotiates an employment contract on behalf of its parent, the employee may sue the employer under the contract in the courts for the place where that establishment is located, regardless of where the work is in fact performed. This also means that the rule of jurisdiction over defendants dealing through branches, agencies or other establishment covers almost all situations where the rule of the engaging place of business is applicable. The difference between the two rules is that the former is always applicable, whereas the latter is applicable only if there is no habitual place of work and applies regardless of whether the employer is domiciled in the EU. The rule of the engaging place of business is, therefore, of practical importance only in two rare situations: where the business that engaged the employee is transferred from one place to another after the engagement and where an employer not domiciled in the EU engages an employee without a habitual place of work through a place of business which was located in the EU at the moment of engagement or is located in the EU at the moment of commencement of proceedings. The employee may sue his or her

149

150 151 152

Case 33/78 Somafer SA v. Saar-Ferngas AG [1978] ECR 2183; [1979] 1 CMLR 490, [13]. See also Mahamdia, ibid., [48], [51], [52]. Arts. 5(1) and 5(3) Brussels Convention; Arts. 7(1), 7(2) and 21(1)(b) Brussels I Recast. Case C-439/93 [1995] ECR I-961; [1995] All ER (EC) 531. Case 218/86 SAR Schotte GmbH v. Parfums Rotschild SARL [1987] ECR 4905; [1989] ECC 431, Opinion of AG Slynn; Lloyd’s Register of Shipping v. Société Campenon Bernard, ibid., [20]; Anton Durbeck GmbH v. Den Norske Bank ASA [2003] EWCA Civ 147; [2003] QB 1160, [40].

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employer at either of these places under the rule of the engaging place of business. An equivalent option does not exist under Article 7(5).153

4.3.5

Other non-consensual jurisdictional bases

The CJEU held that claimant employees cannot invoke the rules of jurisdiction that are neither contained in Section 5 of Chapter II nor referred to therein.154 But the Brussels I Recast clearly allows claimant employees to rely on all general jurisdictional rules that are of practical importance in employment disputes. Unlike Brussels I and the 2007 Lugano Convention, Section 5 of Chapter II of the Brussels I Recast refers to the general rule of jurisdiction over co-defendants of Article 8(1). This rule is of particular importance in employment disputes concerning triangular employment relationships such as employment within a corporate group and agency employment. Under the Brussels I Recast, an employee who is directly employed by one entity (e.g. a member of a corporate group or an employment agency) from one Member State and wants to bring an employment claim not only against the direct employer but also against a related entity (e.g. another member of the group or the end-user) from another Member State will be able to commence proceedings against one of the defendants in the courts of their domicile and join the other defendant to these proceedings, provided there is a sufficient connection between the two claims. Furthermore, the rule on submission by voluntarily entering an appearance of Article 26 of the Brussels I Recast now clearly provides that it applies to employment disputes. Claimant employees are, therefore, in the same jurisdictional position as claimants in general with regard to the availability of general jurisdictional bases.

4.3.6

Jurisdiction agreements

Claimant employees are given a significant jurisdictional preference regarding jurisdiction agreements. Pursuant to Article 23, a jurisdiction 153

154

K. Hertz, Jurisdiction in Contract and Torts under the Brussels Convention (Copenhagen: Jurist- og Økonomforbundets Forlag, 1998), p. 183. See text accompanying n 18. The rules of jurisdiction in employment matters of the Brussels and 1988 Lugano Conventions were not set out in separate, self-contained sections. Hence, the general jurisdictional rules were available in employment disputes: see Martine Carasset-Marillier v. Salahadin Imam et autres, Cass., 13 January 1998, available at http://curia.europa.eu/common/recdoc/convention/en/1998/27–1998.htm (general rule for co-defendants of the Brussels Conventions was an available basis of jurisdiction).

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agreement will be given effect in an employment dispute only if it is entered into after the dispute has arisen or if it allows the employee to bring proceedings in courts other than those indicated by the default rules. Any provision of domestic law that specifically aims to make jurisdiction agreements in employment contracts void155 does not apply.156 But the general requirements of Article 25 have to be satisfied.157 In order to understand Article 23, one should make a distinction between the effects of jurisdiction agreements in favour of the Member State courts and the effects of jurisdiction agreements in favour of nonEU courts. The effects of jurisdiction agreements in favour of the Member State courts can be illustrated by the following example. Suppose an employee habitually works in England for a French company. Suppose further that the parties have agreed on the exclusive jurisdiction of Belgian courts. This agreement purports to have both a positive effect, which would consist in conferring jurisdiction on Belgian courts, and a negative effect, which would consist in taking away jurisdiction from all other courts. If the jurisdiction agreement is entered into after the dispute has arisen, it will be given both a positive and a negative effect. If, on the other hand, it is entered ex ante, it will be given effect only if the employee invokes it before Belgian courts. With regard to jurisdiction agreements in favour of non-EU courts, their positive effect, that is, the question whether they can confer jurisdiction on the designated court, is a matter for the law of the country of the designated court and is not governed by EU law. But the negative effect of such agreements, that is, the question whether they can oust the jurisdiction of the Member State courts conferred by the rules of the Brussels I Recast, is a matter for EU law. Mahamdia,158 a case concerning an exclusive choice-of-court agreement in favour of Algerian courts, shows that such jurisdiction agreements are given negative effect under the same conditions that are applicable to jurisdiction agreements in favour of the Member State courts, namely if they are entered into after the dispute has arisen or if they are relied upon by the employee to commence proceedings in the designated non-EU court. The general requirements of Article 25 also have to be satisfied. In contrast, in disputes not involving a weaker party, jurisdiction agreements in favour of the Member State courts are given full effect, provided they satisfy the requirements of Article 25. Mahamdia is 155 156

157

e.g. section 203 ERA 1996. Sanicentral (n 26); Elefanten Schuh (n 26); cf. Layton and Mercer, European Civil Practice, [18.030]. See n 52. 158 See n 51.

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potentially also relevant in disputes not involving a weaker party. Jurisdiction agreements in favour of non-EU courts can arguably oust the jurisdiction of the Member State courts conferred by the rules of the Brussels I Recast if the requirements of Article 25 are satisfied.159 The Brussels I Recast contains one more important rule concerning the effects of jurisdiction agreements in employment disputes. Section 9 of Chapter II deals with parallel and related proceedings in two or more Member States. Article 31(2) provides that, where a court of a Member State on which a jurisdiction agreement confers exclusive jurisdiction is seised, any court of another Member State shall stay the proceedings until such time as the court seised on the basis of the agreement declares that it has no jurisdiction under the agreement. In other words, the court seised on the basis of a jurisdiction agreement gets to decide first whether it has jurisdiction. If it decides that it has jurisdiction under the agreement, Article 31(3) provides that any court of another Member State must decline jurisdiction in favour of that court. But Article 34(4) prescribes that this rule does not apply where the employee is the claimant and the jurisdiction agreement is not valid in accordance with the special rules concerning jurisdiction agreements in employment disputes of Article 23. In other words, if the employee commences proceedings pursuant to the default rules of the Brussels I Recast and the jurisdiction agreement is not entered into after the dispute has arisen, the court first seised gets to decide first whether it has jurisdiction under the default rules.

4.3.7 Conclusion In certain respects, the rules of jurisdiction in employment matters of the Brussels I Recast give claimant employees a jurisdictional preference. Most notably, jurisdiction agreements are given effect against employees under very strict conditions. This guarantees that employers will be unable to (ab)use their typically superior position and reduce the number of forums available to employees. This is undoubtedly a very important aspect of jurisdictional protection. Furthermore, the wide international scope of the primary rule of jurisdiction in employment matters works in favour of claimant employees in cases where the traditional jurisdictional rules of the Member State of the habitual place of work would not confer jurisdiction on its courts in this situation.

159

Cf. Hartley, Choice-of-Court Agreements, [5.04]–[5.21].

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However, the crucial aspect of protection is the existence of relatively numerous and diverse jurisdictional bases that claimant employees can invoke. Only thereby are the chances of employees pursuing their claims in favourable forums increased and safeguarded. The Brussels I Recast fails in this respect. First, the rule of general jurisdiction and the primary rule of jurisdiction in employment matters are in certain respects less favourable for employees than the generally applicable rule of general jurisdiction and the rule concerning services contracts. Second, the fall-back rule of the engaging place of business does not meet the objectives of proximity and jurisdictionally preferring claimant employees and is, furthermore, deprived of almost any practical importance. The examination of the rules of jurisdiction in employment matters, therefore, reveals that claimant employees are overall not given a jurisdictional preference. In certain respects they are even put in a less favourable position than claimants in general. Given the theoretical and practical importance of according a balanced jurisdictional preference to claimant employees, the Brussels I Recast overall fails to achieve the objective of protection of employees.

4.4 How to achieve protection of employees? The reason for the current structure and content of the rules of jurisdiction in employment matters of the Brussels I Recast lies in their haphazard evolution. If this instrument is to achieve the objective of protection of employees, the existing rules need to be amended in a more systematic manner. The first part of this section explores the ways of improving the existing rules. The second part examines the possibility of introducing new rules.

4.4.1

Improving the existing rules

The shortcoming of the rule of general jurisdiction is that the rule extending the notion of the employer’s domicile often disfavours claimant employees. Admittedly, this rule does guarantee that employees will be able to sue non-EU employers with European ancillary establishments, regarding disputes arising out of the operations of those establishments, in at least one Member State. However, this rule also shields such non-EU employers from the Member States’ traditional, often exorbitant, jurisdictional rules. There is no reason why this kind of jurisdictional protection should be accorded to non-EU employers with European ancillary establishments. Rather, such non-EU employers should be treated as all other non-EU defendants and be amenable to suit in the

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Member State courts pursuant to the Member States’ traditional rules. Article 20(2) of the Brussels I Recast should, therefore, be amended by inserting a provision explicitly stating that the rule extending the notion of the employer’s domicile applies without prejudice to Article 6. The primary rule of jurisdiction in employment matters (conferring jurisdiction on the courts for the habitual place of work) could be amended to reflect the fact that the CJEU has effectively equated the term ‘habitual place of work’ with the ‘principal place of employment’. Although Article 21(1)(b)(i) of the Brussels I Recast tries to implement the CJEU’s interpretation by referring to the ‘courts for the place where or from where the employee habitually carries out his work’, the essence of the CJEU’s interpretation would have arguably been better expressed if the reference to the place ‘where or from where the employee principally carries out his work’ had been made. In order to achieve the desirable convergence between the Brussels I Recast and Rome I, a similar change could be introduced in Article 8(2) of the latter instrument. As discussed, there are two differences between the primary rule of jurisdiction in employment matters and the rule concerning services contracts, which result in a somewhat less favourable position of claimant employees in comparison to claimants in general. The first difference stems from the fact that the obligation of payment of salary is always irrelevant for jurisdictional purposes. In contrast, where the place of provision of services is outside the EU, the obligation to pay remuneration in a Member State represents a basis on which that Member State’s courts can assume jurisdiction over the claim for nonpayment. Should the rules of jurisdiction in employment matters be amended to enable claimant employees to bring claims for the nonpayment of salary in the courts for the place of payment if the habitual place of work is outside the EU?160 Although such a rule would contribute to equating the jurisdictional position of claimant employees and claimants in general, the answer must be negative. Such a rule would not accord with the considerations of proportionality and vindication of legitimate state interests. The chances of the place of payment of salary being sufficiently closely connected with the dispute and the law of that place being applicable where there is a habitual place of work in another country are low. Moreover, this rule would not be particularly protective of the interest of employees. An employer might unilaterally determine

160

Six Constructions (n 62), Opinion of AG Tesauro, [14]–[15].

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the place of payment of salary and thereby seek the benefit of defending the claim in a favourable forum. The second difference is that, absent a habitual place of work, an employee can commence proceedings only in the courts of the engaging place of business. In a comparable situation, a service provider can sue the other party in the courts for each place of provision of services. In order to equate the position of claimant employees and other claimants in this respect, the forum of the engaging place of business should be abolished. If this were done, an employee who does not habitually perform his or her work in any one country should be able to commence proceedings in the courts for each place of work, provided there is a sufficiently close connection between those places and the dispute. Thus, if there is no habitual place of work because two or more places of work are equally important, the employee should be able to commence proceedings in either of those places.161 However, if the habitual place of work does not exist because no place of work is sufficiently closely connected with the dispute, the employee should not be able to commence proceedings in any place of work. There are further reasons for abandoning the rule of the engaging place of business. The CJEU has deprived this rule of almost any practical importance by widely interpreting the term ‘habitual place of work’ and giving a broad scope to the rule of jurisdiction over defendants dealing through branches, agencies and other establishments. Moreover, the rule of the engaging place of business does not accord with the considerations of proportionality and jurisdictionally preferring claimant employees. The chances of this place being sufficiently closely connected with the employment dispute are low; moreover, it is a place that is determined unilaterally by the employer. It is for these reasons that the Netherlands and Belgium, which have otherwise implemented the solutions of Brussels I in their domestic jurisdictional codes, have decided not to introduce the rule of the engaging place of business.162 Seemingly, this rule accords better with the consideration of vindication of legitimate state interests. Rome I prescribes that, absent a habitual place of work, the employment contract is governed by the law of the country where the place of business through which the employee was 161 162

Mulox (n 36), AG Opinion, [35]. The Dutch reporters for the ‘Study on Residual Jurisdiction’ explain, at p. 18 of the Dutch Report, available at http://ec.europa.eu/civiljustice/news/docs/study_resid_jurisd_netherlands_en.pdf, that this rule ‘has not been introduced into Dutch civil procedure because it was considered unnecessary’.

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engaged is situated.163 However, there are many situations where there is no habitual place of work and the forum and ius do not coincide. First, if the engaging business is transferred from one place to another after the engagement, the employee may commence proceedings in the courts for either place. In contrast, only the latter place seems relevant for choiceof-law purposes.164 Second, the rule of Rome I that points to the law of the country of the engaging place of business can be departed from whenever it appears from the circumstances as a whole that the employment contract is more closely connected with another country.165 Since there are no guarantees that the country of the engaging place of business will be sufficiently closely connected with the employment contract, the chances of departure from this rule are relatively high. Third, the parties to an employment contract may, under certain restriction, choose the applicable law.166 If the changes proposed here were adopted, the respects in which the rules of jurisdiction in employment matters are less favourable for claimant employees than the general rules would cease to exist. However, these rules would not thereby overall give claimant employees a jurisdictional preference. The following part of this section explores the possibility of introducing additional jurisdictional bases.

4.4.2 Introducing new rules As discussed in Section 2.4 of Chapter 2, many countries have special rules of jurisdiction for employment disputes. Jurisdiction is asserted on various bases such as the habitual place of work, the engaging place of business, the place of conclusion of the contract, the place of payment of salary, common nationality of the parties and the employee’s domicile or habitual residence. It was argued that most of these bases do not accord with the considerations of proportionality, vindication of legitimate state interests and jurisdictionally preferring claimant employees. It was also noted that there seems to be one situation where the connecting factor of the employee’s domicile or habitual residence accords with the mentioned considerations. This situation exists when an employer actively seeks out an employee in the latter’s home country 163 164

165

Art. 8(3) Rome I. Compare Art. 21(1)(b)(ii) Brussels I Recast, referring to ‘the place where the business which engaged the employee is or was situated’, with Art. 8(3) Rome I, referring to ‘the place of business through which the employee was engaged is situated’. Art. 8(4) Rome I. 166 Art. 8(1) Rome I.

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for work abroad and the parties foresee that the employee will retain strong connection with his or her home country and return there after the termination of employment. A rule that confers jurisdiction on the courts of the employee’s domicile where the employer takes the initiative to recruit the employee away from his or her home state is applied in the US,167 but it is only the active seeking out of employees that meets the requirements of the ‘minimum contacts’ doctrine and the ‘purposeful availment’ test. US case law shows that these tests are satisfied, for example, where the employer advertises in local newspapers and contacts employees locally (either directly or through an agent),168 uses a local employment agency,169 actively recruits employees locally for work abroad170 and so forth. Merely hiring a national employment agency is not enough.171 Nor is merely sending emails to a prospective employee in his or her home state.172 Jurisdiction is also not allowed where it is the employee who initiates contact.173 Introducing a jurisdictional rule of this kind in the Brussels I Recast appears consistent with the spirit of this instrument. The rationale of the ‘seeking out’ rule is the existence of a sufficiently strong connection between the defendant and the forum, which rationale also underlies some of the existing rules such as the rule of general jurisdiction of Article 4(1) and the rule of special jurisdiction of Article 7(5). Admittedly, the link between the defendant and the forum under the proposed ‘seeking out’ rule would usually not be as strong as under the mentioned rules of the Brussels I Recast. Nevertheless, the objective of protection of employees justifies the introduction of such a rule. A parallel can be made with 167

168

169 170

171 172 173

P. Hay, P. J. Borchers and S. C. Symeonides, Conflict of Laws, 5th edn (St Paul, MI: West, 2010), pp. 449–51; see also Texas Civil Practice and Remedies Code, §17.042(3) (‘a nonresident does business in [Texas] if the non-resident recruits Texas residents, directly or through an intermediary located in this state, for employment inside or outside this state’). Runnels v. TMSI Contractors, Inc., 764 F.2d 417 (5th Cir.1985); Clark v. Moran Towing & Transp. Co., Inc., 738 F.Supp. 1023 (E.D.La.1990); Mabry v. Fuller-Shuwayer Co. Ltd., 50 N.C.App. 245, 273 S.E.2d 509 (N.C.App.1981). Moreno v. Milk Train, Inc., 182 F.Supp.2d 590 (W.D.Tex.2002). Shah v. Nu-Kote Intern. Inc., 898 F.Supp. 496 (E.D.Mich. 1995), affirmed 106 F.3d 401 (6th Cir.1997); Babineaux v. Southeastern Drilling Corp., 170 So.2d 518 (La.App. 3 Cir.1965), review denied 172 So.2d 700 (La.), cert. Denied 382 U.S. 16, 86 S.Ct. 67, 15 L.Ed.2d 12 (1965). Conti v. Pneumatic Products Corp., 977 F.2d 978 (6th Cir.1992). Phillips v. Prarie Eye Ctr., 530 F.3d 22 (1st Cir.2008). Farbman v. Esskay Manufacturing Co., 676 F.Supp. 666 (W.D.N.C.1987); Speckine v. Stanwick Intern. Inc. 503 F.Supp. 1055 (W.D.Mich. 1980).

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consumer contracts. The consumer’s domicile represents a relevant connecting factor whenever the supplier seeks out the consumer in his or her home country.174 The proposed ‘seeking out’ rule for employment disputes is essentially based on the same idea. If this new jurisdictional rule and the changes proposed in the first part of this section were introduced, employees would arguably be accorded a disproportionate jurisdictional preference. In order to avoid tilting the jurisdictional scale excessively in employees’ favour, an additional jurisdictional basis could also be made available to claimant employers. Claimant employers could be restored the right to initiate proceedings in the courts for the habitual place of work.175 Several arguments support this proposition. First, the habitual place of work is a jurisdictional basis that best satisfies the considerations of proportionality and vindication of legitimate state interests. The courts for this place are usually the proper forum for resolving employment disputes. Moreover, this basis does not favour either party a priori, as the habitual place of work can be in the employee’s, the employer’s or a third country. What is important is that the employer cannot unilaterally change the habitual place of work and thereby obtain the benefit of litigating in a favourable forum. As discussed, there must be a combination of objective and subjective factors on both the employee’s and employer’s side in order for the change of this place to occur. Second, both the Brussels and 1988 Lugano Conventions enabled employers to commence proceedings in the courts for the habitual place of work. There is no empirical evidence that this rule had the effect of putting defendant employees in an unfavourable position.176 Third, denying claimant employers access to the courts for the habitual place of work has led to practical problems in some Member States. In the Netherlands, for example, employers who wish to terminate an employment contract have the option to petition for judicial rescission instead of dismissal. In some cases, 174 175

176

Arts. 17(1)(c) and 18(1). M. Polak, ‘“Laborum dulce lenimen”? Jurisdiction and Choice of Law Aspects of Employment Contracts’ in J. Meeusen, M. Pertegás and G. Straetmans (eds.), Enforcement of International Contracts in the European Union: Convergence and Divergence between Brussels I and Rome I (Antwerp, Oxford, New York: Intersentia, 2004) 323, [12–8], [12–53]. European Commission does not mention, in ‘Proposal for Brussels I: Explanatory Memorandum’, any practical reasons for denying claimant employers the right to commence proceedings in the courts for the habitual place of work.

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judicial rescission is mandatory.177 Employers from such Member States, therefore, seem to have considerable practical problems with terminating employment contracts with employees who work in such Member States but live elsewhere (e.g. frontier workers). A way of ensuring that the mentioned concerns are accommodated and that defendant employees are given a jurisdictional preference could be to give employers a limited right to commence proceedings in the forum of the habitual place of work only during the employment relationship, not once it has come to an end. Such a rule, for example, was envisaged in Article 8(2)(ii) of the 2000 preliminary draft Hague Convention on jurisdiction and foreign judgments in civil and commercial matters.178 Interestingly, the European Parliament adopted a resolution on 8 October 2013 calling on the European Commission to consider an amendment to the Brussels I Recast that is, to an extent, in line with the amendments suggested here.179 The Parliament called on the European Commission to pay particular regard to, among other things, the question whether, in cases where an employee sues an employer, the fall-back clause which applies where there is no habitual place of work should be reworded so as to refer to the place of business from which the employee receives or received day-to-day instructions rather than to the engaging place of business. In its opinion, the Committee on Employment and Social Affairs went a step further by suggesting an amendment to the Brussels I Recast which would ensure that the employee may sue his or her

177

178

179

See the Netherlands’ initiative to amend Brussels I by making the courts for the habitual place of work available to employers in proceedings for termination of employment contracts [2002] OJ C311/16, rejected by the European Parliament: Parliamentary documents P5_TA(2003)0353 (legislative resolution) and A5–0253/2003 (report by D. Wallis). See also Written Question E-0785/02 by B. Pronk, R. Oomen-Ruijten and T. Manders to the Commission, 19 March 2002, and the Commission’s Answer, 21 March 2002, [2002] OJ C309E/47; Written Question E-1517/02 by M. Smet to the Commission, 29 May 2002, and the Commission’s Answer, 10 July 2002, [2003] OJ C92E/62. P. E. Nygh and F. Pocar, ‘Report on the Preliminary Draft Convention on Jurisdiction and Foreign Judgments in Civil and Commercial Matters’, Hague Conference on Private International Law, Enforcement of Judgments, Preliminary Document No. 11 (August 2000), available at www.hcch.net/upload/wop/jdgmpd11.pdf, pp. 55–6. Resolution on improving private international law: jurisdiction rules applicable to employment (2013/2023(INI)), Parliamentary document A7-0291/2013. In her report of 20 September 2013, E. Regner, the rapporteur of the Committee on Legal Affairs of the European Parliament, cited my article ‘Jurisdiction in Employment Matters under Brussels I – A Reassessment’ (2012) 61 International and Comparative Law Quarterly 91.

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employer in the courts of the Member State where the employee is domiciled.180 These proposals have not been adopted.

4.5 Conclusions The objective of protecting employees by jurisdictional rules cannot be achieved unless employees are accorded a balanced jurisdictional preference when they act both as claimants and as defendants. Indisputably, the Brussels I Recast protects defendant employees since it denies employers the use of most of the generally available jurisdictional bases. However, not only does the Brussels I Recast fail to accord a jurisdictional preference to claimant employees, it actually puts them in a less favourable position in comparison to other claimants in certain respects. First, the rule of general jurisdiction in employment matters and the rule of the habitual place of work are in certain respects less favourable for employees than the corresponding generally applicable rules of general jurisdiction and the rule concerning services contracts. Second, the rule of the engaging place of business does not meet the objectives of proximity and jurisdictionally preferring claimant employees and is, furthermore, deprived of almost any practical importance. Given the theoretical and practical importance of according a balanced jurisdictional preference to claimant employees, the Brussels I Recast overall fails to achieve the objective of protection of employees. The reason for this lies in the haphazard evolution of the relevant rules. The time is ripe for a systematic reassessment of the rules of jurisdiction in employment matters. The existing rules need to be improved. However, merely amending them will not suffice. Additional jurisdictional rules could be introduced: one in favour of claimant employees (the ‘seeking out’ rule), the other in favour of claimant employers (the rule of the habitual place of work). These changes would contribute to a more evenly balanced protection of employees by jurisdictional rules and enable European private international law to adequately perform its systemic function, one of allocating and protecting adjudicatory authority of the Member States in the field of employment law. 180

Committee on Employment and Social Affairs, rapporteur R. Oomen-Ruijten, Opinion for the Committee on Legal Affairs on improving private international law: jurisdiction rules applicable to employment (2013/2023(INI)) (5 September 2013), Parliamentary document A7-0291/2013.

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5 Choice of law Contractual claims

Employment is a complex and sui generis relationship, contractual in origin but, once created, having elements of status and capable of having consecutive or simultaneous points of contact with different jurisdictions. Lord Hoffmann1

Finding a competent court is a halfway stop to resolving a transnational individual employment dispute. Before the courts of a Member State can render a judgment, the applicable law must be determined. Employment claims in English law fall into three basic categories: contractual, statutory and tortious claims. This chapter examines the choice-of-law treatment of the first type of claim. A contractual claim is based on the breach of either an express or implied term of an employment contract. As discussed in Chapter 3, the concept of employment contract is to be interpreted widely to include ancillary contracts such as bonus agreements. Examples of contractual claims are claims for wrongful dismissal, for unpaid wages and bonuses, for breach of a restrictive covenant or for breach of the implied duty of mutual trust and confidence. The law applicable to a contractual claim, which, for example, determines whether an express term is valid or whether a particular term is to be implied or incorporated into the employment contract, has always been determined pursuant to the choice-of-law rules for contracts. Such rules are today contained in Rome I. In a nutshell, Rome I allows the parties to an employment contract to choose the applicable law.2 But the choice cannot deprive the employee of the protection afforded to him or her by the mandatory provisions of the law applicable in the absence of choice (objectively applicable law).3 In the absence of choice, the contract is governed by the law of the 1

2

Serco Ltd. v. Lawson; Botham (FC) v. Ministry of Defence; Crofts v. Veta Ltd. [2006] UKHL 3; [2006] 1 All ER 823, [6]. Art. 8(1). 3 Ibid.

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country of the habitual place of work4 or, if none, by the law of the country of the engaging place of business.5 However, where it appears from the circumstances as a whole that the contract is more closely connected with another country, the law of that country applies.6 There are also special choice-of-law rules for formal validity of contracts,7 whereas the law applicable to legal capacity is determined pursuant to domestic choice-of-law rules.8 Furthermore, the courts are allowed to apply the overriding mandatory provisions of the forum and, under certain conditions, even the overriding mandatory provisions of the country of performance.9 Chapter 2 examined the theory underlying the European choice-oflaw rules for employment contracts. At first sight, these rules seem to accord with the relevant theoretical considerations. In particular, the parties are free to agree on any law, but only to the extent that the agreement improves upon the mandatory minimum standard of protection set by the objectively applicable law. The rules for determining the objectively applicable law seem flexible enough to point to the law of the country that is both sufficiently closely connected with a particular employment relationship and legitimately interested in regulating it and whose application the parties can reasonably expect. Rome I is of universal application in the sense that the country of the applicable law need not be a Member State.10 This shows that Rome I is concerned with more than just the allocation and safeguarding of the Member States’ legislative authority in the field of labour law. In other words, Rome I recognises the legislative authority of non-EU countries in appropriate situations. Given that the rules of Rome I seem to be in line with the relevant theoretical considerations, this instrument accords, at first sight, with the objective of protection of employees in private international law. To determine whether practice conforms to theory, this chapter examines in detail the operation of the rules of Rome I. The first section presents the evolution of the European choice-of-law rules for employment contracts. The following two sections examine party autonomy and its limitations and the rules for determining the objectively applicable law, respectively. After identifying the shortcomings of these rules, possibilities for improvement are discussed.

4 8

5 Art. 8(2). Art. 8(3). Art. 1(2)(a); see also Art. 13.

6

Art. 8(4). 9 Art. 9.

7 10

Art. 11. Art. 2.

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5.1 evolution of the european choice-of-law rules 139

5.1 Evolution of the European choice-of-law rules for employment contracts The evolution began in 1972 with the publication of the draft convention on the law applicable to contractual and non-contractual obligations. Article 2(3) provided that, in labour relations, the choice of law could not affect the mandatory provisions for the protection of the worker in force in the country where he or she habitually worked. Article 5 prescribed that, in the absence of choice, labour contracts were governed by the law of the country of the habitual place of work. If none, the law of the country of the place of business that hired the worker applied, unless it resulted from all the circumstances that the contract was more closely connected with another country. The 1972 draft Convention was revised following the 1973 enlargement of the European Economic Community. The choice-of-law rules for employment contracts remained essentially unchanged and were consolidated in Article 6 of the 1980 Rome Convention. The Rome Convention was implemented into UK law by the Contracts (Applicable Law) Act 1990. Simultaneously with the drafting of what eventually became the Rome Convention, the European Commission was working on an instrument dealing exclusively with the private international law of employment. This work resulted in the 1972 and 1976 drafts of the regulation on the provisions of conflict of laws on employment relationships within the Community. The primary legal basis for this instrument was Article 49 TEC concerning the freedom of movement of workers. The international scope of the 1976 draft Regulation was limited to employment relationships executed in the European Economic Community.11 The applicable law was the law of the country of the normal place of work.12 For seamen, it was the law of the flag;13 for international transport workers, it was the law of the country where the employing undertaking had its registered office or a branch or permanent representation by which they were employed.14 There was neither a rule for determining the applicable law in the absence of a normal place of work nor an escape clause. Party autonomy was allowed only in the most limited circumstances. Employees ‘with special position in the establishment’ or ‘with special nature of their work’ were free to agree on the applicable law.15 Party 11 12

13

Art. 1 1976 draft Regulation. Art. 3(1) 1976 draft Regulation; see also Art. 4 1976 draft Regulation concerning temporary postings. Art. 3(1) 1976 draft Regulation. 14 Ibid. 15 Art. 7 1976 draft Regulation.

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autonomy, limited to several listed laws, was also allowed in certain cases of intra-group transfers of employees16 and in certain cases where a normal place of work did not exist.17 But the choice could not undermine the law of the place of work in respect of nine topics set out in Article 8. Fortunately, the 1976 draft Regulation was withdrawn following the adoption of the Rome Convention. Some aspects of the former instrument, such as the differentiation between white-collar and blue-collar workers and the restrictions of party autonomy, were criticised in Section 2.2 of Chapter 2. Moreover, the adoption of both the 1976 draft Regulation and the Rome Convention covering the same subject matter would have created not only an unnecessary complication for the users of these instruments but also certain anomalies.18 Rome I, which largely follows the rules of the Rome Convention concerning employment, was adopted in 2009, to whose provisions this chapter now turns.

5.2 Party autonomy and its limitations This section presents the ways in which party autonomy can be exercised, before examining its limitations.

5.2.1

Choosing the applicable law

The first sentence of Article 8(1) stipulates that an employment contract is governed by the law chosen by the parties in accordance with Article 3.19 Article 3, entitled ‘Freedom of choice’, has five paragraphs. The following text analyses three paragraphs thereof: Paragraph 1, which prescribes that the choice can be either express or tacit and that the parties may subject different parts of their contract to different laws, and Paragraphs 3 and 4, which prescribe that the choice cannot prejudice the application of the mandatory provisions of the law of the country with which the contract is exclusively objectively connected or of EU law where the contract has no foreign or non-EU elements.20 16 18

19 20

Art. 5 1976 draft Regulation. 17 Art. 6 1976 draft Regulation. B. Hepple, ‘Conflict of Laws on Employment Relationships within the EEC’ in K. Lipstein (ed.), Harmonization of Private International Law by the EEC (London: Institute of Advanced Legal Studies, 1978) 39, pp. 40–1. Art. 6(1) Rome Convention is essentially the same. Art. 3(2) provides that the parties may exercise party autonomy at any time, that they may vary the applicable law and that the choice made after the conclusion of the contract

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5.2.1.1 Express choice An express choice is usually made at the time of conclusion of the contract by means of a choice-of-law clause inserted in the contract. It can also be made subsequently by means of a choice-of-law agreement. An express choice seldom causes problems, exceptions being a meaningless choice, a negative choice and a choice of non-state rules of law. In Shekar v. Satyam Computer Services Ltd.,21 the contract provided the following: ‘Governing law: The work permit in UK/or any other European country shall be governed by, construed and enforced in accordance with the laws of the country you are placed at and at Secunderabad, India.’ The Employment Tribunal found this clause to be too unclear to be given a plain meaning. It was unclear whether it referred to the governing law or to work permits. The way it referred cumulatively to multiple laws was meaningless. The applicable law was determined as if the choice had never been attempted. A negative choice is an express exclusion of a specific law. In Sayers v. International Drilling Co. NV,22 for instance, the contract provided, ‘As the company is a Netherlands corporation, and as my employment contract . . . will be wholly performable . . . outside of United Kingdom . . . I realise that I shall not be covered by virtue of my proposed employment with the company by workmen’s compensation insurance or benefits under the law of United Kingdom.’ The Court of Appeal (Salmon LJ dissenting) held that this clause excluded English law in respect of the issue before the court. A problem arises when the parties attempt to exclude the objectively applicable law. If the parties do not simultaneously agree on another law, such a negative choice, if upheld, would place the employment contract outside the reach of any law. But since employment contracts cannot exist in a legal vacuum,23 such a negative choice should be disregarded as meaningless. Even if the parties do simultaneously agree on another law, a negative choice purporting to exclude the objectively applicable law should be

21 23

cannot prejudice its formal validity or adversely affect the rights of third parties. Art. 3(5) determines the law governing the existence and validity of the parties’ consent. [2005] ICR 737. 22 [1971] 1 WLR 1176. As Lord Diplock famously stated in Amin Rasheed Shipping Corp. v. Kuwait Insurance Co. [1984] AC 50, 65, ‘contracts are incapable of existing in a legal vacuum. They are mere pieces of paper devoid of all legal effect unless they were made by reference to some system of private law which defines the obligations assumed by the parties to the contract by their use of particular forms of words and prescribes the remedies enforceable in a court of justice for failure to perform any of those obligations’.

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disregarded, since upholding it would undermine the mechanism of Article 8(1). Another problem arises where the parties choose non-state rules of law by, for example, incorporating by reference certain codes of conduct. Such rules of law are often used by transnational corporations to establish minimum labour standards that all their businesses worldwide must conform to. Since employment contracts must have a governing national law, non-state rules of law may be given effect only in the context of that law.24

5.2.1.2 Tacit choice According to Article 3(1), a tacit choice must be clearly demonstrated by the terms of the contract or the circumstances of the case. The courts have drawn inferences from the terms of the employment contract in the following situations: the contract referred to a specific collective agreement,25 the contract referred to a specific employment statute26 and the contract contained an exclusive choice-of-court clause in favour of the courts of a specific country.27 However, one should bear in mind that the Brussels I Recast gives full effect to a jurisdiction agreement in an employment dispute only if entered into after the dispute has arisen or if it increases the number of forums available to the employee. A jurisdiction agreement entered into before the dispute has arisen is, therefore, unlikely to demonstrate a tacit choice.28 Another relevant factor may be a reference to the tax or social security legislation of a specific country. The courts have also drawn inferences from the circumstances of the case. For example, the existence of a closely connected contract governed 24 25

26

27

28

See Recital 13. Mme Arsac v. United Airlines, Cass. soc., 27 May 2009 [2010] Droit social 343, note P. Chaumette; BAG, 13 November 2007 (2008) 54 Recht der internationalen Wirtschaft 644 (reference to a US collective agreement between the employer and the Association of Flight Attendants). Cass. soc., 17 October 2000, case number 98–45.864, unreported (reference to the provisions of the Portuguese posted workers statute); BAG, 9 October 1991, IPRspr. 1991 No. 68 (reference to the German statute concerning dismissal). Shekar v. Satyam Computer Services Ltd. (n 21), [42] (choice-of-court clause in favour of the courts of Secunderabad, India); BAG, 26 June 2008, IPRspr. 2008 No. 40 (German choice-of-court clause). See also Recital 12. Cf. F. Jault-Seseke, ‘L’adoption du règlement 593/2008 (Rome I) sur la loi applicable aux obligations contractuelles: le choix de la continuité pour le contrat de travail’ [2008] Revue de droit du travail 620, pp. 622–3 (choice of law and choice of court should be kept separate).

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by a specific law has been held to demonstrate a tacit choice.29 This could be a particularly relevant factor in cases of triangular employment relationships such as employment within a corporate group or agency employment. French courts are said to have often held that French employers and employees who enter into contracts in France tacitly choose French law.30 The courts also often refer to the place of work, the language of the contract and the place and currency of payment of salary as supplementary indications of a tacit choice. A tacit choice is a real choice. The courts should not search for the law that the parties would have chosen had they thought about it at the time of conclusion of the contract.31 The courts should acknowledge a tacit choice only where its existence is apparent.

5.2.1.3 Severance (dépeçage) Article 3(1) allows the parties to subject different parts of their contract to different laws. Such a choice must be logically consistent, that is, relate to the elements in the contract that can be governed by different laws without giving rise to contradictions.32 Some authors argue that the dépeçage of employment contracts should not be allowed because it enables employers to abuse their typically superior position and impose the application of different laws in a way most favourable for them.33 But the mechanism of Article 8(1) provides a solid defence against all abuses of party autonomy. Indeed, the courts allow the dépeçage of employment contracts.34 29

30

31

32 33

34

BAG, 13 November 2007 (n 25) (in addition to the reference to a US collective agreement, an important consideration was the fact that the parties had signed a ‘Pre-Hire Agreement’ expressly subject to US law). F. Jault-Seseke, ‘L’office du juge dans l’application de la règle de conflit de lois en matière de contrat de travail’ (2005) 94 Revue critique de droit international privé 253. See Cass. soc., 4 July 2001, case number 99–44.519, unreported; SA CIEC v. Piriou, Cass soc., 28 October 1997 [1998] Droit social 186, note M.-A. Moreau. M. Giuliano and P. Lagarde, ‘Report on the Convention on the Law Applicable to Contractual Obligations’ [1980] OJ C282/1, p. 17. Ibid. M. Franzen, ‘Conflicts of Laws in Employment Contracts and Industrial Relations’ in R. Blanpain (ed.), Comparative Labour Law and Industrial Relations in Industrialized Market Economies, 9th edn (The Hague: Kluwer, 2007) 221; F. Gamillscheg, ‘Rules of Public Order in Private International Labour Law’ (1983-III) 181 Recueil des Cours 285, pp. 309–10. LAG Frankfurt/Main, 13 September 2000, IPRspr. 2000 No. 42 (the contract, otherwise governed by English law, envisaged the application of German law regarding certain issues concerning the employee’s posting to Germany).

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5.2.1.4 Contracts without foreign or non-EU elements Article 3(3) prescribes that, where all other elements relevant to the situation at the time of the choice are located in a country other than the country of the chosen law, the choice cannot prejudice the application of the mandatory provisions of the law of the former country. Similarly, Article 3(4) upholds mandatory EU law where the contract, apart from the choice of law, has no non-EU elements. However, Articles 3(3) and 3(4) are of little importance for employment contracts. Article 8(1) safeguards the application of the mandatory provisions of the objectively applicable law. If a contract has no foreign or non-EU elements, the objectively applicable law is the law of the country with which the contract is exclusively objectively connected or the law of a Member State that must give effect to mandatory EU law. The effect of Article 8(1) is therefore largely the same as that of Articles 3(3) and 3(4). But, as argued in Section 5.2.2.1, Article 8(1) only safeguards the application of mandatory provisions concerning protection of employees. Since Articles 3(3) and 3(4) safeguard the application of all mandatory provisions, regardless of their objective, there is not a complete overlap between the two articles. In conclusion, employment contracts are identical to other contracts regarding the ways in which party autonomy can be exercised. The following part of this section examines the limitations of party autonomy, which are the hallmark of the special treatment of employment contracts in European private international law. 5.2.2

Limitations of party autonomy

The second sentence of Article 8(1) prescribes that the choice of law cannot deprive the employee of the protection afforded to him or her by the mandatory provisions of the objectively applicable law.35 This rule has given rise to many interpretational difficulties. What are the relevant mandatory provisions? What are the sources of such provisions? When do such provisions apply? How should the laws in question be compared? What is the role of the courts?

5.2.2.1 Relevant mandatory provisions Article 8(1) safeguards the application of the ‘provisions that cannot be derogated from by agreement’ under the objectively applicable law. 35

Art. 6(1) Rome Convention is essentially the same.

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According to Recital 37, ‘provisions which cannot be derogated from by agreement’ are to be distinguished from the narrower category of ‘overriding mandatory provisions’. Article 8(1), therefore, refers to the provisions of the objectively applicable law that the parties cannot exclude by agreement in purely domestic situations. These provisions need not be overridingly mandatory in the sense of Article 9. Does Article 8(1) refer to all mandatory provisions or only those concerning protection of employees?36 As discussed in Chapter 2, states are willing to uphold foreign labour laws in appropriate circumstances because of the common social objective. Indeed, this is a rationale for the universal application of Article 8 Rome I. But the objectives of mandatory provisions in other areas of law may be of a purely political or economic nature. States are unwilling to routinely uphold such foreign mandatory provisions, although they may do so exceptionally. Rome I recognises this possibility in Article 9(3) and allows the courts to give effect, under certain conditions, to the overriding mandatory provisions of the country of performance. Consequently, a wide interpretation of Article 8(1), which would result in safeguarding the application of all mandatory provisions of the objectively applicable law, would run counter to the scheme and objectives of Rome I. The verbal and historic interpretations of Article 8(1) further support this view. This article states that the choice of law cannot deprive ‘the employee of the protection afforded to him’ by the mandatory provisions of the objectively applicable law.37 This wording suggests that only provisions concerning protection of employees are relevant. Furthermore, Article 2(3) of the 1972 draft Convention referred explicitly to ‘mandatory provisions for the protection of the worker’. There is no indication in the Giuliano-Lagarde Report that the drafters of the Rome 36

37

In favour of the former interpretation: F. Jault, ‘Mme Briand v. Institut culturel autrichien’ (2003) 92 Revue critique de droit international privé 450, p. 454; L. Merrett, Employment Contracts in Private International Law (Oxford University Press, 2011), [9.45]. In favour of the latter: H. G. Beale (gen. ed.), Chitty on Contracts, 31st edn (Oxford: Hart, 2012), [30–117]; L. Collins (gen. ed.), Dicey, Morris and Collins on the Conflict of Laws, 15th edn (London: Sweet & Maxwell, 2012), [33–257]; P. Kaye, The New Private International Law of Contracts of the European Community (Aldershot: Dartmouth, 1993), p. 227; C. G. J. Morse, ‘Consumer Contracts, Employment Contracts and the Rome Convention’ (1992) 41 International and Comparative Law Quarterly 1, p. 14; Max Planck Institute, ‘Comments on the European Commission’s Green Paper on the Conversion of the Rome Convention of 1980 on the Law Applicable to Contractual Obligations into a Community Instrument and Its Modernization’, available at http://ec.europa.eu/justice/news/consulting_public/rome_i/ contributions/max_planck_institute_foreign_private_international_law_en.pdf, p. 62. Similarly, Recital 35.

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Convention intended to change this. In fact, when describing the content of the relevant mandatory provisions, the report refers to provisions concerning employment in the broadest sense: ‘[the relevant mandatory provisions] consist not only of provisions relating to the contract of employment itself but also provisions such as those concerning industrial safety and hygiene’.38 Indeed, the High Court of England and Wales held in Duarte v. Black & Decker Corp.39 that ‘the mandatory rules referred to in Article 6(1) [of the Rome Convention] are specific provisions . . . whose overriding purpose is to protect employees’.40 English rules on restrictive covenants in employment contracts were held not to be such provisions, but rather part of the general law of contract. The court further held obiter that if the covenants had been valid and enforceable under the foreign governing law, but invalid and unenforceable under English law, they would have been denied effect in England as being contrary to English public policy. This decision can be criticised on the ground that the limitations of restrictive covenants in employment contracts serve a dual purpose: the protection of competition in the labour market and the protection of employees. This dual purpose is reflected in the fact that restrictive covenants in employment contracts are subject to significantly more scrutiny for reasonableness, both as between the parties and in the public interest, than comparable covenants in commercial contracts. If so, there is no reason not to regard English rules on restrictive covenants in employment contracts as the relevant mandatory provisions in the sense of Article 8(1).41 By way of comparison, German rules concerning non-compete clauses in employment contracts are regarded as such provisions.42 Duarte v. Black & Decker Corp. can also be criticised on the ground that English rules on restrictive covenants do not rise to the standard of public policy for the purposes of private international law.43

38 39 41

42 43

Giuliano-Lagarde Report, p. 25. [2007] EWHC 2720 (QB); [2008] 1 All ER (Comm) 401. 40 Ibid., [55]. Similarly, Chitty on Contracts, 31st edn (2012), [30–112]; Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [33–257]; Merrett, Employment Contracts in PIL, [9.45], [9.47]. LAG Frankfurt, 14 August 2000, IPRspr. 2000 No. 40. Chitty on Contracts, 31st edn (2012), [30–112], fn. 360; P. Goulding and M. Vinall, ‘The English Approach to Jurisdiction and Choice of Law in Employment Covenants Not to Compete’ (2010) 31 Comparative Labour Law and Policy Journal 375, pp. 386–7; Merrett, Employment Contracts in PIL, [9.50]–[9.52].

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5.2.2.2 Sources of mandatory provisions In most countries, labour legislation is the most important source of the relevant mandatory provisions. But some authors have voiced a concern that certain mandatory provisions contained in employment statutes forming part of English law, for example, in the Health and Safety at Work Act 1974, are essentially rules of criminal law and, therefore, outside the subject matter scope of the European choice-of-law rules for contracts.44 They further state that, in so far as such provisions may create civil liability, the remedy lies in tort and also for this reason outside the scope of these rules.45 Indeed, the 1974 Act and certain other employment statutes do prescribe that the breach of some of their provisions is an offence and give inspectors or similar bodies the task of monitoring and enforcing the relevant provisions. Furthermore, the breach of a statutory duty by the employer normally entitles the employee to a remedy in tort in English employment law.46 Nevertheless, English employment statutes should be regarded as a source of the relevant mandatory provisions. The issue of whether statutory duties imposed by the employment statutes fall within the subject matter scope of Rome I is crucial for the analysis undertaken in the following chapter and is examined there in detail. Suffice it to say here that the mandatory provisions of English employment statutes do fall within the scope of, and should consequently be upheld under, Article 8(1). Two further arguments speak in favour thereof. First, since in mainland European countries Article 8(1) undoubtedly safeguards the application of protective statutory provisions,47 the goals of legal certainty, predictability and the uniform interpretation and application of Rome I require that functionally equivalent English statutory provisions are treated identically. Second, if Article 8(1) did not uphold the mandatory provisions of English employment statutes, the mechanism of Article 8(1) would be inoperable whenever English law is objectively 44

45 46

47

P. R. Beaumont and P. E. McEleavy, Anton’s Private International Law, 3rd edn (Edinburgh: Green, 2011), [10.351]. Ibid.; Kaye, The New PIL of Contracts, pp. 227–8. M. Lunney and K. Oliphant, Tort Law: Text and Materials, 4th edn (Oxford University Press, 2010), Ch 15. In Case C-29/10 Heiko Koelzsch v. Luxembourg [2011] ECR I-1595, for example, the CJEU had no doubt that the mandatory provisions of the German statute concerning dismissal were to be upheld under Art. 6(1) Rome Convention had German law been found to be objectively applicable. Similarly, the source of the mandatory provisions on which the employee relied in Case C-384/10 Jan Voogsgeerd v. Navimer SA [2011] ECR I-13275 was the Belgian law on employment contracts. See also Giuliano-Lagarde Report, p. 25.

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applicable, since other sources of English employment law do not contain mandatory provisions. English courts have no doubts that English employment statutes are a source of the relevant mandatory provisions. For example, in Duarte v. Black & Decker Corp.,48 Field J referred to the Employment Rights Act 1996 and the Factories Acts 1961 as statutes containing the relevant mandatory provisions. In many countries, collective agreements also contain mandatory provisions.49 In many Member States, an employer who is a party, either directly or indirectly (through an association of employers), to a collective agreement cannot impose less favourable terms and conditions upon his or her employees than those contained in the collective agreement. Usually, all employees of the employer who is a party to a collective agreement are covered. Sometimes, only the members of the trade union that is a party to a collective agreement are covered. Moreover, in many countries the state may extend the application of a collective agreement to additional employers and their employees, thus giving the collective agreement a status akin to legislation. Mandatory provisions contained in such collective agreements are the relevant mandatory provisions for the purposes of Article 8(1). In England collective agreements are presumed not to be legally enforceable contracts themselves.50 But they may be incorporated into individual employment contracts if suitable or apt for incorporation, either by an express agreement or by inference from the conduct of the parties. There is no extension of collective agreements in England. English collective agreements are, therefore, not sources of the relevant mandatory provisions for the purposes of Article 8(1). Other sources of labour law are unlikely to contain mandatory provisions. For example, the French Cour de cassation has held that customs do not represent mandatory provisions in the sense of Article 6(1) of the Rome Convention.51 Although an a priori exclusion of customs as a 48 49

50

51

See n 39, [55]. On the normative aspects of collective agreements see M. Seweryński, ‘Collective Agreements and Individual Contracts of Employment in Labour Law: General Report’ in M. Seweryński (ed.), Collective Agreements and Individual Contracts of Employment (The Hague: Kluwer, 2003) 1. Section 179 Trade Union and Labour Relations (Consolidation) Act 1992; see H. Collins, K. D. Ewing and A. McColgan, Labour Law: Text and Materials, 2nd edn (Oxford: Hart, 2005), pp. 102–11. Mme Briand v. Institut culturel autrichien, Cass. soc., 12 November 2002 [2003] Droit social 339, note M.-A. Moreau; (2004) 131 Journal du droit international 131, note S. Dion; Jault, ‘Mme Briand v. Institut culturel autrichien’.

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potential source of mandatory rules can be criticised,52 this decision indicates that customs are unlikely to be of any importance under Article 8(1) of Rome I.

5.2.2.3

Situations in which the mandatory provisions of the objectively applicable law apply Article 8(1) prescribes that the choice of law ‘cannot have the result of depriving’ the employee of the protection afforded to him or her by the mandatory provisions of the objectively applicable law. The mandatory provisions of the objectively applicable law should apply if they are more favourable for the employee than the provisions of the chosen law. Conversely, if the mandatory provisions of the objectively applicable law are less favourable, they should give way to the provisions of the chosen law. For example, if the notice period is in issue, whichever law prescribes a longer period should apply.53 It is normally not so easy to determine which law is more favourable for the employee. In the area of dismissal, for example, the two laws may not be in direct conflict, but may provide different rights and remedies in the same situation. Morse gives an example of two laws entitling the employee to different remedies for wrongful dismissal: one to compensation, the other to reinstatement.54 Article 8(1) says nothing about the employee being unable to cumulate benefits under the two laws. Since the cumulation of benefits (i.e. both compensation and reinstatement) would be most favourable for the employee, should Article 8(1) not entitle him or her to ‘double protection’? The answer must be negative. If the employee were entitled to benefits under both laws, he or she would receive better protection than either law envisages. Such an approach would expose the employer to excessive legal uncertainty and compliance costs. There is no reason why the employee, just because he or she is engaged in transnational employment, should enjoy double protection. The employee should receive protection under the law that is more favourable for him or her.55 The problem of comparing the chosen law and the objectively applicable law is, therefore, central to Article 8(1). 52 53 54 55

Dion, ibid., pp. 141–2; Jault, ibid., pp. 454–6; Moreau, ibid., p. 342. Voogsgeerd (n 47), Opinion of AG Trstenjak, [50]; Giuliano-Lagarde Report, p. 25. Morse, ‘Consumer Contracts, Employment Contracts’, pp. 15–16. Case C-64/12 Anton Schlecker v. Melitta Josefa Boedeker, Opinion of AG Wahl, 16 April 2013, nyr, [24]; Voogsgeerd (n 47), AG Opinion, [49], fn. 19; Chitty on Contracts, 31st edn (2012), [30–116]; Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [33– 260]; Kaye, The New PIL of Contracts, pp. 228–9; Morse, ‘Consumer Contracts,

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5.2.2.4

Comparing the chosen law and the objectively applicable law The key question is the level of abstraction at which this comparison should be performed. Should the two laws be compared in general, issue by issue or at some other level of abstraction? A general comparison is inappropriate.56 It is arbitrary, even absurd, to say, for instance, that English law is more or less favourable for employees than French law. There are surely aspects in which English law is more favourable and vice versa. Furthermore, the courts should refrain, out of respect for other countries, from making such evaluations. A general comparison of the Member States’ labour laws seems inconceivable for the CJEU. An issue-by-issue, analytical comparison also seems inappropriate.57 If the employee were entitled to the most favourable provisions of either the chosen law or the objectively applicable law regarding each and every issue, he or she might receive better protection than either law envisages. Such an approach would expose the employer to excessive legal uncertainty and compliance costs. There is no reason why the employee, just because he or she is engaged in transnational employment, should be so favoured. Moreover, both the chosen law and the objectively applicable law contain well-balanced and coherent provisions regarding matters such as dismissal, anti-discrimination and so on. Allowing the employee to combine provisions of the two laws concerning such matters would destroy this balance and coherence. It could also lead to logical inconsistencies.

56

57

Employment Contracts’, p. 16; R. Plender and M. Wilderspin, The European Private International Law of Obligations, 3rd edn (London: Sweet & Maxwell, 2009), [11–033]– [11–034]; M. Polak, ‘“Laborum dulce lenimen”? Jurisdiction and Choice of Law Aspects of Employment Contracts’ in J. Meeusen, M. Pertegás and G. Straetmans (eds.), Enforcement of International Contracts in the European Union: Convergence and Divergence between Brussels I and Rome I (Antwerp, Oxford, New York: Intersentia, 2004) 323, [12–31]. Contra: A. Philip, ‘Mandatory Rules, Public Law (Political Rules) and Choice of Law in the E.E.C. Convention on the Law Applicable to Contractual Obligations’ in P. M. North (ed.), Contract Conflicts: the E.E.C. Convention on the Law Applicable to Contractual Obligations: A Comparative Study (Amsterdam: North-Holland, 1982) 81, pp. 99–100. Voogsgeerd, ibid., [49]; Franzen, ‘Conflict of Laws in Employment Contracts’, p. 228; Gamillscheg, ‘Rules of Public Order’, pp. 319–20; Jault, ‘Mme Briand v. Institut culturel autrichien’, p. 458; S. Krebber, ‘Conflict of Laws in Employment in Europe’ (2000) 21 Comparative Labour Law and Policy Journal 501, p. 528. Jault, ibid., pp. 458–9; Krebber, ‘Conflict of Laws in Employment’; Polak, ‘”Laborum dulce lenimen”?’, [12–31].

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The undesirability of the analytical approach is illustrated by the French Cour de cassation decision in Mme Briand v. Institut culturel autrichien.58 Ms Briand was employed, under a contract expressly subject to Austrian law, to work in France. She was dismissed and received compensation under Austrian law. Nevertheless, she commenced proceedings in France claiming (1) compensation for breach of the provisions of French law obliging the employer to summon the employee to a pre-dismissal interview and to offer a ‘conversion agreement’ (la convention de conversion) in the case of dismissal for economic reasons and (2) compensation for unlawful dismissal. The outcome depended on whether the provisions of the objectively applicable French law applied, which, in turn, depended on whether they were more favourable for the employee than the provisions of Austrian law. The court held that the comparison should be made between the provisions of the two laws having the same object or relating to the same cause. First, the court held that the provisions of French law concerning predismissal interview and ‘conversion agreement’ were more favourable for the employee because Austrian law contained no equivalent provisions. Consequently, the employee was entitled to compensation for breach of those provisions. Second, the court quashed the judgment of the lower instance court that did not apply the French provisions regarding compensation for dismissal without genuine and serious cause. In the opinion of the court, Austrian law was also less favourable for the employee in this respect because it did not contain equivalent provisions. The provisions of Austrian law regarding compensation in lieu of notice and compensation for dismissal were incomparable because they dealt with different issues. Ms Briand, therefore, had a valid claim under both French and Austrian laws. Such an outcome was clearly excessively unforeseeable and costly for the employer. The correct approach must lie somewhere between the two extremes. The comparison should be made between provisions relating to severable issues.59 In Mme Briand v. Institut culturel autrichien, such an issue 58 59

See n 51. See Section 5.2.1.4. Similarly, Schlecker (n 55), AG Opinion, [34] (protection against dismissal as an example of a comparable subject area); Voogsgeerd (n 47), AG Opinion, [49], fn. 20 (comparable subject areas include the right to leave, protection against dismissal, protection of acquired rights); Jault, ‘Mme Briand v. Institut culturel autrichien’, p. 458, fn. 26; Kaye, The New PIL of Contracts, p. 229; Plender and Wilderspin, The European PIL of Obligations, [11–033]–[11–034]; Polak, ‘“Laborum dulce lenimen”?’, [12–31]; W. van Eeckhoutte, ‘The Rome Convention on the Law Applicable to

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would have been protection against dismissal. The court should have compared in their entirety the Austrian and French provisions concerning dismissal that were applicable on the facts of the case (i.e. the comparison should not be performed in the abstract). Apparently, Austrian law entitled the employee to a notice of dismissal of five months and compensation in the amount of nine monthly salaries; French law entitled the employee to a pre-dismissal interview, a ‘conversion agreement’ and compensation in the amount of at least six monthly salaries. The court should have examined whether the employee would have been better off had the employer complied with the French provisions instead of with the Austrian ones.60 The employee’s opinion as to which law was more favourable should have been regarded as an important consideration. Had the court found that the employee would not have been better off had the French provisions been complied with, it should have decided in the employer’s favour. Conversely, it should have granted the employee the remedies for breach of the relevant French provisions. The benefits that the employee had in fact received would then have to be set off against the benefits obtainable under French law.

5.2.2.5 Role of the courts Article 8(1) says nothing about the role of the courts concerning the operation of the mechanism contained therein. Do the courts have an active or passive role? Given the systemic role of Rome I in allocating and safeguarding the regulatory authority of Member States in the field of labour law, there is a good argument that the courts should be under a duty to determine of their own motion the content of the objectively applicable law, especially if it is the law of a Member State.61 But the issue of the role of the courts is closely related to that of pleading and proof of foreign law. Being matters of procedure and evidence, these issues are

60

61

Contractual Obligations and Labour Law (1980)’ (2006) 58 Bulletin of Comparative Labour Law 167, p. 173. Luxembourg Cour d’appel compared, in 3 December 1992 (1993) 29 Pasicrisie Luxembourgeoise 30, the provisions of French and Luxembourg laws concerning dismissal. It found that the French provisions prescribed a shorter period of notice, whereas the Luxembourg provisions, unlike the French ones, did not afford compensation for dismissal. The court applied the French provisions for being overall more favourable for the employee. H. Muir Watt, ‘European Integration, Legal Diversity and the Conflict of Laws’ (2005) 9 Edinburgh Law Review 6, pp. 20–1.

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outside the subject matter scope of Rome I.62 National approaches differ considerably. In England, foreign law is treated as a question of fact. The courts apply foreign law only if a party successfully pleads and proves it.63 The Article 8(1) mechanism cannot operate unless either the chosen law or the objectively applicable law, or both, are foreign. The two laws can be compared only if a party successfully pleads and proves the foreign law(s). It is normally the employee who invokes the mandatory provisions of the objectively applicable law; the employer normally relies on the chosen law. If the objectively applicable law is foreign, the employee normally has to show that the provisions of that law are applicable because they are more favourable for him or her than those of the chosen law.64 If the objectively applicable law is domestic, then the employer has to show that the provisions of the chosen foreign law are applicable.65 The employee who disagrees has to respond to the employer’s pleading and proof of the chosen foreign law and its comparison with the domestic objectively applicable law. Consequently, the operation of the Article 8(1) mechanism in both hypotheses largely depends on the employee’s awareness of it and his or her ability to plead and prove foreign law. This, in turn, may depend on the employee’s ability to obtain costly legal advice of comparative labour law specialists or of labour lawyers from different jurisdictions. In France, the courts are not obliged to apply the relevant choice-oflaw rules and establish the content of the foreign applicable law of their own motion where the parties can freely dispose of their rights.66 Since labour law is an area of law where the parties’ rights are considered to be waivable, at least after the dispute has arisen, it is upon the parties to 62

63 64

65

Art. 1(3). See Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [9–011]; J. J. Fawcett and J. M. Carruthers, Cheshire, North and Fawcett: Private International Law, 14th edn (Oxford University Press, 2008), p. 694; F. J. Garcimartin Alférez, ‘The Rome I Regulation: Much ado about Nothing?’ (2008) 8(2) The European Legal Forum I-61, [71]; T. Hartley, ‘Pleading and Proof of Foreign Law: The Major European Systems Compared’ (1996) 45 International and Comparative Law Quarterly 271, pp. 290–1; cf. R. Fentiman, Foreign Law in English Courts: Pleading, Proof and Choice of Law (Oxford University Press, 1998), pp. 80–97. Hartley, ‘Foreign Law’, pp. 282–5. Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [9–025] (the burden of proof lies on the party who bases his or her claim or defence on foreign law); similarly Cheshire, North and Fawcett: PIL, 14th edn (2008), pp. 111–12; cf. Fentiman, Foreign Law, pp. 94–6 (the burden is always on the employer). Ibid. 66 Jault-Seseke, ‘L’office du juge’.

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plead and prove foreign law.67 In Germany, the courts must apply the relevant choice-of-law rule and establish the content of the foreign applicable law of their own motion.68 The Article 8(1) mechanism is, at least in theory, more effective in the Member States such as Germany where the courts have an active role than in the Member States such as England whose courts are passive. Since no EU-wide unification of the rules on pleading and proof of foreign law is currently in sight, notwithstanding strong arguments in favour of such unification, the effectiveness of the mechanism will continue to depend upon the differences in domestic laws. But there is one, arguably uncontroversial, measure that could be implemented. The court could be obliged, whenever Article 8(1) applies, to ensure that the employee is aware of the existence and the operation of the mechanism, that is, of the consequences of his or her failure to plead and prove foreign law. Such an obligation would mirror that introduced in Article 26(2) of the Brussels I Recast concerning the protection of weaker parties from an unwitting submission to the court’s jurisdiction. But such a provision would not resolve the problem of costs that employees incur in operating the Article 8(1) mechanism. Trade unions could help in this respect.

5.2.3 Conclusion The parties to an employment contract are indeed free to agree on any law to the extent that the agreement improves upon the mandatory minimum standard of protection set by the objectively applicable law. Article 8(1) is capable of safeguarding all mandatory provisions concerning protection of employees regardless of their source. The Article 8(1) mechanism operates only if the parties choose a different law from the objectively applicable law. Given that such choice-of-law agreements work solely in the favour of employees, one might wonder whether and why employers agree to them. Employers do agree to such choice-of-law agreements for various reasons.69 First, some employers are unaware of the existence and operation of the Article 8(1) mechanism and, therefore, of the consequences of choosing a law other than the objectively applicable law. Second, transnational employment contracts frequently commence as domestic contracts. Domestic contracts 67 68 69

Ibid., also mentions cases in which French courts have taken a more active role. Hartley, ‘Foreign Law’, pp. 275–7. P. Mankowski, ‘Employment Contracts under Article 8 of the Rome I Regulation’ in F. Ferrari and S. Leible (eds.), Rome I Regulation (Munich: Sellier, 2009) 171, pp. 212–15.

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often contain choice-of-law clauses in favour of domestic law, whose purpose is merely declaratory. Such contracts may be left unamended after the change of the objectively applicable law. Third, in the cases of permanent postings abroad the parties may choose the law of the country of origin. Fourth, employers may agree to choice of law in order to please their employees who may expect such agreements or to give them an additional incentive. Finally, employers may insert, in their employment contracts, choice-of-law clauses in favour of their own laws for psychological reasons. When a dispute arises, the first thing an employee does is read the contract. The employer may hope that, after the employee has seen a choice-of-law clause in favour of the employer’s law, he or she will be discouraged from pursuing the claim altogether or at least on the basis of a non-chosen law.

5.3 Law applicable in the absence of choice The rules of Rome I and the Brussels I Recast concerning employment use the same objective connecting factors, namely the habitual place of work and the engaging place of business. Should these connecting factors be interpreted identically under the two instruments? The following reasons speak in favour thereof: legal certainty, ease of application resulting from the established case law and achieving coincidence of the forum and ius. Indeed, the CJEU did so in Koelzsch70 and Voogsgeerd.71 However, choice-of-law rules and jurisdictional rules have different ways of achieving their respective objectives. Whereas the former seek to achieve the objective of protection of employees by upholding the mandatory provisions of the law of the country that is sufficiently closely connected with the employment relationship in question, that is legitimately interested in regulating it and whose application the parties can reasonably expect, the latter seek to accord employees a balanced jurisdictional preference. Consequently, there may be situations where the connecting factors may have to be given different interpretation under the two instruments.72 For example, if the changes to the rules of jurisdiction proposed in the previous chapter were adopted, employees 70 72

See n 47. 71 Ibid. Koelzsch (n 47), Opinion of AG Trstenjak, [82]–[83]; J. Hill and A. Chong, International Commercial Disputes: Commercial Conflict of Laws in English Courts, 4th edn (Oxford: Hart, 2010), [14.5.31]; Jault-Seseke, ‘L’adoption du Rome I’, p. 620; A. Zanobetti, ‘Employment Contracts and the Rome Convention: The Koelzsch Ruling of the European Court of Justice’ (2011) 3 Cuadernos de Derecho Transnacional 338, pp. 355–7.

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who do not habitually perform their work in any one country would be able to commence proceedings in the courts for each place of work that has a sufficiently close connection with the dispute. On the contrary, the rules of Rome I would always designate only one objectively applicable law. The following text firstly examines the connecting factors used in Article 8, then the escape clause.

5.3.1

Habitual place of work

Article 8(2) prescribes that the employment contract is objectively governed by the law of the country in which or, failing that, from which the employee habitually carries out his or her work in performance of the contract. It further stipulates that the country where the work is habitually carried out will not be deemed to have changed if the employee is temporarily employed in another country.73 The main problem is the determination of the habitual place of work where the employee works in more than one country. The CJEU addressed this problem, in the context of the European jurisdictional regime, in Mulox,74 Rutten75 and Weber.76 The wording ‘country in which or, failing that, from which the employee habitually carries out his work’ in Article 8(2) incorporates this case law into Rome I.77 Whereas the examination of the connecting factors in the previous chapter focused on the CJEU case law under the European jurisdictional instruments, the following text takes a different approach by investigating how Article 8(2) of Rome I applies to some of the factual patterns under which transnational employment relationships typically arise. It explores the habitual place of work in the cases of posting of employees abroad, intra-group transfer and ‘transnational occupations’. Cases of migrant workers, frontier workers and workers employed by foreign employers are not discussed here, since such workers typically perform 73

74 75

76

77

The wording of Art. 6(2)(a) Rome Convention is slightly different. It refers to ‘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’. Case C-125/92 Mulox IBC Ltd. v. Hendrick Geels [1993] ECR I-4075; [1993] ILPr 668. Case C-383/95 Petrus Wilhelmus Rutten v. Cross Medical Ltd. [1997] ECR I-57; [1997] All ER (EC) 121. Case C-37/00 Herbert Weber v. Universal Ogden Services Ltd. [2002] ECR I-2013; [2002] QB 1189. European Commission, ‘Proposal for a Regulation of the European Parliament and the Council on the Law Applicable to Contractual Obligations (Rome I)’, COM(2005) 650 final, p. 7.

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their work in one country only and, consequently, the problem of determining the habitual place of work usually does not arise. But these cases may raise the problem of the application of the escape clause, which is dealt with in Section 5.3.3.

5.3.1.1 Postings abroad Employers often post their employees abroad, either temporarily, that is, for the completion of a specific task or for a certain period of time, or permanently. Employees may be posted to an employer’s foreign place of business, branch, subsidiary or affiliate. Similarly, employers may post their employees to foreign companies with which they have a cooperation agreement, a contract of ‘hiring-out’ of workers or a similar arrangement. The posting may occur under an existing employment contract, which may contain a ‘mobility clause’ entitling the employer to post the employee abroad. Alternatively, the parties may amend the existing contract or conclude a new contract to set out the details of the posting abroad. In Schlecker,78 for instance, the employee, a German national and resident, worked in Germany for a German employer for fifteen years. The parties then entered into a new contract under which the employee was appointed as a manager of the employer’s Dutch branch, where she worked for another eleven years, while retaining her German residence. The dispute arose when the employer informed the employee that her Dutch position would be abolished and invited her to take up a post in Germany. Although the employee had objected to the notice of amendment, she took up her new post. Soon thereafter, however, she commenced proceedings in the Netherlands seeking damages for the employer’s unilateral decision to change her place of work. An issue was whether Dutch or German law governed the contract under Article 6 of the Rome Convention. Postings of workers occur frequently in the EU internal market, where employers are guaranteed both the freedoms of establishment and to provide services and workers enjoy the freedom of movement. Special rules of the Posted Workers Directive concerning the posting of workers in Europe are examined in Chapter 8. The second sentence of Article 8(2) prescribes that the country where the work is habitually carried out will not be deemed to have changed if the employee is temporarily employed elsewhere. Furthermore, the second sentence of Recital 36 states that the conclusion of a new employment contract with the original employer should not preclude the 78

See n 55.

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employee from being regarded as carrying out his or her work in another country temporarily. The applicable law is, therefore, stable. It does not change when the employee is temporarily posted abroad. Four issues arise in this respect. How to distinguish a temporary posting from a permanent one? If there is a change of the habitual place of work, does the law of the country of the new habitual place of work also apply to disputes concerning previously performed work? What about employment beginning or ending with a posting abroad? What about employees who are frequently posted from one country to another? There are two possible approaches to the first issue. First, posting shorter than a certain fixed amount of time may be regarded as temporary, whereas all other postings may be regarded as permanent. For example, Article 12(1) of the Regulation (EC) No 883/2004 of the European Parliament and of the Council of 29 April 2004 on the coordination of social security systems79 provides that postings of anticipated duration of up to twenty-four months are deemed temporary and do not lead to the change of the applicable social security legislation. The drafters of Rome I have decided not to follow this approach.80 Instead, all the relevant circumstances should be taken into account in order to determine whether a posting is temporary for the purposes of Rome I. This approach is better, since it allows the most appropriate solution in each individual case, albeit at the expense of a degree of legal uncertainty and difficulty of application.81 Are all the circumstances of the case of equal weight or are some more important than the others? Rome I gives a particular importance to the parties’ intentions. According to the first sentence of Recital 36, work carried out in another country should be regarded as temporary if the employee is expected to resume working in the country of origin after 79 80

81

[2004] OJ L166/1. European Commission, ‘Green Paper on the Conversion of the Rome Convention of 1980 on the Law Applicable to Contractual Obligations into a Community Instrument and Its Modernisation’, COM(2002) 654 final, p. 37. EGPIL (European Group for Private International Law), ‘Troisième commentaire consolidé des propositions de modification des articles 1er, 3, 4, 5, 6, 7, 9, 10bis, 12 et 13 de la Convention de Rome du 19 juin 1980 sur la loi applicable aux obligations contractuelles, et de l’article 15 du Règlement 44/2001/CE (Règlement “Bruxelles I”)’, available at www.gedip-egpil.eu/documents/gedip-documents-13cc.html, [23](1); Max Planck Institute, ‘Comments on the European Commission’s Proposal for a Regulation of the European Parliament and the Council on the Law Applicable to Contractual Obligations (“Rome I”)’ (2007) 71 Rabels Zeitschrift für ausländisches und internationales Privatrecht 225, p. 288; cf. Polak, ‘“Laborum dulce lenimen”?’, [12–14] (in favour of a oneyear period).

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carrying out his or her tasks abroad. If the parties intend the posting to be temporary (i.e. if there is animus revertendi on the employee’s part and animus retrahendi on the employer’s part),82 there is, in principle, no change of the habitual place of work. Otherwise, there is.83 The parties’ intentions may be ascertained from the terms of the contract and other circumstances of the case. Article 4 of the Council Directive 91/533/EEC of 14 October 1991 on an employer’s obligation to inform employees of the conditions applicable to the contract or employment relationship84 obliges employers to provide information regarding the posting to posted employees. This information may be particularly useful for determining whether the posting is temporary. But the parties’ intentions are not the only relevant factor. In particular, the duration of the posting abroad must be considered. Thus, if the employee has been working in a foreign country for a significant amount of time, he or she should be regarded as habitually working in that country even though he or she used to habitually work in the country of origin and the parties intended the employee to return there. What amount of time is (in)significant in this respect depends on the circumstances of the case and is left to the courts to decide. A confirmation for this view is found in Schlecker.85 In the context of a discussion of the operation of the escape clause, Advocate General Wahl gave an example of a contract concluded in France between a French company and a French national, which ‘was presupposed would be performed in France, but which, in the context of a very long posting (over 10 years), was essentially and continuously performed in Saudi Arabia’.86 Although, in his example, the parties would have expected the employee to resume working in the country of origin after carrying out his or her tasks abroad, the advocate general thought that the habitual place of work would have been in Saudi Arabia. Thus, in the view of the advocate general, the ten-year mark seems to represent a benchmark when a temporary posting turns into a permanent one regardless of the parties’ 82 83

84

Mankowski, ‘Employment Contracts under Article 8’, pp. 185–6. In Hessisches LAG, 1 September 2008, IPRspr. 2008 No. 48, a Turkish employee worked for a Turkish bank in Turkey for five years. He was posted first to the Netherlands for seven years and then to Germany for three years. The postings were held to be temporary. The fact that the employee had lost his animus revertendi was disregarded, since this had never been communicated to the employer. See also Shekar v. Satyam Computer Services Ltd. (n 21) (an employee worked under an employment contract in India for eights months; he was transferred to England under a new contract, which resulted in the change of the habitual place of work). [1991] OJ L288/32. 85 See n 55. 86 Ibid., AG Opinion, [43].

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intentions, although in individual cases the bar can be lower depending on the circumstances. A difficulty arises where a dispute, brought after the habitual place of work has changed, concerns previously performed work. Does the law of the country of the current or of the previous habitual place of work apply? The best solution seems to be the application of the law of the country where the employee habitually worked when the facts giving rise to the dispute occurred.87 An employer who has fully complied with the applicable law should not be adversely affected by a change of the habitual place of work and the consequent change of the governing law. Sometimes, employment begins or ends with a posting abroad. According to Recital 36, work performed in another country is deemed temporary if the employee is expected to resume working in the country of origin after carrying out his or her tasks abroad. This wording suggests that the employee must have already worked in the country of origin before being posted abroad and that he or she is expected to continue working there. Where the employment begins with a temporary posting abroad, the first requirement is not met; where the employment is expected to end with a temporary posting abroad, the second requirement is not met. Nonetheless, Article 8(2) should be interpreted broadly and enable the application of the law of the country of origin in these situations.88 Some employees are frequently posted from one country to another. Construction workers, for example, may be posted from a building site in one country to a building site in another country immediately after the completion of the construction project. Managerial, advisory and specialist staff may be moved between countries where their employer is doing business. Weber89 provides guidance. The CJEU held that the relevant criterion for determining the habitual place of work in this type of case ‘is, in principle, the place where [the employee] spends most of his working time engaged on his employer’s business’.90 Therefore, an employee who is frequently posted from one country to another is habitually working in 87

88

89

Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [33–266]; P. Mankowski, ‘Europäisches Internationales Arbeitprozessrecht: Weiteres zum gewöhnlichen Arbeitsort’ (2003) 23 Praxis des Internationalen Privat- und Verfahrensrecht 21, p. 25; Morse, ‘Consumer Contracts, Employment Contracts’, p. 17; similarly, Plender and Wilderspin, The European PIL of Obligations, [11–051]. U. Magnus, ‘Die Rom I-Verordnung’ (2010) 30 Praxis des Internationalen Privat- und Verfahrensrecht 27, p. 40; Mankowski, ‘Employment Contracts under Article 8’, pp. 188–9; Max Planck Institute, ‘Comments on the Proposal for Rome I’, p. 289. See n 76. 90 Ibid., [50] (emphasis added).

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the country where he or she spends most of his or her working time, unless the circumstances of the case indicate otherwise.

5.3.1.2 Intra-group transfers Workers employed by a member of a corporate group are often transferred within the group, especially if they are managerial, advisory or specialist staff. Such transfers, generally speaking, take three forms.91 First, the employee may be transferred to a foreign group member without entering into employment with that member. This is merely a type of posting abroad discussed above. Second, the employee may be transferred to, and enter into employment with, a foreign group member, while terminating his or her employment with the original employer. Given that there is no overlap between the two employment relationships, the habitual place of work under each should be determined separately and independently.92 Third, the employee may be transferred to, and enter into employment with, a foreign group member, while retaining his or her employment with the original employer. The conclusion of the employment contract with the foreign group member may be mandated by the host country’s immigration and other legislation. Such employment is usually limited in time or to a specific task. The original employer frequently retains the right to revoke the employee. The third type of transfer raises the question of the relevance of the ‘local’ employment contract for establishing the habitual place of work under the ‘original’ employment contract and vice versa. It will be remembered that the CJEU dealt with this kind of case in Pugliese93 in the context of the European jurisdictional regime. With regard to the choice-of-law rules, the second sentence of Recital 36 of Rome I addresses this problem of ‘double employment’.94 It states that the conclusion of a new contract with an employer belonging to the same group of companies as the original employer should not preclude the employee from being regarded as carrying out his or her work in another country temporarily. Therefore, the habitual place of work under the ‘original’ 91

92

93

94

G. Palao Moreno, ‘Multinational Groups of Companies and Individual Employment Contracts in Spanish and European Private International Law’ (2002) 4 Yearbook of Private International Law 303, p. 326. See Chunilal v. Merrill Lynch International Inc. [2010] EWHC 1467 (Comm) (an employee working in London for an English bank was transferred, following the conclusion of a new employment contract with a US affiliate, to a Honk Kong affiliate). Case C-437/00 Giulia Pugliese v. Finmeccanica SpA, Betriebsteil Alenia Aerospazio [2003] ECR I-3573; [2004] All ER (EC) 154. Mankowski, ‘Employment Contracts under Article 8’, p. 190.

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and the ‘local’ contracts should be determined separately, by considering all the relevant circumstances. Typically, a transfer to a foreign group member represents a temporary posting abroad under the ‘original’ contract not resulting in the change of the habitual place of work. The work under the ‘local’ contract is usually entirely performed in the host country, which should, therefore, be regarded as the country of the habitual place of work under that contract. Exceptionally, the two contracts may have the same habitual place of work, for example, when the transfer to a foreign group member represents a permanent posting abroad under the ‘original’ contract or when the ‘local’ contract is made solely for administrative purposes (e.g. obtaining a work permit).95 The flexibility of Article 8(2) allows the most appropriate solution in each individual case of intra-group transfer of employees.96 Moreover, the solution laid down in Recital 36 can be applied by analogy to other cases of ‘double employment’, such as where the employee concludes a ‘local’ employment contract with a company to which he or she was ‘hired out’ by his or her employer.97

5.3.1.3 ‘Transnational occupations’ Some occupations are transnational by their very nature. Commercial representatives covering territories of several countries normally maintain an office in one country from which they travel abroad and to which they return after each business trip. International transport workers routinely cross national borders. Offshore workers sometimes perform their work outside any country’s territorial waters. Do such workers have a habitual place of work? The CJEU addressed the problem of determining the habitual place of work of commercial representatives in Mulox98 and Rutten.99 It was held in Mulox that the habitual place of work was ‘the place where or from which the employee principally discharges his obligations towards his employer’100 and in Rutten that the habitual place of work was ‘the place where the employee has established the effective centre of his working activities and where, or from which, he in fact performs the essential part of his duties vis-à-vis his employer’.101 In both cases, the location of the 95 96

97

98

European Commission, ‘Green Paper on Rome I’, p. 36. EGPIL, ‘Troisième commentaire consolidé’, [23](2); Max Planck Institute, ‘Comments on the Proposal for Rome I’, pp. 289–91. Mankowski, ‘Employment Contracts under Article 8’, pp. 191–3; Max Planck Institute, ‘Comments on the Proposal for Rome I’, p. 291. See n 74. 99 See n 75. 100 Mulox (n 74), [24]. 101 Rutten (n 75), [23].

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employee’s office was the crucial factor for determining the habitual place of work. Since Article 8(2) incorporates this case law,102 the law of the country where the commercial representative maintains his or her office typically governs his or her employment contract. The CJEU has dealt in two recent cases with the determination of the habitual place of work of international transport workers under the Rome Convention. In Koelzsch,103 the employee brought a dispute in Luxembourg against that Member State for the alleged breach of Article 6 of the Rome Convention by its judicial authorities. Mr Koelzsch was a lorry driver domiciled in Germany, who worked, under an employment contract subject to Luxembourg law, for a Luxembourg company. The employer’s business consisted in transporting goods from Denmark to destinations situated mostly in Germany by means of lorries stationed in Germany. Following his dismissal, Mr Koelzsch commenced proceedings in Luxembourg arguing that his dismissal was unlawful under the objectively applicable German law. The Luxembourg courts disagreed and held that Mr Koelzsch’s employment was subject exclusively to Luxembourg law, under which the dismissal was lawful. The employee then claimed damages against Luxembourg for maladministration on the part of its judicial authorities. The Luxembourg Cour d’appel asked the CJEU whether the Luxembourg courts’ interpretation of Article 6(2)(a) of the Rome Convention was correct. After endorsing its case law under the Brussels regime, the CJEU held that the rule of the habitual place of work applied whenever ‘it is possible . . . to determine the State with which the work has a significant connection’ and that this rule referred to ‘the place in which or from which the employee actually carries out his activities and, in the absence of a centre of activities, to the place where he carries out the majority of his activities’.104 The CJEU gave a strong hint that Mr Koelzsch had his habitual place of work in Germany by listing the following factors as relevant for determining the habitual place of work: the place from which the employee carries out his transport tasks, receives instructions concerning his tasks and organises his work; the place where his work tools are situated; the places where the transport is principally carried out, where the goods are unloaded and where the employee returns after completion of his tasks.105 102 104

European Commission, ‘Proposal for Rome I’, p. 7. Ibid., [44]–[45]. 105 Ibid., [49].

103

See n 47.

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It will be remembered that Voogsgeerd106 concerned a seaman who concluded an employment contract with a Luxembourg company (Navimer) at the headquarters of the employer’s Belgian subsidiary (Naviglobe). The contract was expressly subject to the law of Luxembourg. Mr Voogsgeerd worked on board ships belonging to Navimer and received his salary from that company. But he reported to, and received briefings and instructions from, Naviglobe in Belgium, where all of his voyages commenced and terminated. Almost a year after his dismissal, Mr Voogsgeerd commenced proceedings in Belgium for payment in lieu of notice invoking Belgian employment law as the objectively applicable law under the rule of the habitual place of work. Contrary to this, the defendants argued that Luxembourg law was solely applicable to the contract, since Mr Voogsgeerd had had no habitual place of work and the engaging place of business, Navimer, had been situated in Luxembourg. The claim was time-barred under Luxembourg law. After the lower instance courts had rejected his claims, Mr Voogsgeerd appealed to the Belgian Court of Cassation. He claimed that Naviglobe was the engaging place of business and that Belgian law was objectively applicable under the fall-back rule of the engaging place of business. The court made a reference for preliminary ruling to the CJEU. The CJEU confirmed the preceding case law and a very wide interpretation of the rule of the habitual place of work. In particular, it stated that the country in which the employee habitually performed his work was the country where he ‘principally carries out his work’,107 that is, the country ‘with which the work has a significant connection’108 or ‘in which or from which the employee actually carries out his working activities and, in the absence of a centre of activities . . . where he carries out the majority of his activities’.109 The CJEU suggested that the facts of the case indicated that Belgian law was objectively applicable under the rule of the habitual place of work.110 Moreover, and more importantly, the CJEU arguably laid down a general rule for international transport cases that whenever the place from which the employee carried out his or her transport tasks or where he or she was obliged to report coincided with the place where he or she received instructions, that place had to be regarded as the habitual place of work.111 Voogsgeerd put an end to the longstanding debate on whether a seaman’s employment contract is governed by the law of the flag or 106 110

See n 47. 107 Ibid., [33]. 108 Ibid., [36]. See in particular ibid., [31], [39]–[41], [44].

109 111

Ibid., [37]; see also [41]. Ibid., [39], [44]; but see [40].

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whether other criteria are more appropriate. Many argued that, since seamen worked on ships, which fell under the jurisdiction of the country whose flag they flew, employment contracts of seamen were, in principle, governed by the law of the flag.112 Others argued in favour of other criteria, primarily the engaging place of business.113 The former solution seems inappropriate. Saying that a British seaman who works on a ferry registered in the Bahamas and plying from a base in Portsmouth to the Channel Islands and Northern France habitually works in the Bahamas is clearly wrong.114 In other words, there is no guarantee that the country of the flag of the ship will be sufficiently closely connected with, and legitimately interested in regulating, the employment relationship. Moreover, this connecting factor is determined unilaterally by the employer. In any event, this debate has now been resolved. A seaman’s employment contract is, in principle, governed by the law of the country of the seaman’s permanent base, provided there is a significant connection between the work and the base. Otherwise, the fall-back rule applies. A parallel debate exists with regard to employment contracts of aircrew members. Many academics, particularly those favouring the ship’s flag as the relevant connecting factor for employment contracts of seamen, argued in favour of the law of the aircraft’s registration.115 Others 112

113

114

115

M. Bogdan, Concise Introduction to EU Private International Law (Groningen: Europa Law Publishing, 2006), p. 132, fn. 47; A. Junker, ‘Arbeitsverträge’ in F. Ferrari and S. Leible (eds.), Ein neues Internationales Vertragsrecht für Europa: Der Vorschlag für eine Rom I-Verordnung (Munich: Sellier, 2007) 111, pp. 124–5; Magnus, ‘Die Rom IVerordnung’, p. 41; Mankowski, ‘Employment Contracts under Article 8’, pp. 199–200; Polak, ‘”Laborum dulce lenimen”?’, [12–19]; Zanobetti, ‘Employment Contracts’, pp. 351–3; Max Planck Institute, ‘Comments on the Proposal for Rome I’, pp. 294–7. Chitty on Contracts, 31st edn (2012), [30–118]; Beaumont and McEleavy, Anton’s PIL, [10.366]; Hill and Chong, International Commercial Disputes, [14.5.34]; Jault-Seseke, ‘L’adoption du Rome I’, p. 624; Kaye, The New PIL of Contracts, p. 235; P. Lagarde, ‘Le nouveau droit international privé des contrats après l’entrèe en vigeur de la Convention de Rome du 19 juin 1980’ (1991) 80 Revue critique de droit international privé 287, p. 319; Merrett, Employment Contracts in PIL, [6.61]; Morse, ‘Consumer Contracts, Employment Contracts’, pp. 18–19; Plender and Wilderspin, The European PIL of Obligations, [11–042]; also tentatively European Commission, ‘Green Paper on Rome I’, p. 37; but see S. Francq, ‘Le règlement “Rome I” sur la loi applicable aux obligations contractuelles’ (2009) 136 Journal du droit international 41, pp. 65–6 (in favour of the connecting factor of the fixed base). See also Booth v. Phillips [2004] EWHC 1437 (Comm); [2004] 1 WLR 3292, [25] (in favour of the engaging place of business). See Diggins v. Condor Marine Crewing Services Ltd. [2009] EWCA Civ 1133; [2010] ICR 213. Junker, ‘Arbeitsverträge’, p. 126; Mankowski, ‘Employment Contracts under Article 8’, pp. 178–9; Polak, ‘“Laborum dulce lenimen”?’, [12–19].

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supported the immediate application of the fall-back rule.116 The drafters of Rome I tried to put an end to this particular debate. According to the European Commission, the wording ‘country in which or, failing that, from which’ in Article 8(2) covers ‘personnel working on board aircraft, if there is a fixed base from which work is organised and where the personnel perform other obligations in relation to the employer (registration, safety checks)’.117 But this debate is far from over as the Belgian and French judgments concerning Ryanair, an Irish budget airline, show. An important part of Ryanair’s business model is the hiring of aircrew members, wherever based, under Irish contracts. This seems to be pursued by a combination of Irish choice-of-law clauses in employment contracts, the fact that such aircrew members work on board aircrafts registered in Ireland that the owner of Ryanair considers ‘Irish territory’ and the signing of the contracts in Ireland.118 Some of the aircrew members deployed by Ryanair from airports in Belgium and France commenced proceedings in these countries arguing that Belgian and French laws, respectively, applied to their employment contracts. The courts have reached different conclusions, some finding Belgian and French law applicable under the rule of the habitual place of work, others that Irish law applied.119 Following the rule that the CJEU seems to have laid down in Voogsgeerd120 – that whenever the place from which an international transport worker carries out his or her transport tasks or where he or she is obliged to report coincides with the place where the employee receives instructions, that place has to be regarded as the habitual place of work – the Commission’s interpretation of Article 8(2) is to be preferred. Offshore workers usually work within a country’s territorial waters, although offshore installations may be positioned outside these waters, for example, above a country’s continental shelf or even on the high seas. 116

117 118

119

120

Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [33–267]; Jault-Seseke, ‘L’adoption du Rome I’, p. 624; Kaye, The New PIL of Contracts, p. 235; Lagarde, ‘Le nouveau droit international privé des contrats’, p. 319; Max Planck Institute, ‘Comments on the Proposal for Rome I’, pp. 287–8; Mme Arsac v. United Airlines, Cass. soc., 27 May 2009 (n 25); BAG, 13 November 2007 (n 25). European Commission, ‘Proposal for Rome I’, p. 7. Case C-555/03 Magali Warbecq v. Ryanair Ltd. [2004] ECR I-6041; ‘Ryanair Fined €9m by French Court over Breach of Labour Laws’, The Guardian, 2 October 2013. See A. van Hoek, ‘Private International Law: An Appropriate Means to Regulate Transnational Employment in the European Union?’ (2014) 7 Erasmus Law Review 157, text accompanying fns. 73–4; Hendrickx, ‘Editorial’. See n 47.

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Weber121 concerned an employee who worked on vessels and installations positioned above Dutch and Danish continental shelves. The CJEU held that work performed on fixed or floating installations positioned on or above the part of the continental shelf adjacent to a Member State for the purposes of prospecting and exploiting its natural resources was regarded as work in the territory of that Member State. With regard to work performed on installations on the high seas, there are essentially two possibilities. The first is to regard the country of the flag or of the registration of the installation as the country of the habitual place of work. The second is to regard such work as not being habitually performed in any country and to apply the fall-back rule. Since the first solution is unlikely to meet the objective of protection of employees, the fall-back rule should apply.122

5.3.2 Engaging place of business Article 8(3) prescribes that, absent a habitual place of work, the employment contract is governed by the law of the country where the place of business through which the employee was engaged is situated.123 In light of the CJEU case law, it is clear that not many situations fall under Article 8(3). One example is where the employee’s work is not carried out from a permanent base (e.g. an office) and the distribution of the working time spent in various places and the parties’ intentions do not establish a habitual place of work. Another example is the case of an employee who maintains two or more permanent bases of equal importance in different countries. Employees working outside the territory of any country also come to mind,124 as do international transport workers who have a base in a particular country but not a significant connection with it. Cases of this kind are rare. In order to understand the rule of the engaging place of business, one has to determine what is meant, first, by the term ‘engaged’ and, second, by the term ‘place of business’. The CJEU examined these issues in detail in Voogsgeerd.125 121 122 123 124

125

See n 76. Chitty on Contracts, 31st edn (2012), [30–118]; Giuliano-Lagarde Report, p. 26. Art. 6(2)(b) Rome Convention is essentially the same. Art. 6(2)(b) of the European Commission proposal for Rome I expressly stated that the rule of the engaging place of business covered cases where the employee ‘habitually carries out his work in or from a territory subject to no national sovereignty’. See n 47.

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There were two strands of academic opinion regarding the interpretation of the term ‘engaged’. According to Mankowski,126 this term relates to ‘organisational integration, internal structuring and internal directives’.127 Employment relations ordinarily are long-term agreements. Hence, it would be very much preferable to employ a connecting factor that is linked with the living relation as such, not merely its starting point. Organisational integration reflects this perfectly. Its elements might be e.g. the monthly payment of wages and salaries, the accountancy work and the tax business, supervision and giving directives.128

However, national courts, supported by the majority of academics, have interpreted the term ‘engaged’ as referring to the conclusion of the employment contract or recruitment of employees.129 Voogsgeerd demonstrates why the former interpretation is inappropriate. Here, the employee concluded the employment contract with, and received salary from, an employer established in one country, but reported to, and received briefings and instructions from, a company from another country. It would be hard, if not impossible, to find one place of business within which the employee was organisationally integrated in accordance with the criteria set out in the quotation above. It comes as no surprise that the CJEU held that the term ‘engaged’ referred to ‘the conclusion of the contract or, in the case of a de facto employment relationship, to the creation of the employment relationship and not to the way in which the employee’s actual employment is carried out’.130 But it is not entirely clear whether the court referred to the 126

127 129

130

Mankowski, ‘Employment Contracts under Article 8’, pp. 193–7. Also W. Däubler, ‘Das Neue Internationale Arbeitsrecht’ (1987) 33 Recht der internationalen Wirtschaft 249, p. 251; Zanobetti, ‘Employment Contracts’, p. 350; also tentatively van Eeckhoutte, ‘The Rome Convention’, p. 171. Mankowski, ‘Employment Contracts under Article 8’, p. 195. 128 Ibid., p. 195. Booth v. Phillips (n 113), [25] (an employee, in England, accepted an offer of employment on a ship by sending an e-mail to the employer in Jordan; the engaging place of business was in Jordan); Chunilal v. Merrill Lynch International Inc. (n 92), [20] (the contract signed at the employer’s premises in New York; the engaging place of business was in New York); Cour d’appel de Lyon, 18 February 2004, case number 2003/00993, unreported; LAG Niedersachsen, 20 November 1998, AR-Blattei ES 920 No. 6; Hessisches LAG, 16 November 1999, NZA-RR 2000, 401; Hessisches LAG, 25 August 2008, IPRspr. 2008 No. 47; Garcimartin Alférez, ‘Rome I’, [73]; Krebber, ‘Conflict of Laws in Employment’, pp. 525–6; Merrett, Employment Contracts in PIL, [4.85], [4.87]; Palao Moreno, ‘Multinational Groups’, pp. 322–3; Plender and Wilderspin, The European PIL of Obligations, [11–053]. Voogsgeerd (n 47), [46].

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conclusion of the employment contract by a particular place of business or at a particular place of business. The CJEU judgment and Advocate General Trstenjak’s opinion provide support for both views. In order to reduce the risk of abuse, it was stated that a place of business could be regarded as the ‘engaging’ place of business if it ‘has been actively involved in the conclusion of the employment contract on the instructions of the employer, for example by taking part in contractual negotiations with the employee’.131 A place of business that has not been actively involved in the conclusion of the contract should be disregarded and the rule of the engaging place of business should point to the place of business of the undertaking in whose name and on whose behalf the contract was concluded.132 With regard to the interpretation of the term ‘place of business’, there were also several strands of opinion. According to some, this term should be equated with the term ‘branch, agency or other establishment’ of Article 7(5) of the Brussels I Recast.133 But according to Mankowski, the term ‘place of business’ should have different meanings in different contexts.134 ‘The main difficulty with instrumentalising the very same notion [i.e. the term “branch, agency or other establishment”] in the context of employment relations is that the notion has been developed for external business relations and not for the internal feature of employment agreements.’135 The majority of authors, however, have not taken a clear position in this regard.136 While the advocate general’s position in Voogsgeerd was clear, that of the CJEU was not. The advocate general expressly endorsed a parallel

131

132 133

134 136

Ibid., AG Opinion, [70]. Other examples of active involvement were given at ibid., AG Opinion, [72]. See also ibid., CJEU judgment, [50]. Ibid., CJEU judgment, [49]. A. Cruz, D. Real and P. Jenard, ‘Report on the Convention on the Accession of the Kingdom of Spain and the Portuguese Republic to the 1998 Brussels Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters’ [1990] OJ C189/35, [23](c), fn. 1; A. Layton and H. Mercer (eds.), European Civil Practice (London: Sweet & Maxwell, 2004), [18–023], fn. 50. Mankowski, ‘Employment Contracts under Article 8’, pp. 196–7. 135 Ibid., p. 197. Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [33–267]; Kaye, The New PIL of Contracts, pp. 235–6; Lagarde, ‘Le nouveau droit international privé des contrats’, pp. 318–9; Merrett, Employment Contracts in PIL, [4.85], [4.102]; Palao Moreno, ‘Multinational Groups’, pp. 322–3; Morse, ‘Consumer Contracts, Employment Contracts’, p. 19. See also P. Jenard and G. Möller, ‘Report on the Convention on Jurisdiction and the Enforcement of Judgments in Civil and Commercial Matters Done at Lugano on 16 September 1988’ [1990] OJ C189/57, [43].

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interpretation.137 In her view, the term ‘place of business’ referred to an employer’s establishment, regardless of whether it possessed legal personality,138 over which the employer exercised actual control so that its actions were attributable to the employer,139 which possessed a sufficient degree of permanence,140 and which had been set up in accordance with the relevant provisions of the country in which it had been established.141 The CJEU did not expressly endorse a parallel interpretation. But it did arguably refer to the same four requirements laid down by the advocate general by holding that the term ‘place of business’ covered every stable structure, including a subsidiary, branch or an office, regardless of whether it possessed legal personality,142 provided that it had a sufficient degree of permanence,143 and that, in principle, it belonged to the undertaking that engaged the employee, that is, formed an integral part of its structure.144 Assuming that the advocate general was right in holding that the requirements she laid down mirrored the definition of the ancillary establishment of Article 7(5) of the Brussels I Recast, it can be concluded that the CJEU effectively also equated the definition of the term ‘place of business’ with that of ‘branch, agency or other establishment’. It will be examined now how the rule of the engaging place of business applies to the factual scenario furnished by Voogsgeerd itself. Similar facts are provided by the famous Sayers case.145 The employer in Voogsgeerd was a Luxembourg company (Navimer). The employment contract was concluded at the premises of a Belgian subsidiary (Naviglobe). It is not known whether the subsidiary concluded the contract on behalf of the employer or whether it merely made its premises available for the conclusion of the contract by a representative of the employer. It is also not known whether the subsidiary was involved in any other way (apart from making its premises available) in the conclusion of the contract. Both Navimer’s place of business in Luxembourg and Naviglobe’s place of business in Belgium meet the requirements of the term ‘place of business’. Whether Navimer or Naviglobe is to be regarded as the 137 140 144 145

Voogsgeerd (n 47), AG Opinion, [83]. 138 Ibid., [78]–[79]. 139 Ibid., [80]. Ibid., [81]. 141 Ibid., [85]. 142 Ibid., CJEU judgment, [54]. 143 Ibid., [55]. Ibid., [57]. See n 22. Here, the plaintiff was engaged by a Dutch subsidiary of a Texan company to work on an oil rig in Nigerian territorial waters. The contract had been negotiated in England with a representative of the Dutch company at the office of an English subsidiary of the Texan company. At this office the Dutch company had an English representative who did not participate in the negotiation of the contract.

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engaging place of business thus depends on the interpretation of the term ‘engaged’. As mentioned, it is not clear whether this term refers to the conclusion of the employment contract by or at a place of business. In any event, it is necessary that the place of business was actively involved in the conclusion of the contract. If Naviglobe concluded the employment contract on behalf of Navimer at its premises, it seems that the requirements of the term ‘engaged’ would clearly be met. But if Naviglobe made its premises available for the conclusion of the contract by a representative of Navimer, the legal position is not as clear. The former interpretation of the term ‘engaged’ (conclusion of the contract by a place of business) would point to Navimer as the ‘engaging’ place of business. The latter interpretation (conclusion of the contract at a place of business) would point to Naviglobe, provided it was actively involved in the conclusion of the contract. The fact that Naviglobe made its premises available for the conclusion of the contract could, under some conditions, be enough for regarding it as being actively involved. As the CJEU said, the purely transitory presence in a State of an agent of an undertaking from another State for the purpose of engaging employees cannot be regarded as constituting a place of business which connects the contract to that State . . . If, however, the same representative travels to a country in which the employer maintains a permanent establishment of his undertaking, it would be perfectly reasonable to suppose that that establishment constitutes [the engaging place of business].146

However, it is not entirely clear whether, for an establishment to constitute the ‘engaging’ place of business, the representative of the employer must regularly present himself or herself at that establishment or whether a one-off recruitment would be enough. The advocate general stated that The fact that a representative of a foreign employer regularly presents himself at that place in order to recruit workers for employment abroad could not . . . be regarded as sufficient. If, however, the same representative travels to a country in which the employer maintains a permanent establishment of his undertaking, it would be perfectly reasonable to suppose that that establishment constitutes [the engaging place of business].147

One could argue that the advocate general’s opinion supports the proposition that the representative of the employer must regularly present himself or herself at a place of business that made its premises available for the conclusion of the employment contract, in order for that place of 146

Voogsgeerd (n 47), [55]–[56].

147

Ibid., AG Opinion, [81] (emphasis added).

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business to be regarded as the ‘engaging’ place of business. But it seems that the requirement of regularity should not be introduced. Its introduction would increase legal uncertainty and unforeseeability as it would open the question of what regular is. Furthermore, it would contribute nothing to the achievement of the objective of protection of employees. The employer can always structure its business so as to regularly present itself at a particular place of business for the purpose of entering into employment contracts. Given the ambiguities of the CJEU judgment and the advocate general’s opinion, it is uncertain whether the employer (Navimer) or the subsidiary (Naviglobe), or even both, should be regarded as the engaging place(s) of business. In case the term ‘engaged’ covers both the conclusion of the employment contract by and at a place of business and assuming that the contract was concluded by a representative of Navimer at the premises of Naviglobe and that Naviglobe was actively involved in the conclusion of the contract, the term ‘engaged’ would be satisfied in relation to both Navimer and Naviglobe. Since there can be only one engaging place of business for the purposes of Rome I, the court would have to give preference to either Naviglobe or Navimer. It is uncertain and unforeseeable which place of business would be given preference. The objective of protection of employees would again have nothing to say in this regard. The employer can always structure its business so as to conclude its employment contracts either by or at a particular place of business. In conclusion, the CJEU has deprived the rule of the engaging place of business of almost any effect. Yet the existence of this rule creates considerable legal uncertainty and unforeseeability. The relationship between the primary rule of the habitual place of business and the fallback rule is not entirely clear. The meaning of the terms ‘engaged’ and ‘place of business’ is obscure. Furthermore, there is no guarantee that the fall-back rule will point to the law of a country that is sufficiently closely connected with, and legitimately interested in regulating, the employment relationship. Since engagement is within the employer’s sphere of control, this rule effectively enables the employer to unilaterally choose the applicable law.148 The downsides of the rule of the engaging place of business are particularly evident in the context of the EU internal market, where employers are guaranteed the freedoms of establishment and to

148

Also Schlecker (n 55), AG Opinion, fn. 27.

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provide services. These conclusions inevitably raise the question whether the rule of the engaging place of business should be abolished in Rome I. If the equivalent rule is abolished in the Brussels I Recast, as argued in the previous chapter, there will be an a priori reason for doing the same in Rome I for the sake of achieving and maintaining consistency between the two instruments. There are also self-standing reasons for abolishing this rule. Since it is particularly amenable to being displaced through the application of the escape clause,149 in cases where there is not a habitual place of work, the parties will often be in dispute not only over the interpretation of the connecting factor of the engaging place of business but also over the application of the escape clause. The abolition of the fallback rule would advance the goals of legal certainty and foreseeability, since the parties would not have to enter into a dispute over its interpretation. Furthermore, the number of appeals would be reduced and the efficiency of proceedings would be increased. Whether a place of business is the ‘engaging place of business’ is a legal question. Since the exact meaning of this concept is unclear, the trial court is likely to answer it wrongly, at least from the point of view of one of the parties. The possibility of such an error of law often gives the losing party a sufficient reason to lodge an appeal. On the other hand, the direct application of the principle of the closest connection would give the trial court a degree of discretion over the determination of the applicable law. Unless the trial court committed a manifest error when determining the applicable law by the direct application of the principle of the closest connection, the appeal court would be unlikely to intervene.150 Finally, the objective of protection of employees would be advanced, since employers could not (ab)use this connecting factor to evade protective legislation and the courts would always have to determine and apply the law of the country with which the employment relationship is most closely connected and which is legitimately interested in regulating it. From a technical point of view, nothing precludes the abolition of the rule of the engaging place of business. If it is abolished, the applicable law will be determined, absent a habitual place of work, by the direct application of the principle of the closest connection. This technique would not be much different from that used in the general rules of Rome I. Many of these rules are based on the theory of the characteristic performance.151 But if the characteristic performance of a contract cannot be established, 149 151

Voogsgeerd (n 47), [51]. Arts. 4(1) and 4(2).

150

See Jault-Seseke, ‘L’office du juge’.

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the applicable law is determined by the direct application of the principle of the closest connection.152 If the fall-back rule were abolished, the location of the engaging place of business would still retain relevance as one of the factors to be considered under the principle of the closest connection.

5.3.3

Escape clause

Article 8(4) provides that where it appears from the circumstances as a whole that the contract is more closely connected with a country other than that indicated by Articles 8(2) and 8(3), the law of that other country applies.153 The wording of this escape clause differs from the escape clause of Article 4(3), which allows a departure from the general choice-of-law rules of Articles 4(1) and 4(2) ‘where it is clear from all the circumstances of the case that the contract is manifestly more closely connected with [another country]’. Does the different wording imply that the rules of Articles 8(2) and 8(3) can be departed from more easily than the general choice-of-law rules? A highly contentious issue under the Rome Convention was the relationship between the presumption of the characteristic performance of Article 4(2) and the escape clause of Article 4(5), which is worded identically as Article 8(4) of Rome I. Two approaches were identified. The first, ‘strong presumption’ approach, was pursued in the Netherlands and Scotland; the second, ‘weak presumption’ approach, was adopted in England and France.154 Faced with the lack of uniform interpretation and application, the drafters of Rome I have clarified, in Article 4(3), that the general choice-of-law rules can be departed from only in truly exceptional circumstances.155 Should the escape clause of Article 8(4) be applied in the same manner as that of Article 4(3)? In Schlecker,156 a case concerning a German frontier worker with a habitual place of work in the Netherlands, the CJEU dealt with the 152 153 154

155

156

Art. 4(4). The escape clause contained in Art. 6(2) of Rome Convention is identical. S. Atril, ‘Choice of Law in Contract: The Missing Pieces of the Article 4 Jigsaw?’ (2004) 53 International and Comparative Law Quarterly 549; J. Hill, ‘Choice of Law in Contract under the Rome Convention: the Approach of the UK Courts’ (2004) 53 International and Comparative Law Quarterly 352; see also Case C-133/08 Intercontainer v. Balkenende [2009] ECR I-9687; [2010] QB 411. Z. S. Tang, ‘Law Applicable in the Absence of Choice – The New Article 4 of the Rome I Regulation’ (2008) 71 Modern Law Review 785. See n 55.

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interpretation of the escape clause of Article 6(2) of the Rome Convention, which is worded identically as both the escape clause of Article 8(4) of Rome I and the general escape clause of Article 4(5) of the Rome Convention. Advocate General Wahl confirmed that In essence, there are two conflicting views. According to the first, the fundamental relationship between those two parts [i.e. between the choice-of-law rules of Articles 6(2)(a) and 6(2)(b) of the Rome Convention and the escape clause] is that of the rule and the exception, which means that the search for possible closer connections with another country can occur only in exceptional circumstances, that is to say, in the event that the presumptions result in the selection of a law which is manifestly inappropriate to the contract. According to the second view, there is no hierarchical relationship between the two parts and the court has a measure of discretion in determining the law most closely connected with the relevant contract.157

The advocate general opted for the latter interpretation and, furthermore, held that the same interpretation should also be given to Article 8(4) of Rome I.158 Thus, in the opinion of the advocate general, even if ‘the employment contract has been performed in a lasting, continuous and uninterrupted manner in a single country, [the escape clause] does not lose its raison d’être: if a contract is obviously located in a State which is not that of the habitual performance of the work, it is still possible to bring that provision into operation’.159 The CJEU agreed with the advocate general and held ‘that, even where an employee carries out the work in performance of the contract habitually, for a lengthy period and without interruption in the same country, the national court may . . . disregard the law applicable in the country where the work is habitually carried out’.160 All the circumstances of the case should be considered under Article 8(4). Recital 20, for example, states that account should be taken of whether the contract in question has a very close relationship with another contract or contracts. This factor is particularly relevant in cases of triangular employment relationships that arise in the context of employment within a corporate group and agency employment. Furthermore, particularly significant factors, according to the CJEU, are the payment of taxes in a certain country and the affiliation to social security, pension, sickness insurance and invalidity schemes.161 Also relevant are the parameters relating to the determination of salary and other working conditions 157 160

Ibid., AG Opinion, [42]. 158 Ibid., [58]. 159 Ibid., [60]. Ibid., CJEU judgment, [44]. 161 Ibid., [41].

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(e.g. collective agreement or national scale). But, as the advocate general noted, it should be examined whether the payment of taxes and contributions in a particular country is by mutual agreement or whether it is imposed by the employer.162 Factors of lesser importance include the nationality, domicile and residence of the parties, the place of conclusion of the contract, the language of the contract and the place and currency of payment of salary.163 The registration of the aircraft and the flag of the ship can also be taken into account. Finally, the advocate general in Schlecker stated that even ‘the intention or awareness of the parties’ may be relevant indicators for the purposes of identifying the country with which the employment contract is most closely connected.164 There is no guarantee that the law designated by Articles 8(2) and 8(3) will contain high employment standards. Can the escape clause be used to ensure the application of the law which, among the laws of the countries connected with an employment relation, affords the employee the best protection? The answer must be negative.165 As discussed in Chapter 2, the protective task of private international law should not be to favour the employee over the employer. It should consist in upholding the law of the country that is both sufficiently closely connected with, and legitimately interested in regulating, the employment relationship in question and whose application the parties can reasonably expect. Can then these three factors be taken into account under the escape clause? Indisputably, the closeness of the connections between the employment relationship and various countries and thereby the foreseeability of applying their laws are relevant factors. What about the states’ legitimate interests in having their labour laws applied? The states’ legitimate interests are also a relevant factor under the escape clause. The wording of Article 8(4), which refers to ‘the circumstances as a whole’, is wide enough to allow taking those interests into consideration. As discussed in Chapter 2, the states’ legitimate interests represent a reason for the existence of the special choice-of-law rules for 162 163

164 165

Ibid., AG Opinion, [68]. Ibid., [70]; Voogsgeerd (n 47), AG Opinion, [74]; Booth v. Phillips (n 113), [25]–[31]; Minéo v. Albert (Cour d’appel d’Angers, 18 May 1989 (1990) 117 Journal du droit international 616, note P. Fieschi-Vivet; (1990) 79 Revue critique de droit international privé 501, note V. Heuzé; BAG, 11 December 2003, IPRspr. 2003 No. 46. Ibid., [77]–[78]. Ibid., CJEU decision, [34]; cf. Chitty on Contracts, 31st edn (2012), [30–119]; Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [33–268].

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employment contracts. It would be unusual if those interests, although central to the idea of protection of employees in private international law, were disregarded in the practical operation of the special choice-of-law rules. Indeed, in Koelzsch the CJEU stated that ‘Article 6 of the Rome Convention . . . must be understood as guaranteeing the applicability of the law of the State in which . . . the employee performs his economic and social duties and [where] the business and political environment affects employment activities.’166 Similarly, the advocate general held thus in Schlecker: ‘The objective [of the Rome Convention] is . . . to protect [the employee] by making applicable to him the mandatory rules of the law . . . of the social environment in which his employment relationship unfolds.’167 The CJEU and the advocate general thereby indicated that labour law of the country to whose labour market the employee ’belongs’ and that is presumably interested in regulating the employment relationship should be safeguarded.168 The escape clause should enable this where Articles 8(2) and 8(3) do not.

5.3.4

Conclusion

The choice-of-law rules for determining the objectively applicable law are flexible enough to accommodate the various factual patterns under which transnational employment relations typically arise. They take into account not only the connections of the relationship with various countries but also the states’ legitimate interests in the application of their labour laws. But the rule of the engaging place of business leads to excessive legal uncertainty and unforeseeability and does not support the objective of protection of employees.

5.4 Conclusions By and large, the rules of Rome I accord with the relevant theoretical considerations identified in Chapter 2. The parties to an employment contract are free to agree on any law to the extent that the agreement improves upon the mandatory standard of protection set by the objectively applicable law. Rome I is capable of safeguarding all mandatory provisions concerning protection of employees regardless of their source. 166 167 168

See n 47, [42] (emphasis added); also Voogsgeerd (n 47), [52]. Schlecker (n 55), AG Opinion, [26]. Compare van Hoek, ‘PIL: An Appropriate Means’, pp. 163–4.

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The rules for determining the objectively applicable law are flexible enough and enable the application of the law of the country that is sufficiently closely connected with the employment relationship in question, legitimately interested in regulating it and whose application the parties can reasonably expect. However, the CJEU has deprived the rule of the engaging place of business of almost any effect. For this reason and because it leads to excessive legal uncertainty and unforeseeability and undermines the objective of protection of employees, this rule should be abolished. If that is done, the law applicable to the employment contract, absent a habitual place of work, will be determined by the direct application of the principle of the closest connection. This chapter has examined in detail the operation of Article 8 of Rome I that lays down choice-of-law rules for employment contracts, which determine the law applicable to contractual claims. But the majority of employment claims in England are based on the breach of employment legislation by the employer. The following chapter explores the law applicable to statutory claims and, in particular, the relevance of Article 8 and Rome I in general in this respect.

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6 Choice of law Statutory claims

[Employment Rights Act 1996] contains no geographical limitation. Read literally, it applies to any individual who works anywhere in the world . . . Nevertheless . . . some territorial limitations must be implied. Lord Hoffmann1

If an employee brings a claim for the employer’s breach of a right granted by a statute that forms part of English law and if the employment relationship involves a foreign element, the question arises whether the statute applies. The traditional approach to this question is to look exclusively at the statute’s express or implied territorial scope. Traditionally, only contractual and tortious claims trigger the application of choice-of-law rules. Statutory claims raise only the problem of statutory construction. But today the choice-of-law rules for all obligations in English law are of European origin and are contained (excluded matters aside) in Rome I and Rome II. It is clear that, if an employee advances a claim in either contract or tort, the applicable law is determined by the choice-of-law rules of one of the two regulations. But what happens if an employee brings a statutory claim? Must one be guided solely by what the statute expressly or impliedly says regarding its territorial reach? Or does the application of the statute depend, at least partly, on the choice-of-law rules? These questions are of crucial importance in the private international law of employment in England because the vast majority of claims in English employment law are based on the employer’s breach of employment legislation. English courts still adhere to the traditional approach, as evidenced by the leading House of Lords decision in Lawson v. Serco2 and two recent Supreme Court cases.3 The conventional view is also upheld in 1

2 3

Serco Ltd. v. Lawson; Botham (FC) v. Ministry of Defence; Crofts v. Veta Ltd. [2006] UKHL 3; [2006] 1 All ER 823, [1]. Ibid. Duncombe v. Secretary of State for Children, Schools and Families (No 2) [2011] UKSC 36; [2011] 4 All ER 1020; Ravat v. Halliburton Manufacturing and Services Ltd. [2012] UKSC 1; [2012] 2 All ER 905.

179

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academic literature.4 Contrary to this view, this chapter argues that the question of whether an employee can invoke a right granted by a statute forming part of English law must not be treated exclusively as a matter of statutory construction, but should be answered primarily by reference to the choice-of-law rules. Rome I and Rome II lay down the choice-of-law rules for all obligations and require a different approach to the application of employment legislation. If the question is approached in this manner, there are two issues to be resolved. The first is whether English law applies pursuant to the ‘European’ choiceof-law rules. The second is whether there is a good reason not to apply the statute despite the fact that English law is applicable or whether there is a good reason to apply the statute despite the fact that English law is not applicable. Arguably, such reasons rarely exist and the statute normally applies within the boundaries determined by the choice-of-law rules. In other words, contractual and statutory claims seem to have been largely merged into a single category for the purposes of choice of law. The following section presents the current state of the law with regard to the territorial scope of British employment legislation. It reveals the complex and often confusing nature of the traditional approach. Section 6.2 proposes a different approach towards rights granted by British employment legislation that gives priority to the choice-of-law rules for employment contracts of Rome I.

4

H. G. Beale (gen. ed.), Chitty on Contracts, 31st edn (London: Sweet & Maxwell, 2012), [30–113]-[30–115], [30–287]; L. Collins (gen. ed.), Dicey, Morris and Collins on the Conflict of Laws, 15th edn (London: Sweet & Maxwell, 2012), [1–049]-[1–064], [33– 278]-[33–296]; S. F. Deakin and G. S. Morris, Labour Law, 6th edn (Oxford: Hart, 2012), pp. 119–25; B. Hepple, Labour Laws and Global Trade (Oxford: Hart, 2005), pp. 156–7; L. Merrett, Employment Contracts in Private International Law (Oxford University Press, 2011), [1.02], [1.05]–[1.06], Ch 7, [8.38]-[8.42]; L. Merrett, ‘The ExtraTerritorial Reach of Employment Legislation’ (2010) 39 Industrial Law Journal 355; C.G.J. Morse, ‘Choice of Law, Territoriality and National Law: the Case of Employment’ in Vers de nouveaux équilibres entre ordres juridiques: liber amicorum Hélène GaudemetTallon (Paris: Dalloz, 2008) 763; R. Plender and M. Wilderspin, The European Private International Law of Obligations, 3rd edn (London: Sweet & Maxwell, 2009), [11–059]– [11–072], [12–003]–[12–017]; A. Scott, ‘The Territorial Scope of British Employment Legislation’ [2010] Lloyd’s Maritime and Commercial Law Quarterly 640. See also A. Briggs, ‘A Note on the Application of the Statute Law of Singapore within Its Private International Law’ [2005] Singapore Journal of Legal Studies 189. Cf. H. Collins, K. D. Ewing and A. McColgan, Labour Law: Text and Materials, 2nd edn (Oxford: Hart, 2005), pp. 57–60.

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6.1 Territorial scope of British employment legislation Many employment statutes contain a provision of the following kind: ‘this Act extends to England and Wales and Scotland but not to Northern Ireland’.5 Such provisions identify the legal system(s) within the UK of which the statute forms part, but say nothing about the territorial scope of the rights granted by the statute.6 For the purpose of addressing the problem of territoriality, the rights that British employment legislation confers upon employees can be divided into three types: statutory rights, contractual rights and rights derived from EU law. The territorial scope of these different types of right is determined pursuant to different principles and rules.

6.1.1

Statutory rights

The most frequently invoked statutory rights are the right not to be unfairly dismissed conferred by section 94(1) of ERA 1996 and the right not to be discriminated against conferred by the Equality Act 2010. The determination of the territorial scope of these rights is problematic, since both ERA 1996 and EqA 2010 are silent on this issue. On the other hand, there are pieces of employment legislation that express the territorial scope of the rights they confer, namely the National Minimum Wage Act 1998, the Trade Union and Labour Relations (Consolidation) Act 1992 and the Patents Act 1977. The following text firstly examines the territorial scope of the right not to be unfairly dismissed and of the other rights conferred by ERA 1996, then of the employment rights conferred by EqA 2010 before finally presenting the relevant provisions of the remaining statutes.

6.1.1.1 Employment Rights Act 1996 ERA 1996 does not express its territorial scope. Section 204 provides, ‘For the purposes of this Act, it is immaterial whether the law which . . . governs any person’s employment is the law of the UK, or of a part of the UK, or not.’ The meaning of this provision has been held to be that the determination of the territorial scope of ERA 1996 is entirely disconnected from the choice-of-law process. This disconnection is illustrated by two appellate decisions. In Financial Times Ltd. v. Bishop7 the claimant argued that, as a corollary of the principle that a UK statute does 5 7

e.g. section 244(1) ERA 1996. 6 Lawson v. Serco (n 1), [1]. UKEAT/0147/03/ZT, 25 November 2003, unreported.

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not normally apply to a contract not governed by the law of some part of the UK, ERA 1996 should apply to an employment contract governed by English law. The Employment Appeal Tribunal rejected this argument on the ground that the rights given by ERA 1996 were not contractual but statutory rights and that section 204 provided that ‘for the purposes of ERA, whether the proper law of the contract is or is not the law of the UK or part of it is immaterial’.8 In Bleuse v. MBT Transport Ltd.9 the parties chose English law to govern their employment contract. The Employment Appeal Tribunal confirmed that ‘s.204 . . . makes it plain that the proper law of the contract is of no materiality when considering the reach of the statutory rights’.10 In other words, English courts regard the determination of the territorial scope of ERA 1996 exclusively as a matter of statutory construction. Originally, ERA 1996 did express, in section 196, its territorial scope. Most rights, including the right not to be unfairly dismissed, did not apply to employees who, under their employment contracts, ordinarily worked outside Britain.11 Certain rights had a different territorial reach. The right to a statement of employment particulars and minimum period of notice applied whenever the contract was governed by English or Scottish law.12 Certain rights concerning maternity and childbirth had no express territorial limitations.13 The rights on insolvency of a British employer did not apply to employees ordinarily working outside the European Communities, Norway or Iceland.14 Section 196 was repealed by section 32 of the Employment Relations Act 1999. The purpose of the repeal was to extend ERA 1996 to employees temporarily working in Britain, thus implementing the Posted Workers Directive into UK law, and to employees who had been working for some years in Britain but were excluded from ERA 1996 because of the way the courts had interpreted section 196.15 In the ministerial view, there had to be a ‘proper connection’ with the UK for the act to apply.16 The result of the repeal was considerable legal uncertainty that necessitated the intervention of the House of Lords in Lawson v. Serco.17 Lawson v. Serco was comprised of three combined appeals. The first case concerned Mr Lawson, a British national employed by a British company to work as a security supervisor on Ascension Island, a 8 12 15

16

9 Ibid., [55]. [2008] ICR 488. 10 Ibid., [43]. 11 Sections 196(2) and 196(3). Section 196(1). 13 Sections 196(4) and 196(5). 14 Section 196(7). HC Debates, vol. 336, col 32, 26 July 1999. The decision referred to was Carver v. Saudi Arabian Airlines [1999] 3 All ER 61, discussed in text accompanying n 54. HC Debates, ibid. 17 See n 1.

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dependency of the British Overseas Territory of St Helena, where the employer provided services to a British military base. The second case concerned Mr Botham, a British national employed by the Ministry of Defence to work at various military bases in Germany. He was part of the civil components of British Forces in Germany and treated as resident in the UK for various purposes. The third case concerned Mr Crofts, who was employed as a pilot by a Hong Kong company that was a wholly owned subsidiary of, and provided aircrew to, a Hong Kong airline. He was based at Heathrow and lived in the UK under the airline’s ‘permanent basings policy’. The three employees claimed that they had been unfairly dismissed. The question before the House of Lords was whether they fell within the territorial scope of section 94(1) of ERA 1996. Lord Hoffmann, who gave the only substantive speech, stated that some territorial limitations had to be implied into ERA 1996, since otherwise this act would have a worldwide application.18 In his Lordship’s view, ‘the standard, normal or paradigm case’ of the application of section 94(1) was the employee working in Britain at the time of the dismissal, regardless of what the contemplated place of work was when the employment contract was made.19 With regard to peripatetic employees (e.g. airline pilots, international management consultants or salespersons), their work was considered to be performed in Britain if the employee was based in Britain at the time of the dismissal.20 This covered Mr Crofts’ case.21 With regard to expatriate employees, section 94(1) was, 18 19

20

21

Ibid., [1]. Ibid., [25]–[27]. For examples of employees posted to Britain by foreign employers who fell in this category of employees, see Shekar v. Satyam Computer Services Ltd. [2005] ICR 737; Pervez v. Macquarie Bank Ltd. [2011] ICR 266. For cases where the actual operation of the employment contract took precedence over its terms when determining whether the employee worked in Britain, see Williams v. University of Nottingham [2007] IRLR 660; YKK Europe Ltd. v. Heneghan [2010] ICR 611. Ibid., [28]–[33], approving Lord Denning MR in Todd v. British Midland Airways Ltd. [1978] ICR 959 and disapproving Carver (n 15). Lord Hoffmann also referred to Wilson v. Maynard Shipbuilding Consultants AB [1978] QB 665, 677, where Megaw LJ gave a non-exhaustive list of factors relevant for establishing the employee’s base in Britain: the location of the employee’s headquarters, where the travels involved in his or her employment begin and end, where the employee resides or is expected to reside, the place and currency of payment of salary and whether he or she pays national insurance contributions in Britain. For cases where the actual operation of the employment contract took precedence over its terms when determining whether the employee was based in Britain, see Hunt v. United Airlines Inc. [2008] ICR 934. See also Diggins v. Condor Marine Crewing Services Ltd. [2009] EWCA Civ 1133; [2010] ICR 213 (section 94(1) applied to an officer on a ferry registered in the Bahamas plying from Portsmouth to the Channel Islands and Northern France).

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in principle, inapplicable.22 The fact that someone worked for a Britishbased employer was not enough; nor was the fact that the employee was a British national recruited in Britain: ‘Something more is necessary.’23 Lord Hoffmann gave two examples of when that something more would be present: (1) an employee posted abroad for the purpose of a business conducted in Britain, such as a foreign correspondent on the staff of a British newspaper;24 and (2) an employee posted to a political or social British enclave abroad.25 The latter example covered Mr Lawson’s and Mr Botham’s cases.26 Moreover, Lord Hoffmann admitted the possibility of other exceptional cases of expatriate employees with equally strong connections with Britain and British employment law. The question of whether, on the given facts, a case falls within the territorial scope of section 94(1) is a question of law. But it is also a question of degree on which the decision of the employment tribunal as the primary fact-finder should be given considerable respect.27 The Supreme Court subsequently held that Duncombe (No 2)28 was such an exceptional case with equally strong connections with Britain and British employment law. This case concerned the employment, by the Secretary of State for Children, Schools and Families, of teachers to work in the European Schools. These schools are established under a treaty between the EU and the Member States to provide a distinctly European education to children of EU officials and employees. Most teachers at the Schools are employed by the Member States. By virtue 22 24

25 26

27 28

See n 1, [36]. 23 Ibid., [37]. Ibid., [38]. Lord Hoffmann referred to Financial Times Ltd. v. Bishop (n 7) and said that section 94(1) would not apply to an employee selling advertising space in San Francisco for the American edition of the Financial Times. See Lodge v. Dignity & Choice in Dying, Compassion in Dying, UKEAT/0252/15/LA, 2 December 2014, unreported (section 94(1) applied to an employee who moved to Australia, with the consent of the employer, for family reasons and there continued to work remotely for the employer’s London operation); cf. Williams v. University of Nottingham (n 19) (section 94(1) did not apply to an academic employed by the University of Nottingham to work at the University of Nottingham in Malaysia); similarly, Walker v. Church Mission Society, UKEAT/0036/ 11/ZT, 17 June 2011, unreported. Ibid., [39]. Lord Hoffmann distinguished Bryant v. Foreign and Commonwealth Office EAT/174/02/ RN, 10 March 2003, unreported, where section 94(1) did not apply to a British national locally engaged to work at the British Embassy in Rome. See n 1, [34]. See n 3. The Duncombe litigation gave rise to another decision of the Supreme Court: Duncombe v. Secretary of State for Children, Schools and Families (No 1) [2011] UKSC 14; [2011] 2 All ER 417, which dealt obiter with the territorial scope of employment legislation.

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of regulations in force at the Schools, the teaching posts are subject to a maximum duration of nine years (or exceptionally ten). In the UK, it is the secretary of state that employs teachers for the Schools under a series of fixed-term contracts. After the completion of the nine-year period, the teachers are dismissed. Mr Duncombe was a teacher employed to work at the School in Karlsruhe, Germany. After having worked there for nine years, he was dismissed. His case was a test case for unfair dismissal and wrongful dismissal and for a declaration as to permanent status as an employee brought by the teachers against the secretary of state. With regard to the unfair dismissal claim, the teachers were held to fall into the residual group of expatriate employees covered by section 94(1). This depended on a combination of factors.29 First, the employer was not just British-based but the government of the UK. Second, the employment contracts were governed by English law. Third, the teachers were employed in international enclaves, having no particular connection with the countries where they happened to be situated and governed by an international treaty. Fourth, it would be anomalous if the teachers employed to work in the Schools in England enjoyed different protection from the teachers employed to work in the Schools outside the UK.30 It is important to note that the Supreme Court in Duncombe (No 2) departed from the traditional view that the determination of the territorial scope of ERA 1996 was entirely disconnected from the choice-of-law process. It held that the law governing the employment contract was a relevant consideration for establishing the territorial scope of the statutory right not to be unfairly dismissed. According to Lady Hale, who delivered the only substantive judgment, ‘[the claimants] were employed under contracts governed by English law . . . Although this factor is not 29 30

Ibid., [16]. Ministry of Defence v. Wallis [2011] EWCA Civ 231; [2011] ICR 617 is another case where the claimant employees were held to fall into the residual group of expatriate employees covered by section 94(1) (the claimants worked as support staff in British sections of schools which were part of NATO headquarters in Belgium and the Netherlands; they got their jobs as wives of British soldiers posted to NATO). In Duncombe (No 2) (n 3), the Supreme Court dismissed the application of the Ministry of Defence for permission to appeal. Similarly, Cameron v. Navy, Army and Air Force Institutes (NAAFI), Employment Appeal Tribunal, case number 0124/06/DA, 14 December 2006, unreported (section 94(1) applied to an employee who worked for NAAFI in British bases in Germany for thirty years). Cf. Rogers v. Ministry of Defence, UKEAT/0455/12/ZT, 1 February 2013, unreported (section 94(1) did not apply to the wife of a serving British soldier who was employed by a German employer to manage a children’s play area in a NAAFI complex in Germany, where she herself was a German national and not part of the civilian component of NATO).

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mentioned in Lawson v. Serco, it must be relevant to the expectation of each party as to the protection which the employee would enjoy.’31 Furthermore, Lady Hale stated that ‘[t]his very special combination of factors, and in particular the second [the fact that English law governed the employment contract] and third [the fact that the employees had virtually no connection with the place of work], distinguished these employees from “the directly employed labour”’.32 The potential implications of Lady Hale’s view regarding the importance of the law governing the employment contract for the determination of the territorial scope of employment legislation will be examined in detail in the second section of this chapter. In any event, Lawson v. Serco left two questions open. Were Lord Hoffmann’s three categories (employees working in Britain, peripatetic employees, expatriate employees) exhaustive? Were the Lawson v. Serco principles relevant for determining the territorial scope of the rights other than the right not to be unfairly dismissed conferred by ERA 1996? The Supreme Court dealt with the first question in detail in Ravat.33 Mr Ravat, a British national and resident, was employed by a British company, but worked in Libya for a German affiliate of the employer. He worked on ‘a commuter or rotational basis’; that is, he continued to live in Britain and travelled to and from his home to work for short periods overseas. He worked for twenty-eight consecutive days in Libya, followed by twenty-eight consecutive days at home. In effect he was job sharing, working back-to-back with another employee on the same arrangement. A feature of Mr Ravat’s commuter status, so he was told by the employer, was that the terms and conditions of employment were such as they would have been had he worked in Britain. The employer assured him that he would continue to have the full protection of UK law while working abroad. Indeed, following his dismissal, Mr Ravat invoked the employer’s UK grievance procedure. He also received a redundancy payment that was stated to have been paid in accordance with ERA 1996. But when Mr Ravat complained of unfair dismissal, the employer fought tooth and nail to show that he fell outside the territorial scope of employment legislation. The appellate history of this case will be considered, since it reveals the complexities and uncertainties surrounding the application of the Lawson v. Serco principles. Instead of starting with Lord Hoffmann’s categories, the Employment Tribunal examined all the circumstances of 31

Duncombe (No 2), ibid., [16].

32

Ibid. (emphasis added).

33

See n 3.

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the case to determine whether there was a ‘substantial connection’ with Britain and British employment law. It found that such a connection existed and that section 94(1) applied. The Employment Appeal Tribunal held that Lord Hoffmann’s categories were exhaustive. In its view, Mr Ravat fell into the ‘expatriate employees’ category but, as he was neither working for the purposes of a British business nor in a British enclave abroad, section 94(1) was inapplicable. The Inner House of the Court of Session, by a majority, reinstated the Employment Tribunal’s decision. Lord Brodie, dissenting, approved the Employment Appeal Tribunal’s reasoning. The majority disagreed, but for different reasons. Lord Osborne held that Lord Hoffmann’s categories were not exhaustive and that Mr Ravat did not fall into any of them because the ‘expatriate employees’ category was intended to cover someone who not only worked but also lived abroad. In Lord Osborne’s opinion, the question was whether there was a ‘strong connection’ with Britain and British employment law. He found that such a connection existed and that section 94(1) applied. Lord Carloway agreed with Lord Brodie that Lord Hoffmann’s categories were exhaustive. But he held, like Lord Osborne, that Mr Ravat did not fall into the ‘expatriate employees’ category, since he lived in Britain. In Lord Carloway’s opinion, Mr Ravat was more peripatetic than expatriate and section 94(1) applied because his base was in Britain.34 The Supreme Court ultimately held that Lord Hoffmann’s categories were not exhaustive. According to Lord Hope, who gave the only substantive speech, ‘It is not for the courts to lay down a series of fixed rules where Parliament has decided . . . not to do so. They have a different task. It is to give effect to what Parliament may reasonably be taken to have intended by identifying, and applying, the relevant principles.’35 He then held, with regard to employees who worked abroad, that the starting point needs to be more precisely identified. It is that the employment relationship must have a stronger connection with Great Britain than with the foreign country where the employee works. The general rule is that the place of employment is decisive. But it is not an absolute rule. The open-ended language of section 94(1) leaves room for some exceptions where the connection with Great Britain is sufficiently strong to show that this can be justified. The case of the peripatetic 34

35

For a tentative suggestion that Lord Carloway applied ‘in substance, though not in form,’ the ‘substantial connections’ test and that there was a majority in the Court of Session in favour of such a test see Scott, ‘Territorial Scope’, pp. 659–60. Ravat (n 3), [26]. Similarly, Duncombe (No 2) (n 3), [8].

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choice of law: statutory claims employee who was based in Great Britain is one example. The expatriate employee, all of whose services were performed abroad but who had nevertheless very close connections with Great Britain because of the nature and circumstances of employment, is another. The reason why an exception can be made in those cases is that the connection between Great Britain and the employment relationship is sufficiently strong to enable it to be presumed that, although they were working abroad, Parliament must have intended that section 94(1) should apply to them.36

But ‘[t]he case of those who are truly expatriate because they not only work but also live outside Great Britain requires an exceptionally strong connection with Great Britain and British employment law before an exception can be made for them’.37 Since the Supreme Court found that Mr Ravat’s employment had a closer connection with Britain than with any other country, the appeal was dismissed. In particular, Lord Hope confirmed Lady Hale’s view in Duncombe (No 2) that the law governing the employment contract was a relevant consideration.38 Lawson v. Serco concerned the right not to be unfairly dismissed. Lord Hoffmann said that there was no reason why all the rights conferred by ERA 1996 should have the same territorial scope.39 Undoubtedly, the Lawson v. Serco principles will be relevant for most rights. Thus, in Shekar v. Satyam Computer Services Ltd.40 and Bleuse41 the provisions concerning unlawful deductions from wages were held to have the same territorial scope as those concerning unfair dismissal. The reason was that these provisions had the same express territorial scope under the repealed section 196. Similarly, the Employment Tribunal held in Van Winkelhof 42 that the territorial scope of the provisions concerning whistleblowing should not be construed more narrowly than that of the 36 37

38 42

Ibid., [27]–[28]. Ibid., [28]. The statements of the relevant principles are also set out in Lawson v. Serco (n 1), [36]; Duncombe (No 2) (n 3), [8], [16]. For further clarifications and elaborations, see Bates van Winkelhof v. Clyde & Co. LLP [2012] EWCA Civ 1207; [2013] 1 All ER 844, [98], reversed on a different point in [2014] UKSC 32; [2014] 1 WLR 2047; Dhunna v. Creditsights Ltd. [2014] EWCA Civ 1238 clarifies, at [39]-[41], that the object of the exercise is not to decide whether British or a (potentially) competing foreign system of law is more or less favourable to the employee. Ibid., [32]–[33]. 39 See n 1, [14]. 40 See n 19. 41 See n 9. Case number 2200549/2011, 16 May 2011, unreported, affirmed on this point in UKEAT/ 0568/11/RN, UKEAT/0168/12/RN, 26 April 2012, unreported, and in the Court of Appeal (n 37). See also Lodge v. Dignity & Choice in Dying, Compassion in Dying (n 24) and Smania v. Standard Chartered Bank, UKEAT/0181/14/KN, 5 December 2014, unreported (the territorial scope of the provisions concerning whistleblowing equals that of the provisions concerning unfair dismissal).

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provisions concerning unfair dismissal. However, as mentioned above, certain rights under ERA 1996 had a different express territorial scope under the repealed section 196. In cases concerning those rights, it is possible that the Lawson v. Serco principles will be modified.43

6.1.1.2 Equality Act 2010 The main question regarding the territorial scope of the employment rights conferred by EqA 2010 is the relevance of Lawson v. Serco. The preceding anti-discrimination legislation, which was consolidated, repealed and replaced by EqA 2010, applied in relation to employment ‘at an establishment in Great Britain’. Employment was regarded as such if (1) the employee worked wholly or partly in Britain or (2) the employee worked wholly outside Britain and the following three criteria were cumulatively fulfilled: (a) the employer had a place of business at an establishment in Britain, (b) the work was for the purposes of the business carried on at that establishment and (c) the employee was ordinarily resident in Britain either at the time when he or she applied for, or was offered, employment or at any time during the course of the employment.44 This test was interpreted on several occasions. The fulfilment of the prescribed criteria was to be determined on the basis of the facts existing at the time of the alleged discrimination taking into account the whole period of employment.45 This was in line with Lawson v. Serco. Furthermore, the ‘work for the purposes of a British business’ criterion was held to be identical to the equivalent criterion for expatriate employees in Lawson v. Serco.46 Finally, employees could claim under the antidiscrimination legislation if their work in Britain was not de minimis,

43

44 45

46

Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [33–287]–[33–288]; Merrett, Employment Contracts in PIL, [7.66]; Morse, ‘Choice of Law, Territoriality and National Law’, pp. 772–3. See e.g. sections 10(1) and 10(1A) Sex Discrimination Act 1975. Carver (n 15); Saggar v. Ministry of Defence [2005] EWCA Civ 413; [2005] ICR 1073; see also Tradition Securities and Futures SA v. X [2009] ICR 88 (an employee who worked firstly in Paris and then in London could bring a claim of sex discrimination only in respect of employment in Britain); Stevenson v. Atos Origin IT Services UK Ltd. (2012) 165(16) SJLB 39 (an employee who had worked in Britain for a member of a corporate group was assigned to manage, on a temporary basis, a business for the group in France; he was not appointed to the permanent position that would require residence outside Great Britain; the issue of the employee’s non-appointment could not be said to be in relation to employment by the employer at an establishment in Great Britain). Williams v. University of Nottingham (n 19).

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even if they were not British-based.47 But according to Lawson v. Serco, section 94(1) of ERA 1996, in principle, does not apply to foreign-based employees. Given that historically the rights conferred by the anti-discrimination legislation and ERA 1996 had had somewhat different territorial scope, it is to be expected that the Lawson v. Serco principles will be modified in cases concerning EqA 2010. Indeed, in Van Winkelhof48 the Employment Tribunal regarded Lawson v. Serco as the leading authority for determining the territorial scope of EqA 2010. But it also noted that, ‘If the Tribunal was deciding this under the SDA 1975 the Tribunal would have had territorial jurisdiction as the Claimant satisfied section 10(1)(a) of the Sex Discrimination Act as she worked partly in Britain. The principle behind the Equality Act cannot be to regress from this position.’49

6.1.1.3 Other statutes NMWA 1998 applies to a worker who ‘is working, or ordinarily works, in the United Kingdom’.50 Lord Hoffmann’s categories seem to largely correspond to employees falling within the territorial scope of this act.51 Certain provisions of TULR(C)A 1992, principally concerning rights in relation to trade union membership and activities, do not apply where ‘under his contract of employment an employee works, or in the case of a prospective employee would ordinarily work, outside Great Britain’.52 Since the repealed section 196(2) of ERA 1996 contained an essentially identical test, the cases interpreting that section are relevant under TULR(C)A 1992. The leading case is Wilson v. Maynard Shipbuilding Consultants AB,53 where the Court of Appeal introduced a rule that, to 47

48 49

50 51

52

53

British Airways plc v. Mak [2011] EWCA Civ 184; [2011] ICR 735 (appeal pending) (Hong Kong-based cabin crew employed on flights from Hong Kong to London worked ‘partly’ in Britain and came within the scope of the anti-discrimination legislation); cf. Ministry of Defence v. Gandiya [2004] EWCA Civ 1171 (the employee, a soldier stationed in Germany who had spent one day working in Britain, could not bring a claim of racial discrimination). See n 42. Ibid., [67]; cf. Fuller v. United Healthcare Services Inc., UKEAT/0464/13/BA, 4 September 2014, unreported, [46]. Section 1(2)(b). Cf. Merrett, Employment Contracts in PIL, [7.70] (the test under this Act is the same as under the preceding anti-discrimination legislation). Section 285(1). Similarly, the Right to Time Off for Study or Training Regulations SI 2001/2801 apply to employees who ordinarily work in England and Wales: reg.1(2). See n 20.

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determine whether an employee ordinarily worked inside or outside Britain, the court had to consider where the parties had contemplated that the employee’s base would be at the time of contracting. The focus on the terms of the contract, rather than its actual performance, led to the highly criticised decision in Carver,54 which precipitated the repeal of section 196 of ERA 1996. This case concerned an employee recruited in Saudi Arabia as a flight attendant. After training in Jeddah, she was transferred to India for four years and then to London, which remained her base until she resigned six years later. The Court of Appeal found that the employee fell outside the territorial reach of the right not to be unfairly dismissed because her contract had contemplated that she would be based in Saudi Arabia. The provisions of the Patents Act 1977 concerning employees’ inventions apply to an invention made by an employee if, at the time the employee made the invention, he or she was mainly employed in the UK; even if the employee was not mainly employed anywhere at the relevant time or if his or her place of employment could not be determined, the act applies if the employer had a place of business in the UK to which the employee was attached.55 Another piece of legislation that expresses its territorial scope is the Transfer of Undertakings (Protection of Employment) Regulations SI 2006/246, which implemented the Transfer of Undertaking Directive into UK law.56 For the sake of convenience, the territorial scope of this instrument will be considered here because, unlike other EU law-derived rights, the rights conferred by TUPE 2006 are subject to express territorial limitations. The purpose of TUPE 2006 and the directive is to safeguard the rights of employees in the event of a change of employer. According to regulation 3 of TUPE 2006, this instrument is restricted to transfers of undertakings situated immediately before the transfer in the UK. This is an implementation of Article 1(2) of the Transfer of Undertaking Directive, which states that the directive applies ‘where and in so far as the undertaking, business or part of the undertaking or business to be transferred is situated within the territorial scope of the Treaty’. Consequently, protection under TUPE 2006 was not given to employees who worked on mobile offshore vessels situated, outside the UK territorial waters, in the Scottish sector of the continental shelf in the 54 56

See n 15. 55 Section 43(2). Council Directive 2001/23/EC of 12 March 2001 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses [2001] OJ L82/16.

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North Sea where the undertaking was transferred from a Swedish to a Scottish company.57 But protection was afforded to employees who worked in the UK, although the transfer was to be outside the EU, in Israel.58 Finally, it should be mentioned that some pieces of employment legislation lay down special provisions concerning employment on ships. For example, section 199(7) of ERA 1996 prescribes the conditions under which certain provisions of the act apply to employment on British-registered ships.59 With regard to employment on other ships, the act applies in accordance with the Lawson v. Serco principles.60 Furthermore, the territorial reach of the rights conferred by some employment statutes is extended to offshore workers working on the UK and foreign sectors of the continental shelf.61

6.1.2

Contractual rights

Certain rights conferred by British employment legislation are classified as contractual. The employee can invoke these rights if English or Scottish law governs the employment contract. Two questions need to be considered. First, why are the principles and rules concerning the territorial scope of the statutory rights and contractual rights conferred by employment legislation different? Second, how are the statutory rights to be distinguished from the contractual rights? The English common law conflict of laws of obligations, which was partially repealed and replaced by the Rome Convention, and is 57

58 59

60 61

Addison v. Denholm Ship Management (UK) Ltd. [1997] ICR 770 (this case was decided under the Transfer of Undertaking (Protection of Employment) Regulations SI 1981/ 1794, implementing the Council Directive 77/187/EEC of 14 February 1977 on the approximation of the laws of the Member States relating to the safeguarding of employees’ rights in the event of transfers of undertakings, businesses or parts of undertakings or businesses [1977] OJ L61/26). Holis Industries v. GMB [2008] ICR 464. See also section 81 EqA 2010; Equality Act 2010 (Work on Ships and Hovercraft) Regulations SI 2011/1771; section 40 NMWA 1998; section 285(2) TULR(C)A 1992. The relevant provisions of EqA 2010 and the Equality Act 2010 (Work on Ships and Hovercraft) Regulation 2011/1771 were interpreted in Hasan v. Shell International Shipping Services (PTE) Ltd. UKEAT/0242/13/SM, 14 January 2014, unreported. Diggins v. Condor Marine Crewing Services Ltd. (n 21). Employment Protection (Offshore Employment) Order SI 1976/766; National Minimum Wage (Offshore Employment) Order SI 1999/1128; Employment Relations (Offshore Employment) Order SI 2000/1828; Equality Act 2010 (Offshore Work) Order SI 2010/ 1835.

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nowadays almost completely superseded by Rome I and Rome II, provides an answer to the first question. In the common law conflict of laws, choice-of-law rules, in principle, did not apply to statutory rights. As Briggs explains,62 statutes are made by the democratically elected Parliament, whereas the common law choice-of-law rules were made by the unelected judiciary. In a parliamentary democracy, Parliament’s power to legislate could not be bound by such judge-made rules, nor could it be Parliament’s intention for its legislation to be bound by such rules. Consequently, legislation applied whenever Parliament intended it to apply. Sometimes, Parliament’s intention was expressed in the statute itself. This was the case, for instance, with the repealed section 196 of ERA 1996. Where it was not, it was the courts’ task to find out ‘what Parliament may reasonably be supposed to have intended and attributing to Parliament a rational scheme’.63 If a right conferred by employment legislation was classified as contractual, it might reasonably be supposed that Parliament intended this right to be available whenever English law governed the employment contract. But if a right was classified as statutory, Lawson v. Serco shows that different considerations applied. Although the choice-of-law rules for obligations in England are no longer judge-made, but rather come from the legislator sitting in Brussels, the old view is still very much alive. The differentiation between the statutory rights and contractual rights conferred by British employment legislation is not a straightforward task. Generally speaking, rights enacted in the form of compulsory terms in contracts, enforceable in ordinary contractual disputes, apply whenever English or Scottish law governs the employment contract, unless the legislation prescribes otherwise. On the other hand, rights enacted as free-standing claims apply only if the employee falls within their scope pursuant to the principles described in the previous section. For example, the common law gave employers, by virtue of the defence of common employment, a shield against vicarious liability for the torts committed against the claimant employee by his or her fellow employees in the course of employment. Section 1 of the Law Reform (Personal Injuries) Act 1948 abolished such a defence and also rendered void any term in an employment contract giving such a defence. As Collins 62 63

Briggs, ‘A Note’, pp. 194–7. Lawson v. Serco (n 1), [23]. See also S. Dutson, ‘The Conflict of Laws and Statutes: The International Operation of Legislation Dealing with Matters of Civil Law in the United Kingdom and Australia’ (1997) 60 Modern Law Review 668.

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convincingly argued,64 this section applies to all employment contracts governed by English law: ‘The place where the work is done and the place of the accident must be irrelevant, because the section strikes at clauses in employment contracts ab initio and the place of employment, and a fortiori the place of the accident, may be matters only for speculation when the contract is made.’65 Further support for this proposition may be found in the words of Denning LJ (as he then was):66 ‘The doctrine of common employment was an irrational exception to the liability of an employer . . . It has now been abolished by statute, and should be disregarded in the same way as if it had never been enunciated. Statute law and common law should be integrated into one law.’ If section 1 of the 1948 Act and the common law are indeed integrated into one law, this section applies whenever English law governs the employment contract. The leading decision concerning the differentiation between the statutory rights and contractual rights conferred by employment legislation for the purpose of establishing the legislation’s territorial reach is the decision of the Court of Appeal in Duncombe v. Secretary of State for Children, Schools and Families.67 A question raised by this case was whether the rights granted by the Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations SI 2002/2034 should be classified as statutory or contractual. The defendant argued that these rights were statutory and that the claimant could invoke them only if the Lawson v. Serco principles were satisfied. In contrast, the claimant argued that the 2002 Regulations were a statutory part of English employment law, applicable to all contracts governed by English law. In the claimant’s view, the 2002 Regulations changed employment law by providing that, in the prescribed circumstances, a fixed-term contract transmuted into a permanent contract. The performance of the contract abroad did not prevent that change in the law and that change in the contract from taking place. The claimant found further support for his argument in the fact that the 2002 Regulations did not contain an express territorial limitation or a provision such as the one contained in section 204 of ERA 1996. Mummery LJ accepted the claimant’s argument. In his view, this is simply a case of an employment contract affected by a change in the law applying to all employment contracts that satisfy the prescribed 64

65 67

L. Collins, ‘Exemption Clauses, Employment Contracts and the Conflict of Laws’ (1972) 21 International and Comparative Law Quarterly 320, pp. 329–30. Ibid., p. 330. 66 Broom v. Morgan [1953] 1 QB 597, 608–9. [2009] EWCA Civ 1355; [2010] 4 All ER 335.

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conditions. Working in Great Britain is not one of the conditions. This result does not infringe any territoriality principle, if what is sought to be enforced is a common law claim for breach of a contract governed by English law.68

Although the Supreme Court did not have to rule on this issue (because it found that the Lawson v. Serco principles were satisfied), Lady Hale confirmed obiter this view by stating that ‘[t]he rights which workers have [under the 2002 Regulations] are enforceable as part of the contractual arrangements between them and their employers’.69 Further guidance for drawing the line between the rights conferred by employment legislation which apply whenever English law governs the employment contract and those which apply only if the Lawson v. Serco principles are satisfied may be found in the repealed section 196 of ERA 1996. The right to a statement of employment particulars and minimum period of notice applied whenever the contract was governed by English or Scottish law.70 Arguably, this was because Parliament perceived them as contractual rights. One may also refer to cases concerning domestic (as opposed to transnational) employment. For example, in Barber v. RJB Mining (UK) Ltd.71 the Working Time Regulations SI 1998/1833 were held to have imposed into employment contracts a right not to work more than forty-eight hours a week. There is, therefore, a good argument that the 1998 Regulations affect a change in employment law applicable to all employment contracts governed by English law.

6.1.3

EU law-derived rights

72

Bleuse established a principle that EU law-derived rights have a different territorial scope than purely domestic statutory rights. Mr Bleuse, a German national and resident, was employed by a UK company to work in mainland Europe. The employment contract was expressly governed by English law. Mr Bleuse invoked several rights, including the right not to be unfairly dismissed under ERA 1996 and the right to holiday pay under WTR 1998, which implemented the Working Time Directive.73 Following Lawson v. Serco, however, Mr Bleuse fell outside the territorial scope of the purely domestic right not to be unfairly dismissed. With regard to the right to holiday pay, the Employment Appeal Tribunal 68 71 73

Ibid., [117]. 69 Duncombe (No 1) (n 28), [30]. 70 Section 196(1). [1999] ICR 679. 72 See n 9. Directive 2003/88/EC of the European Paliament and of the Council of 4 November 2003 concerning certain aspects of the organisation of working time [2003] OJ L299/9.

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referred to the fact that the CJEU had held that the rights conferred by the Working Time Directive were sufficiently precise and clear to be capable of having direct effect. Although directly effective EU rights could not be pleaded against private defendants, the principle of harmonious interpretation gave indirect effect to such rights in horizontal relationships. Consequently, the Employment Appeal Tribunal had to construe the 1998 Regulations in a manner which gave effect to the directly effective EU rights. The implied territorial limitations laid down in Lawson v. Serco were disregarded and Mr Bleuse was held to fall within the territorial scope of the right to holiday pay. The Court of Appeal extended the Bleuse principle in two later decisions. It should be noted, however, that the defendant in these decisions was the state, not a private defendant. In Wallis74 the court held that directly effective EU rights had to be given effect in appropriate situations even if the employee fell outside the express territorial scope of the implementing legislation (here, the SDA 1975, implementing the Equal Treatment Directive75). This was to be achieved either by reading into the legislation words to cover the case of the claimant or by disapplying the legislation’s express territorial limitations. In Duncombe v. Secretary of State for Children, Schools and Families76 the Court of Appeal decided that the Bleuse principle applied even with regard to EU rights that had no direct effect: ‘when the UK made its choice in enacting the [Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations], the discretion of the United Kingdom was exhausted and the relevant parts of the [Fixed-Term Contracts Directive77] became directly effective for the purpose of engaging the principle of effectiveness’.78 Lady Hale in the Supreme Court approved obiter the lower instance decision in the following words: 74 75

76 77

78

See n 30. Council Directive 76/207/EEC of 9 February 1976 on the implementation of the principle of equal treatment for men and women as regards access to employment, vocational training and promotion, and working conditions [1976] OJ L39/40, amended by Directive 2002/73/EC [2002] OJ L269/15 and repealed by Directive 2006/54/EC of the European Parliament and of the Council of 5 July 2006 on the implementation of the principle of equal opportunities and equal treatment of men and women in matters of employment and occupation (recast) [2006] OJ L204/23. See n 67. Council Directive 1999/70/EC of 28 June 1999 concerning the Framework Agreement on fixed-term work concluded by ETUC, UNICE and CEEP [1999] OJ L175/43. See n 67, [130], per Mummery LJ.

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it would seem unlikely that, if the protection of European employment law is to be extended to workers wherever they are working in the area covered by European law, that protection should depend upon whether or not it gives rise to directly effective rights against organs of the state. A way would have to be found of extending it to private as well as public employment.79

Furthermore, the Court of Appeal held in Duncombe that the principle of effectiveness in EU law was ‘fundamental and forceful’80 and that it required that even the territorial limitations of purely domestic rights should be modified if necessary for the effective vindication of EU lawderived rights. Thus, if a claim for unfair dismissal is the only effective remedy for the vindication of the rights granted by the 2002 Regulations, the employee should be accorded that remedy. The Supreme Court did not address this issue.81 Bleuse, Wallis and Duncombe left several questions open. First, the decision in Bleuse was premised on the fact that the CJEU had held that the rights conferred by the Working Time Directive were directly effective. The Court of Appeal in Duncombe extended the Bleuse principle to the rights contained in statutes forming part of English law that are derived from EU law that has no direct effect. Lady Hale also endorsed that view. Although Duncombe supports the proposition that the distinction between directly effective EU rights and those that are not is not decisive, the issue will remain controversial until the CJEU resolves it. Second, the CJEU has held that the courts must take steps to interpret and apply all national law, ‘as far as possible’, in the light of the wording and purpose of EU law.82 It is, therefore, not certain that EU law required a contra legem interpretation of the SDA 1975 in Wallis. Third, the employment contracts in the three cases were governed by English law and contained no non-EU elements. What would have happened had the contracts been governed by foreign laws or contained non-EU elements?

79

80 81

82

Duncombe (No 1) (n 28), [34]. Lords Rodger and Mance agreed with Lady Hale. Lords Collins and Clarke expressed no view on this issue. See n 67, [145], per Mummery LJ. The Supreme Court reserved its judgment on this issue to a later date in Duncombe (No 1) (n 28), [38]. In Duncombe (No 2) (n 3) the Supreme Court did not have to address this issue because it held that the claimants fell into the residual group of expatriate employees covered by section 94(1) ERA 1996. Case C-106/89 Marleasing SA v. La Comercial Internacional de Alimentacion SA [1990] ECR I-4135; [1992] 1 CMLR 305, [8].

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In Wallis Elias LJ held obiter that the fact that another Member State’s law governs the contract would not make a substantial difference: [O]nce a claimant is seeking to enforce a directly effective EU right, it matters not which national law is applicable to the right in question, provided at least that it is the law of a member state. This is because whichever system of law within the EU is the appropriate state law to apply, either it gives effect to the EU right when appropriately construed, or it must be disapplied to the extent that it does not.83

Wallis seems to suggest that, where the employment contract is governed by another Member State’s law, the claimant in English proceedings has to rely on the implementing legislation of the governing law.84 This conclusion is supported by Bleuse, where Elias P said, English law . . . is the relevant domestic law for giving effect to the directly effective right . . . In different circumstances foreign law might be the appropriate domestic law to consider. Assume, for example, that the claimant had a contract to drive in Austria and the proper law of the contract was Austrian. He could still bring a claim in the English courts, since the company is domiciled here, but the relevant body to be applied would surely be Austrian law.85

But Duncombe (No 1)86 seems to point to a different conclusion. According to Lady Hale, [W]e are concerned with a person employed by an employer in the United Kingdom to work in another country within the European Union. Is it to be expected that there should be gaps in the protection offered to such workers? In other words, that they would be protected if employed by an employer in the country where they work, but not if employed by an employer in their home country? Two people doing exactly the same work would enjoy very different protection. This seems, on the face of it, an unlikely conclusion. On the other hand, there would still be differences between the two employees. One would be covered by the European Union law as implemented in the country where they both worked; the other would be covered by the law as implemented in the country where his employer was based. These would not always be identical . . . I would therefore be inclined to agree with the Tribunals and the Court of Appeal that Mr Duncombe and other teachers employed by the Secretary of State in European schools abroad are covered by the [2002 Regulations].87 83 84

85 87

Wallis (n 30), [52]. Cf. ibid., [51] (‘EU law confers rights on workers enforceable against their employers wherever situated within the EU. It does not compartmentalise these rights in geographical units.’) Bleuse (n 9), [54]; see also [55]–[56]. 86 See n 28. Ibid., [32]–[33] (emphasis added).

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Lady Hale stressed that her view was obiter and that she would have referred this issue of the territorial scope to the CJEU had it had to be decided by the court.88 Lady Hale’s view appears to support the proposition that the claimant in English proceedings can rely on an EU lawderived right in English law whenever the case falls within the territorial scope of the EU law instrument that the invoked English statue aims to implement. The fact that Lady Hale did not discuss whether English law or the law of another Member State was the applicable law suggests that the law governing the employment contract is not conclusive for determining the territorial scope of the English EU law-derived rights. What is important is that the case falls within the territorial scope of the relevant EU law instrument.89 So, when does a case fall within the territorial scope of EU law? This is clearly so if the contract contains no non-EU elements.90 But if the employment relationship contains some non-EU elements, the answer is not straightforward. The CJEU dealt, in Ingmar,91 with a related issue of the territorial scope of the Self-Employed Commercial Agents Directive.92 Here, the claimant, a UK-based commercial agent, operated in the UK and Ireland for the defendant, a Californian principal. It brought a claim in England under the Commercial Agents (Council Directive) Regulations SI 1993/3053, which implemented the directive into UK law. The parties expressly chose Californian law to govern their contract, which did not grant commercial agents any rights upon the termination of commercial agency contracts. The CJEU held that, in order to protect commercial agents and their freedom of establishment and the operation of undistorted competition in the internal market, the provisions of the directive guaranteeing the payment of indemnification or compensation to commercial agents upon the termination of 88 89

90 91

92

Ibid., [33]. See also Plender and Wilderspin, The European PIL of Obligations, [11–069]: ‘In Bleuse . . . Elias J held that because the Working Time Regulations contained no statement as to their territorial scope, they could be interpreted to confer the right to holiday pay on an employee working outside the United Kingdom. This interpretation was derived from the fact that the E.C. right was directly effective, and has nothing to do with whether or not English law was the applicable law – the same interpretation would apply had the English courts been required to apply a foreign law’ (emphasis added and a footnote omitted). See Art. 3(4) Rome I. Case C-381/98 Ingmar GB Ltd. v. Eaton Leonard Technologies Inc. [2000] ECR I-9305; [2001] 1 CMLR 9. Council Directive 86/653/EEC of 18 December 1986 on the coordination of the laws of the Member States relating to self-employed commercial agents [1986] OJ L382/17.

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commercial agency contracts were overridingly mandatory and had to be applied ‘where the situation is closely connected with the Community, in particular where the commercial agent carries on his activity in the territory of a Member State’.93 There is no reason not to apply the ‘close connection test’ to EU employment law.94 The range of employment situations that have a sufficiently close connection with the EU, however, is inherently unclear.95 It should be noted that, had Rome I been applied in Ingmar to determine the objectively applicable law, the law of the agent’s country, that is, the law of a Member State, would have been applicable.96 There is no reason why the same test should not apply to EU employment law. Whether an employment situation is closely connected with the EU should primarily be determined pursuant to Article 8 of Rome I. Whenever the law of a Member State is the objectively applicable law, the employment situation should be regarded as having a close connection with the EU. But even if the objectively applicable law is not the law of a Member State, there may be circumstances, such as the performance of some of the work in a Member State, which would establish a strong connection with the EU. This is supported by Walrave v. Koch, where the CJEU stated, in relation to the rule on non-discrimination, the following: By reason of the fact that it is imperative, the rule on non-discrimination applies in judging all legal relationships in so far as these relationships, by reason either of the place where they are entered into or of the place where they take effect, can be located within the territory of the Community. It is for the national judge to decide whether they can be so located, having regard to the facts of each particular case.97

Another important case is Boukhalfa, where the CJEU held that provisions of Community law may apply to professional activities pursued outside Community territory [working in the embassy of a Member State in this case] as long as the employment relationship retains a sufficiently close link with the Community . . . This principle must be deemed to extend also to cases in which there is a sufficiently close link 93 95

96 97

Ingmar (n 91), [25] (emphasis added). 94 See Wallis (n 30), [53]. On the problem of the territorial scope of secondary EU law in general, see S. Francq, ‘The Scope of Secondary Community Law in the Light of the Methods of Private International Law – or the Other Way Around?’ (2006) 8 Yearbook of Private International Law 333. Art. 4(2) in connection with Arts. 4(1)(e) and 4(1)(f). Case 36–74 B.N.O. Walrave and L.J.N. Koch v. Association Union cycliste internationale, Koninklijke Nederlandsche Wielren Unie et Federación Española Ciclismo [1974] ECR 1405; [1975] 1 CMLR 320, [28]–[29] (emphasis added).

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between the employment relationship, on the one hand, and the law of a Member State and thus the relevant rules of Community law, on the other.98

Lady Hale’s speech in Duncombe (No 1)99 also appears to support the proposition that some degree of connection with England is required, for example, that the employer is English, in addition to the case falling within the territorial scope of the relevant EU law instrument before the claimant in English proceedings can invoke the relevant EU law-derived right in English law. A recent decision by the Employment Appeal Tribunal100 confirms that some degree of connection with England is required, for example, that the employment contract is governed by English law. In conclusion, the determination of the territorial scope of the rights conferred by British employment legislation is a difficult task. The principles and rules for establishing the territorial scope differ depending on the nature and the source of the right and, moreover, are in the state of flux.

6.2

The importance of choice of law

The decision of the Court of Appeal in Duncombe v. Secretary of State for Children, Schools and Families101 is a leading authority with respect to the two issues that will surely occupy the courts of this country in the future, namely the differentiation between the statutory and contractual rights conferred by employment legislation and the impact of EU law on the territorial scope of employment legislation. In comparison, the Supreme Court’s decision addressing the problem of territoriality102 seems, at least at first sight, to be less interesting. It only dealt with the application of the 98

99 100

101

C-214/94 Ingrid Boukhalfa v. Bundesrepublik Deutschland [1996] ECR I-2253; [1996] 3 CMLR 22, [15] (emphasis added). See n 28. Fuller v. United Healthcare Services Inc. (n 49), [21], [45]. Cf. Bossa v. Nordstress Ltd. [1998] ICR 694. Here, the Industrial Tribunal dismissed the claimant’s claim for unlawful discrimination because he fell outside the express territorial scope of the Race Relations Act 1976. Allowing the appeal, the Employment Appeal Tribunal held that what is now Art. 45 TFEU conferred on individual workers rights in relation to freedom of movement of workers, including the right to work anywhere within the Union, enforceable by them in Member State courts. The Employment Appeal Tribunal gave effect to the treaty by disapplying the inconsistent provisions of the Race Relations Act 1976. The fact that the case had a close link with Italy and that the only connection with England was the place of the interview was irrelevant for the application of the EU law-derived rights. See n 67. 102 Duncombe (No 2) (n 3).

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Lawson v. Serco principles to an unusual factual scenario. Although this decision departs from the traditional view that the determination of the territorial scope of the statutory rights conferred by employment legislation is entirely disconnected from the choice-of-law process, the immediate impact of this change of view should not be overestimated. The fact that English law governs the employment contract is as of now only one of the factors relevant for the application of the Lawson v. Serco principles.103 But the Supreme Court’s decision raises an important question. Should the choice-of-law process have an even greater importance for determining the territorial scope of the statutory employment rights? To answer this question, we must take a closer look at Lawson v. Serco.

6.2.1 Lawson v. Serco: a closer look Lord Hoffmann commenced his speech in Lawson v. Serco by stating that ‘[r]ead literally, [ERA 1996] applies to any individual who works under a contract of employment anywhere in the world’ and that ‘some territorial limitations must be implied’ because ‘[i]t is inconceivable that Parliament was intending to confer rights upon employees working in foreign countries and having no connection with Great Britain’.104 Clearly, Lawson v. Serco was based on the assumption that ERA 1996 would have a worldwide application unless some territorial limitations were implied into it. However, this assumption was erroneous. It disregarded a basic principle of private international law of contract that ‘a statute does not normally apply to a contract unless it forms part of the governing law of the contract’.105 Therefore, ERA 1996 could have never claimed a worldwide application, but rather applied, in principle, to employment contracts governed by English (or Scottish) law. One might point out that the Employment Appeal Tribunal in Financial Times Ltd. v. Bishop106 and Bleuse107 rejected this very argument for two reasons. First, because section 204 of ERA 1996 prescribes the following: ‘For the purposes of this Act it is immaterial whether the law which (apart from this Act) governs any person’s employment is the law of the United Kingdom, or a part of the United Kingdom, or not.’ Second, because the choice-of-law rules for employment contracts do not 103 105 106 107

Confirmed in Ravat (n 3), [32]. 104 See n 1, [1]. Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [1–053]. See n 7, [53]–[55]. See n 9, [43]–[45]. See also Lawson v. Serco Ltd. EAT/0018/02TM, 11 March 2003, unreported, [23].

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apply to statutory, but only to contractual, rights. However, neither of these counter-arguments can withstand closer scrutiny. A provision such as that contained in section 204 of ERA 1996 was first introduced in section 9(2) of the Contracts of Employment Act 1963. At that time, employment contracts were subject to the common law choiceof-law rules for contract. Under those rules, if an employment contract was governed by a foreign law, English law, including statute law, was inapplicable. The purpose of section 9(2) of the 1963 Act was to give this act ‘the character of a statute embodying a principle of public policy so as to exclude the application of foreign law . . . whenever this would infringe the policy of the Act’.108 This purpose could not have been achieved otherwise, because English courts had been reluctant to derive public policy from statute law, as opposed to case law, unless expressly compelled to do so.109 In the same vein, the purpose of section 204 of ERA 1996 is to impose the application of the act where the application of a foreign law would infringe the act’s policy. One might argue that section 204 is also intended to preclude the application of the act where English (or Scottish) law applies only by virtue of the parties’ agreement and there is no other relevant connection with Britain. In other words, one might argue that the purpose of section 204 is to make ERA 1996 not only an ‘overriding’ but also a ‘self-limiting’ (or possibly a ’self-denying’) statute.110 However, regardless of the purpose which section 204 seeks to achieve, one thing is certain. ERA 1996 was never intended to have, and indeed has never had, a worldwide application. Lawson v. Serco concerned the territorial scope of the statutory right not to be unfairly dismissed. One might argue that the choice-of-law rules for contract, including the mentioned principle of private international law, do not apply to statutory rights, that is, that it is exclusively the statute which defines the situations where the rights conferred by it apply. Indeed, this was the position under the common law conflict of laws.111 This view also formed the basis of the House of Lords decision in Lawson v. Serco, as evidenced by the fact that Lord Hoffman’s speech made no 108

109

110

111

J. Unger, ‘Use and Abuse of Statutes in the Conflict of Laws’ (1967) 83 Law Quarterly Review 427, p. 430. See also F. A. Mann, ‘Statutes and the Conflict of Laws’ (1972–1973) 46 British Yearbook of International Law 117, p. 137. Unger, ‘Use and Abuse of Statutes’, p. 431, referring to O. Kahn-Freund, ‘Reflections on Public Policy in the English Conflict of Laws’ (1953) 39 Transactions of the Grotius Society 39. This rather clumsy terminology is adopted in Dicey, Morris and Collins, 15th edn (2012), [1–039], [1–049]–[1–064]. See text to nn 62 and 63.

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reference to the choice-of-law rules, which at the time were contained in the Rome Convention. In other words, Lord Hoffman was of the view that the choice-of-law rules of the Rome Convention merely took the place of the preceding common law choice-of-law rules for contract and, therefore, applied only to contractual claims, without affecting the other two types of employment claims, namely statutory and tortious claims. But this view could not have been correct, since the Rome Convention covered not only contractual but also statutory claims and is undoubtedly incorrect nowadays when the choice-of-law rules for all obligations are contained in Rome I and Rome II.112 The following text demonstrates that the choice-of-law rules of both the Rome Convention and Rome I cover statutory claims. The Rome Convention applies ‘to contractual obligations in any situation involving a choice between the laws of different countries’.113 Rome I applies ‘in situations involving a conflict of laws, to contractual obligations in civil and commercial matters’.114 Rome II applies ‘in situations involving a conflict of laws, to non-contractual obligations in civil and commercial matters’.115 Employment matters are undoubtedly ‘civil and commercial matters’.116 The respective fields of application of the Rome Convention and the two regulations depend on the classification of the relevant obligation, that is, the defendant’s obligation forming the basis of the claim. Where the basis of the employee’s claim is the employer’s breach of statutory duty, it is the classification of this duty that is crucial. Under the Rome Convention and the two regulations, (non)contractual obligations are autonomous concepts, independent of any national law.117 The fact that a breach of statutory duty normally gives rise to tortious liability in English substantive law118 is, therefore, not determinative. At least until the CJEU has had the chance to rule on these concepts for the purposes of the choice-of-law instruments, the classification of an obligation as (non) contractual should be done by reference to the CJEU case law on the 112

113 116 117

118

Rome I superseded the Rome Convention on 17 December 2009 in relation to all contracts concluded after this date: Arts. 28 and 29(2). Rome II repealed and replaced, in matters falling within its scope, national choice-of-law rules on 11 January 2009 in relation to events giving rise to damage which occurred after its entry into force: Arts. 31 and 32. Art. 1(1). 114 Art. 1(1). 115 Art. 1(1). Case 25/79 Sanicentral GmbH v. René Collin [1979] ECR 3423; [1980] 2 CMLR 164. This is unambiguously stated in Recital 11 Rome II. See also Art. 18 Rome Convention; Recital 7 Rome I. M. Lunney and K. Oliphant, Tort Law: Text and Materials, 4th edn (Oxford University Press, 2010), Ch 11.

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interpretation of Articles 7(1) (special jurisdiction in ‘matters relating to a contract’) and 7(2) (special jurisdiction in ‘matters relating to tort, delict or quasi-delict’) of the Brussels I Recast and their predecessors.119 In Athanasios Kalfelis v. Bankhaus Schröder, Münchmeyer, Hengst and Co.,120 the CJEU held that Article 5(3) of the Brussels Convention, the predecessor of Article 7(2) of the Brussels I Recast, covered ‘all actions which seek to establish the liability of a defendant and which are not related to a “contract” within the meaning of Article 5(1)’.121 The concepts of ‘contract’ and ‘tort, delict or quasi-delict’ for the purposes of the European jurisdictional instruments are, therefore, mutually exclusive. By analogy, if an obligation is classified as contractual for the purposes of the Rome Convention or Rome I, it cannot be concurrently classified as non-contractual for choice-of-law purposes. The CJEU has broadly interpreted the concept of ‘contract’ within the meaning of Article 7(1) of the Brussels I Recast and its predecessors. Importantly for the present discussion, in Jakob Handte & Co. GmbH v. Traitements Mécanochimiques des Surfaces SA122 the CJEU held that ‘the phrase “matters relating to a contract” . . . is not to be understood as covering a situation in which there is no obligation freely assumed by one party towards another’.123 Similarly, the Rome Convention and Rome I should not apply to obligations that are not freely assumed by one party towards another. By entering into an employment contract, the parties freely assume obligations arising under the applicable employment legislation as the legal incidents of the contract. Such obligations should, therefore, be classified as contractual for the purposes of the Rome Convention and Rome I and it is these instruments that determine the applicable law whenever the basis of the employee’s claim is the employer’s breach of statutory duty. The CJEU decision in Heiko Koelzsch v. Luxembourg124 provides further support for this proposition. Following his dismissal, Mr Koelzsch commenced proceedings against the employer for, among other things, breach of the provisions of the German statute concerning 119

120 122 124

Both Recital 7 Rome I and Recital 7 Rome II provide the following: ‘The substantive scope and the provisions of this Regulation should be consistent with [Brussels I].’ In its preamble, the Rome Convention refers to ‘the work of unification of law which has already been done . . . in the field of jurisdiction and enforcement of judgments’. Case 189/87 [1988] ECR 5565. 121 Ibid., [17]. Case C-26/91 [1992] ECR I-3967; [1993] ILPr 5. 123 Ibid., [15]. Case C-29/10 [2011] ECR I-1595. See also Case C-384/10 Jan Voogsgeerd v. Navimer SA [2011] ECR I-13275.

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dismissal (Kündigungsschutzgesetz). The CJEU had no doubts that the obligations imposed by the German statute were contractual for the purposes of the Rome Convention. In Lawson v. Serco, therefore, Lord Hoffmann started off with a wrong assumption that ERA 1996 would have a worldwide application unless some territorial limitations were implied into it. ERA 1996 could have never claimed a worldwide application, since it applies, in principle, to employment contracts governed by English (or Scottish) law. What his Lordship should have asked was whether there was a good reason to imply territorial limitations into ERA 1996 where this act applied as part of the applicable English law or whether there was a good reason to apply ERA 1996 where English law was not the applicable law. Had this question been asked, his Lordship would have had to lay down different principles for determining the territorial reach of ERA 1996, which principles would have had to take into account the governing law of the employment contract. Before further dealing with these issues, the boundaries that the ‘European’ choice-of-law rules set for the application of employment legislation must be considered more closely.

6.2.2

‘European’ choice-of-law rules and the boundaries within which British employment legislation applies

With regard to the determination of the objectively applicable law, an English lawyer will find it hard to object to the connecting factors used by Rome I. The rules for determining the objectively applicable law of Article 8 are based on essentially the same principles that Lord Hoffmann expounded in Lawson v. Serco and Lady Hale and Lord Hope refined in Duncombe (No 2) and Ravat. Article 8(2) lays down the rule that the applicable law is the law of the country ‘in which or, failing that, from which’ the employee habitually works. According to Lord Hoffmann, the standard case for the application of ERA 1996 is the employee working in Britain at the time of the dismissal. ERA 1996 also applies to peripatetic employees based in Britain. These two categories of employees are the same as those contemplated by Article 8(2). Furthermore, Lord Hoffmann held that, exceptionally, ERA 1996 could also apply to employees who neither worked nor were based in Britain provided there was a sufficiently strong connection between them and Britain and British employment law. Lord Hope confirmed that the relevant test was one of (exceptionally) strong connection. Similarly, Article 8(4) allows, by way of exception, departure from the

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choice-of-law rules of Articles 8(2) and 8(3) in favour of the law of the country with which the employment contract is more closely connected. One might argue that there is not such a close fit between Article 8 and the Lawson v. Serco principles after all because Article 8(3) allows, where Article 8(2) is inapplicable, the application of the law of the country of the engaging place of business, whereas Lawson v. Serco gives no significance to this connecting factor.125 But the CJEU has interpreted the connecting factor used in Article 8(2) so widely that there are almost no situations falling under Article 8(3). As argued in the previous chapter, for this and other reasons, the connecting factor of the engaging place of business should be abolished in European private international law. Consequently, whenever English law is objectively applicable, the employee will normally fall within the territorial scope of employment legislation. Article 9(2) of Rome I allows the courts to apply domestic overriding mandatory provisions. Overriding mandatory provisions are defined in Article 9(1) as ‘provisions the respect for which is regarded as crucial by a country for safeguarding its public interests, such as its political, social or economic organisation, to such extent that they are applicable to any situation falling within their scope, irrespective of the law otherwise applicable to the contract’.126 As mentioned, section 204 of ERA 1996 prescribes that, for the purposes of this act, it is immaterial whether the proper law of the employment contract is or is not the law of the UK or part of it. Some authors argue, and the courts implicitly accept, that the effect of this section is to turn all provisions of the act into overriding mandatory provisions that apply to all situations falling within their scope regardless of the applicable law. For example, this is the position adopted by Plender and Wilderspin.127 125

126 127

However, it should be noted that Lord Hoffmann stated in Lawson v. Serco, at [11], that ‘the original exclusion of cases in which the employee ordinarily “works outside Great Britain” shows that when Parliament created the new remedy in 1971, it thought that the sole criterion delimiting its territorial scope should be the place where the employee worked . . . It attached no significance to such matters as the place where he was engaged, from which he was managed or his employer resided. The repeal of section 196 means that the courts are no longer rigidly confined to this single litmus test’ (emphasis added). If the courts are indeed no longer rigidly confined to this ‘single litmus test’, the location of the engaging place of business is a relevant factor for the application of the Lawson v. Serco principles. Art. 7 Rome Convention does not contain an analogous definition. Plender and Wilderspin, The European PIL of Obligations, [11–059]–[11–068], [12– 004]–[12–017]. This was also the position adopted by the authors of Dicey, Morris and Collins on the Conflict of Laws before the 15th edition of their work: see Dicey, Morris and

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They argue that Article 9(1) of Rome I gives a country the freedom to decide for itself which provisions of its law are overridingly mandatory. In their view, section 204 of ERA 1996 establishes that all provisions of the act are of this nature. They go even further and argue that the provisions of all other pieces of employment legislation, even if they do not contain a provision such as that contained in section 204, are overriding mandatory provisions that apply to all situations falling within their express or implied territorial scope. But this argument blurs the difference between a provision’s overriding effect and its territorial scope. It is possible that a provision is overridingly mandatory, but an employee falls outside its territorial scope. Conversely, it is also possible that an employee falls within a provison’s territorial scope, but cannot rely on it, since it does not override the applicable law. British employment statutes cannot, in their entirety, be regarded as overriding mandatory provisions. The CJEU decision in Commission v. Luxembourg128 supports this proposition with regard to the situations falling within the scope of the Posted Workers Directive. Under Article 3(1) of the Posted Workers Directive, Member States must apply, regardless of the applicable law, provisions concerning seven listed matters to undertakings established in other Members States which, in the framework of the transnational provision of services, post workers to their territory. The following are the listed matters: maximum work periods and minimum rest periods; minimum paid annual holidays; minimum rates of pay; conditions of hiring-out of workers, health, safety and hygiene at work; protection of pregnant women, women who have recently given birth, children and young people and non-discrimination. Under Article 3(10) of the Posted Workers Directive, Member States may also apply ‘public policy provisions’ concerning non-listed matters. Commission v. Luxembourg dealt with the provision of a Luxembourg statute which provided that all laws, regulations and administrative provisions and so on concerning certain matters, some of which were not listed in Article 3(1), were ‘mandatory provisions falling under national public policy’. The CJEU noted that

128

Collins on the Conflict of Laws, 14th edn (2006) and L. Collins (gen. ed.), Dicey, Morris and Collins on the Conflict of Laws: 4th Supplement to the 14th edn (London, Sweet & Maxwell, 2010), [33–086]–[33–103]. Case C-319/06 [2008] ECR I-4323. This case and its implications are further examined in Chapter 8, Section 8.3.1.

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the classification of national provisions by a Member State as public-order legislation applies to national provisions compliance with which has been deemed to be so crucial for the protection of the political, social or economic order in the Member State concerned as to require compliance therewith by all persons present on the national territory of that Member State and all legal relationships within that State.129

Furthermore, the CJEU stated that Article 3(10), as a derogation from the fundamental freedom to provide services and from the ‘exhaustive’ list of Article 3(1), had to be interpreted strictly and its scope could not be determined unilaterally by the Member States.130 The CJEU then found that the provisions of Luxembourg law concerning non-listed matters, despite the express statutory wording to the contrary, did not satisfy the Article 3(10) ‘public policy provisions’ test. This decision shows that the provisions contained in Member States’ employment legislation concerning non-listed matters are highly unlikely to satisfy the Article 3(10) test, even if there is a provision which expressly prescribes that they are overridingly mandatory. There is no other way in which such provisions can override the applicable law in situations falling within the scope of the Posted Workers Directive.131 Another question is whether the provisions contained in British employment legislation can override the applicable law in situations falling outside the scope of the Posted Workers Directive. This depends on the meaning of the concept of ‘overriding mandatory provisions’ of Article 9(1) of Rome I. There are three reasons for giving this concept a strict interpretation under which the provisions contained in employment legislation concerning matters not listed in Article 3(1) of the Posted Workers Directive are not to be regarded as overriding mandatory provisions. First, in the view of the European Commission, the Posted Workers Directive is an implementation of Article 7 of the Rome Convention, the predecessor of Article 9 of Rome I.132 If so, the provisions concerning seven listed matters will be regarded as 129 131

132

Ibid., [29]. 130 Ibid., [30]–[31]. C. Barnard, ‘The UK and Posted Workers: The Effect of Commission v. Luxembourg on the Territorial Application of British Labour Law’ (2009) 38 Industrial Law Journal 122, pp. 127–32; also Merrett, Employment Contracts in PIL, [8.18]–[8.23]; T. Novitz, ‘UK Implementation of the Posted Workers Directive 96/71’, Formula Working Paper 22/ 2010, available at www.jus.uio.no/ifp/english/research/projects/freemov/publications/ papers/2010/september/WP22-Novitz-2010.pdf, pp. 15–17. Recital 34 Rome I; European Commission, ‘Proposal for a Council Directive Concerning the Posting of Workers in the Framework of the Provision of Services: Explanatory Memorandum’, COM(91) 230 final/2-SYN 346, [17]–[18].

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overridingly mandatory in the sense of Article 9(1). Provisions concerning other matters will be regarded as overridingly mandatory only if they satisfy the test of Article 9(1), that is, if they are ‘crucial . . . for safeguarding . . . political, social or economic organisation’, which is the same test as the one of Article 3(10) of the Posted Workers Directive. This position seems to be further supported by the wording of Recital 37 of Rome I, which states that ‘[c]onsiderations of public interest justify giving the courts of the Member States the possibility, in exceptional circumstances, of applying exceptions based on . . . overriding mandatory provisions’. Second, the definition of ‘overriding mandatory provisions’ in Article 9(1) is derived from the CJEU decision in Arblade and Leloup,133 which concerned derogations from the fundamental freedom to provide services. One might argue that the almost word-by-word transposition of the relevant part of the Arblade and Leloup decision into Article 9(1) suggests that the concept of ‘overriding mandatory provisions’ is indeed narrow.134 Finally, an employee needs to invoke the concept of overriding mandatory provisions of Article 9(1) only when he or she falls within the territorial scope of a right conferred by British employment legislation, but neither English nor Scottish law is applicable. This is presumably a rare occurrence given that the principles for determining 133

134

Joined Cases C-369/96 and C-376/96 Criminal proceedings against Jean-Claude Arblade and Arblade & Fils SARL (C-369/96) and Bernard Leloup, Serge Leloup and Sofrage SARL (C-376/96) [1999] ECR I-8453; [2001] ICR 434, [30]–[31]; European Commission, ‘Proposal for Rome I’, p. 7. A. Bonomi, ‘Overriding Mandatory Provisions in the Rome I Regulation on the Law Applicable to Contracts’ (2008) 10 Yearbook of Private International Law 285, pp. 289– 90 (but cf. pp. 291–5); Deakin and Morris, Labour Law, pp. 124–5, 127; Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [33–278], [33–282], [33–292]; A. Dickinson, The Rome II Regulation: The Law Applicable to Non-contractual Obligations (Oxford University Press, 2008), [15.16]–[15.18]; R. Fentiman, International Commercial Litigation (Oxford University Press, 2010), [3.51]–[3.52]; F. J. Garcimartin Alférez, ‘The Rome I Regulation: Much ado about Nothing?’ (2008) 8(2) The European Legal Forum I-61, [75]; U. Magnus, ‘Die Rom I-Verordnung’ (2010) 30 Praxis des Internationalen Privat- und Verfahrensrecht 27, p. 41; Merrett, Employment Contracts in PIL, [7.44]–[7.47], [8.38]–[8.42]; Max Planck Institute, ‘Comments on the European Commission’s Green Paper on the Conversion of the Rome Convention of 1980 on the Law Applicable to Contractual Obligations into a Community Instrument and Its Modernization’, available at http://ec.europa.eu/justice/news/consulting_public/ rome_i/contributions/max_planck_institute_foreign_private_international_law_en. pdf, answer to question 16, [4]; cf. J. Harris, ‘Mandatory Rules and Public Policy under the Rome I Regulation’ in F. Ferrari and S. Leible (eds.), Rome I Regulation: The Law Applicable to Contractual Obligations in Europe (Munich: Sellier, 2009) 269, pp. 292–7; M. Hellner, ‘Third Country Overriding Mandatory Rules in the Rome I Regulation: Old Wine in New Bottles?’ (2009) 5 Journal of Private International Law 447, pp. 457–61.

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the territorial scope of statutory rights conferred by employment legislation are essentially the same as those underlying Article 8 of Rome I. Presumably, all such occurrences concern postings of workers to Britain. But the vast majority of postings of workers to Britain fall within the scope of the Posted Workers Directive and the provisions contained in employment legislation concerning non-listed matters can then apply only if the test of Article 3(10) of the Posted Workers Directive is satisfied. An unrestricted application of such provisions in situations concerning other postings of workers to Britain would not only undermine the choice-of-law process but also run counter to the goals of legal certainty, predictability, uniformity of result and discouragement of forum shopping which underlie Rome I. The CJEU clarified the meaning of the concept of ‘overriding mandatory provisions’ in its recent decision in Unamar.135 Here, a Belgian commercial agent brought a claim in Belgium under the Belgian implementation of the Self-Employed Commercial Agents Directive against a Bulgarian principal. The contract was expressly subject to Bulgarian law. Both Member States had implemented the directive properly. The scope and level of protection granted by the Belgian implementation, however, went beyond the minimum standard of protection offered by the directive. Although the CJEU had clarified in Ingmar136 that the provisions of the Self-Employed Commercial Agents Directive were overridingly mandatory in the case where the parties chose the law of a non-EU country to govern their contract and should be applied where the situation was closely connected with the EU, it was not certain whether the implementing legislation of one Member State would apply with the same force to contracts governed by the law of another Member State that had also properly implemented the directive in question. Advocate General Wahl was strongly in favour of an overriding application of the Belgian implementation of the Self-Employed Commercial Agents Directive.137 Although he acknowledged that the concept of overriding mandatory provisions for the purposes of both Article 7 of the Rome Convention and Article 9(1) of Rome I was ‘an autonomous European concept’138 that was ‘not unlimited’,139 he was of the opinion that the Member States, nevertheless, ‘have a wide discretion to decide in which areas and on what grounds a provision of the law of the forum is 135

136 139

Case C-184/12 United Antwerp Maritime Agencies (Unamar) NV v. Navigation Maritime Bulgare, 17 October 2013, nyr. See n 91. 137 Unamar (n 135), AG Opinion, 15 May 2013, nyr. 138 Ibid., [34]. Ibid., [36].

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considered mandatory’.140 The CJEU, on the other hand, was much more cautious. It emphasised that the principle of party autonomy required a strict interpretation of the concept of overriding mandatory provisions.141 Furthermore, it added that, in the course of assessing whether the provisions in question were overridingly mandatory, national courts had to determine whether it appeared that they had been adopted ‘in order to protect an interest judged to be essential by the Member State concerned . . . [S]uch a case might be one where the transposition in the Member State of the forum . . . offers greater protection to commercial agents by virtue of the particular interest which the Member State pays to that category of nationals’.142 These statements show that the CJEU rejected a wide interpretation of the concept of overriding mandatory provision. So how likely are the provisions contained in British employment legislation concerning matters not listed in Article 3(1) of the Posted Workers Directive to satisfy the test of Article 9(1) of Rome I? For example, unfair dismissal is not a listed matter although its importance for the political, social and economic organisation of a country is, without a doubt, great. But it is not certain that the provisions concerning unfair dismissal of ERA 1996 rise to the standard of Article 9(1). Until 6 April 2012, these provisions applied to the dismissal of employees who had been continuously employed for more than a year.143 But the qualifying period of employment has now been raised to two years. The Office for National Statistics figures suggest that an extra 12 per cent of employees have been denied the chance to claim unfair dismissal as a result of the change.144 Provisions which exclude such a large number of working population from their scope seem unlikely to be crucial for safeguarding political, social or economic organisation.145 Furthermore, one might argue that there is a link between the breadth of the personal scope of employment legislation and its overriding effect. Many provisions contained in British employment legislation concerning matters listed in Article 3(1) of the Posted Workers 140 142

143

144

145

Ibid., [31]; similarly, [35]. 141 Ibid., CJEU judgment, [49]. Ibid., [50] (emphases added). See also Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [33–291]. Section 108(1); Art. 3 Unfair Dismissal and Statement of Reasons for Dismissal (Variation of Qualifying Period) Order SI 2012/989. ‘Employees Will Pay to Bring Unfair Dismissal Claims, Government Proposes’, The Guardian, 3 October 2011. Similarly, Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [33–282].

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Directive extend beyond ‘employees’, that is, persons working under employment contracts, to encompass wider categories of persons. Thus, provisions concerning working time and minimum wage also cover ‘workers’.146 Provisions concerning anti-discrimination apply to ‘employment under a contract of employment, a contract of apprenticeship or a contract personally to do work’.147 Provisions concerning health and safety have the widest personal scope; they also extend to independent contractors.148 On the other hand, almost all of the provisions concerning non-listed matters apply only to ‘employees’. An explanation for this difference in personal scope is that the legal regulation primarily directed at the possible misuse of managerial authority is confined to contracts of employment because those contracts contain the implied terms of the requirement of loyalty and performance in good faith.149 But when the legal regulation is directed primarily at the operation of the labour market, as in the case of working time, wages and anti-discrimination legislation, the personal scope is broader because it is recognised that the market for the performance of work extends beyond traditional contracts of employment.150 A similar argument could be advanced with regard to the overriding effect of employment legislation. If a provision primarily concerns the possible misuse of managerial authority, it should apply only if English (or Scottish) law governs the contract. But if a provision is primarily concerned with the operation of the labour market, it could have an overriding effect.151 By way of comparison, the German Bundesarbeitsgericht has expressly held that the German provisions concerning unfair dismissal are not overridingly mandatory, since they do not have the protection of public interests as their primary purpose, but rather the balancing out of the parties’ individual interests.152 146

147 148 149 151

152

See section 45A(1) ERA 1996 (right not to suffer detriment in employment in working time cases); section 2(1) WTR 1998; section 1(2)(a) NMWA 1998. Section 83(2) EqA 2010; cf. Jivraj v. Hashwani [2011] UKSC 40; [2011] 1 WLR 1872. Sections 3 and 4 Health and Safety at Work Act 1974. Collins, Ewing and McColgan, Labour Law, p. 210. 150 Ibid. See Van Winkelhof (n 42), in which the Employment Tribunal acknowledged, at [72], the link between the personal and territorial scope of employment legislation. But it should be noted that the provisions concerning whistleblowing have the same territorial scope as those concerning unfair dismissal: see cases referred to in n 42. BAG, 24 August 1989, IPRspr. 1989 No. 72. Dutch courts have adopted a similar approach: Sorensen v. Aramco Overseas Co., Hoge Raad, 23 October 1987, NJ 1988, 842, cited in H. L. E. Verhagen, ‘The Tension between Party Autonomy and European Union Law: Some Observations on Igmar GB Ltd. v. Eaton Leonard Technologies Inc.’ (2002) 51 International and Comparative Law Quarterly 135, p. 144.

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If the provisions concerning unfair dismissal of ERA 1996 do not satisfy the test of Article 9(1) of Rome I,153 it will be difficult to find any provision contained in ERA 1996 or in any other piece of employment legislation concerning a non-listed matter which can do so. Therefore, since the concept of ‘overriding mandatory provisions’ of Article 9(1) of Rome I is limited to provisions which are ‘crucial . . . for safeguarding . . . political, social or economic organisation’ of a country, it is possible that the provisions contained in British employment legislation concerning matters not listed in Article 3(1) of the Posted Workers Directive, including unfair dismissal, will apply only if English (or Scottish law) governs the employment contract.

6.2.3 Should the Lawson v. Serco approach be abandoned? Had Lord Hoffmann not started off with a wrong assumption in Lawson v. Serco, that is, that ERA 1996 would have a worldwide application unless some territorial limitations were implied into it, his Lordship would have found it difficult to imply any territorial limitations into this act. The question before his Lordship would have been whether there was a good reason to imply territorial limitations where ERA 1996 applied as part of the applicable English law. Two types of cases should have been distinguished: those where English law was objectively applicable and those where English law was the chosen law. Before proceeding further, a preliminary issue must be addressed. One might argue that the rules limiting the territorial scope of British employment legislation are to be regarded as choice-of-law rules. Their application would then be precluded whenever English law is applicable either because the Rome Convention and Rome I displace national choice-of-law rules in situations falling within their scope or because they exclude renvoi.154 The nature of such self-limiting rules was discussed in the past. Some perceived them as choice-of-law rules,155 others 153

154

155

See also European Commission, ‘Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions: The Implementation of Directive 96/71/EC in the Member States’, COM(2003) 458 final, pp. 13–14 (arguing that the rules concerning dismissal are not considered to be overridingly mandatory). Art. 15 Rome Convention; Art. 20 Rome I. See S. Krebber, ‘Conflict of Laws in Employment in Europe’ (2000) 21 Comparative Labour Law and Policy Journal 501, pp. 520–1. J. H. C. Morris, ‘The Choice of Law Clauses in Statutes’ (1946) 62 Law Quarterly Review 170.

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as substantive law rules which prescribe a condition for the application of a right.156 Suffice it to say that nowadays in England the latter view is unanimously, and correctly, accepted.157 The rules limiting the territorial scope of employment legislation are, therefore, a creature of statutory construction and apply, like any other rule limiting the scope of employment legislation (e.g. qualifying period of employment), even when English law is the applicable law. So would there have been a good reason to imply territorial limitations into ERA 1996 when the act applied as part of the objectively applicable English law? Given that the rules for determining the objectively applicable law for employment contracts of the Rome Convention and Rome I are based on essentially the same principles that the House of Lords laid down in Lawson v. Serco and the Supreme Court refined in Duncombe (No 2) and Ravat, any implication of territorial limitations when English law was objectively applicable would have been hard to justify. This would have been particularly so where the parties did not choose a law that was different from the objectively applicable English law. The implication of territorial limitations in such situations could lead to a legal vacuum, that is, to English law being the only applicable law, but the employee being unable to invoke any protective provisions of that law. However, one might argue that ‘the general principle of construction . . . that legislation is prima facie territorial’158 at least precludes the application of ERA 1996 where English law is only the chosen law and not also the objectively applicable law. But according to the authors of Dicey, Morris and Collins on the Conflict of Laws, if the ‘presumption that Parliament does not design its statutes to operate beyond the territorial limits of the United Kingdom . . . still exists, it is one which is easily rebutted’.159 There are good reasons why this ‘presumption’ should be rebutted in cases concerning employment legislation.160 Section 2(1) of the European Communities Act 1972 expresses 156

157

158 159

160

Mann, ‘Statutes and the Conflict of Laws’, pp. 136–7; Unger, ‘Use and Abuse of Statutes, pp. 428–33. Collins, Ewing and McColgan, Labour Law, pp. 57–60; Deakin and Morris, Labour Law, p. 119; Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [1–049]–[1– 052], [33–278]–[33–296]; Merrett, ‘Extra-Territorial Reach’; Plender and Wilderspin, The European PIL of Obligations, [11–060], [11–063]–[11–065], [11–068]; Scott, ‘Territorial Scope’. Lawson v. Serco (n 1), [6]. Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [1–038]. Also, Dutson, ‘The Conflict of Laws and Statutes’, p. 675. Also, Collins, Ewing and McColgan, Labour Law, p. 59.

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Parliament’s intention that all its legislation, past, present and future, must be ‘construed and have effect’ in accordance with EU law. Since the territorial limitations of employment legislation are contrary to three objectives of Rome I, namely party autonomy, protection of employees and legal certainty, Parliament must be presumed to have intended its employment legislation to apply, in principle, within the boundaries determined by the choice-of-law rules of Rome I. Furthermore, one must bear in mind that the provisions of Rome I have direct effect in EU law. The principle of effectiveness in EU law requires that all national provisions which preclude their effectiveness be modified or disregarded. With regard to the Rome Convention, admittedly this instrument is not part of EU law and does not have direct effect. Nevertheless, an English court mindful of its international character and of the desirability of achieving uniformity in its interpretation and application161 would have to take into consideration the objectives pursued by this instrument and refrain from implying the territorial limitations into employment legislation. First, party autonomy is the ‘cornerstone’ of the Rome Convention and Rome I.162 English law allows the parties to incorporate the provisions of ERA 1996 concerning say unfair dismissal into their employment contract, which provisions are then enforceable in ordinary contractual disputes. There does not seem to be a good reason why the parties should not be allowed to achieve the same result by means of a choice-of-law clause in favour of English law. The Employment Appeal Tribunal tried to counter this argument in Financial Times Ltd. v. Bishop163 by holding that a ‘Senegalese employee working in Peru for a Wisconsin corporation would not be enabled to bring proceedings in the Tribunals here to assert the right not to be unfairly dismissed simply because his contract of employment happened to provide that English law was the proper law of his contract’. Leaving aside the point that English courts might not have international jurisdiction to hear the claim in such a case, it should be noted that no rational employee from Senegal working in Peru would agree with a rational employer from Wisconsin on the application of English law. The more likely scenario is a choice-of-law clause in an employment contract between an English employee and an English or a foreign company or between a foreigner and an English company. When such parties choose English law, they expect the whole of English law, including statute law, to apply. In particular, the legitimate expectations 161

Art. 18 Rome Convention.

162

Recital 11 Rome I.

163

See n 7, [55].

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of English employees are not upheld if the choice of English law does not lead to the application of statutory employment rights, which are the primary means of protection of employees in this country. Even the Supreme Court recognised this by stating, in Duncombe (No 2), that the fact that English law was chosen by the parties must be relevant to the expectation of each party as to the protection which the employee would enjoy. The law of unfair dismissal does not form part of the contractual terms and conditions of employment, but it was devised by Parliament in order to fill a well-known gap in the protection offered by the common law to those whose contracts were ended.164

Moreover, a typical feature of the employment relation is the asymmetry of information. The employer is more likely than the employee to know the law. The employer may use this knowledge to its advantage when drafting the standard form contract of employment. As the law stands, the employer who is knowledgeable of the territorial limitations of the statutory employment rights and who employs employees to work abroad can, almost without any adverse consequences on its part, insert a choice-of-law clause in favour of English law. On the other hand, the employee is unlikely to be knowledgeable of the problem of territoriality. If he or she sees an English choice-of-law clause, the employee will assume that he or she is entitled to the protection of the whole of English law, including statute law. The employee might even be told so by his or her employer, as the employee in Ravat was. Furthermore, an English employee might even accept a somewhat lower salary in return for the application of ‘his’ or ‘her law. In order to eradicate such adverse consequences of asymmetry of information, the whole of English law, including statute law, should, in principle, be applied whenever English law is chosen by the parties. Second, the territorial limitations preclude the operation of the protective mechanism of the Rome Convention and Rome I whenever English law is only the chosen law. A way in which these instruments seek to achieve the protection of employees is by allowing the parties to choose a law that provides better protection than the objectively applicable law. If English law is only the chosen law, the Lawson v. Serco principles preclude the application of the statutory employment rights, the primary means of protection of employees in this country. Therefore, 164

See n 3, [16]. See also Ravat (n 3), [32].

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the territorial limitations undermine the objective of protection of employees. Third, the territorial limitations run afoul of the objective of legal certainty. Duncombe v. Secretary of State for Children, Schools and Families165 is the best proof of how uncertain it is to foresee the exact territorial scope of the rights conferred by employment legislation and the outcome of litigation. It is expected that the questions of differentiation between statutory and contractual rights conferred by employment legislation and of impact of EU law on the territorial scope of employment legislation will continue to cause considerable legal uncertainty in the future. Finally, employment legislation of mainland European Member States is not, in principle, of strictly territorial application like most of British employment legislation. Thus, if the parties choose French or German law, employment legislation of these countries, in principle, applies even if French or German law is only the chosen law.166 In these cases, employees are accorded the protection of the most favourable provisions found in French or German law and in the objectively applicable law. The territorial limitations of the statutory rights conferred by British employment legislation, however, mean that these rights do not apply in equivalent situations when English (or Scottish) law is only the chosen law. These territorial limitations thereby put British employers, who are more likely than employers from other Member States to agree on the application of English (or Scottish) law, in an unjustifiably better position in 165 166

See nn 3 and 67. See e.g. SA CIEC v. Piriou, Cass. soc., 28 October 1997 [1998] Droit social 186, note M.-A. Moreau; BAG, 21 January 1999, IPRspr. 1999 No. 46. One might note that in Sayers v. International Drilling Co. NV [1971] 1 WLR 1176, the Court of Appeal found that a provision of Dutch law invalidating a clause in the contract of employment exempting the employer from liability for injury to the employee had a limited territorial scope. However, this finding is controversial. As Salmon LJ noted at 1182, ‘according to the evidence called before the judge, there is in Dutch law a distinction between an ordinary contract and what is called an international contract of employment. As far as an international contract is concerned the clause excluding the master’s liability for negligence is effective. There was no explanation in the evidence of the Dutch lawyer as to what constitutes an international contract; nor any authority cited as to the effect of such a contract. However, there was no cross-examination and no evidence called on the part of the plaintiff on this issue. The judge accordingly had no alternative other than to accept as he did the evidence of the Dutch lawyer.’ But according to P. M. North this was an erroneous conclusion as to Dutch law: ‘Reform, but not Revolution’ (1990-I) 220 Recueil des Cours 9, p. 226, fn. 743, citing T. M. de Boer, Beyond Lex Loci Delicti: Conflicts Methodology and Multistate Torts in American Case Law (The Hague: Kluwer, 1987), p. 186.

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relation to comparable employers from other Member States. One wonders if this is in accordance with EU law. In conclusion, the Lawson v. Serco approach should be abandoned for two reasons. First, the principles that this case lays down are the same as those underlying the rules for determining the objectively applicable law for employment contracts of the Rome Convention and Rome I. Second, the limitations of the territorial scope of employment legislation are contrary to the objectives pursued by these instruments, especially when English law is the chosen law. It is not suggested here that the territorial limitations should be completely abolished. If there are good reasons to limit the application of the provisions of a particular piece of employment legislation, for example, health and safety legislation, to a particular territory, Parliament is free to do so. However, the territorial limitations should not be routinely implied into employment legislation.

6.3 Conclusions In the common law of conflict of laws of employment, statutory claims were regarded as a different category from contractual and tortious claims. The determination of the territorial scope of the statutory rights conferred by employment legislation forming part of English law was regarded as an issue entirely disconnected from the choice-of-law process. The conventional view has been upheld by the House of Lords in Lawson v. Serco and by the Supreme Court in recent cases. But Rome I and, to a certain extent, the Rome Convention have radically changed the law in this field. First, since both of these instruments apply to statutory claims, employment legislation does not have a worldwide application because it applies, in principle, to employment contracts governed by English (or Scottish) law. Second, there are no reasons to routinely impose territorial limitations into the statutory employment rights when English law is objectively applicable, since the rules for determining the objectively applicable law for employment contracts of the Rome Convention and Rome I are based on essentially the same principles that the House of Lords laid down in Lawson v. Serco and the Supreme Court later refined. Third, the territorial limitations of the statutory employment rights should be avoided as far as possible when English law is the chosen law. Such territorial limitations not only are contrary to the objectives of party autonomy, protection of employees and legal certainty pursued by the Rome Convention and Rome I but also put British employers who employ employees to work abroad in an

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unjustifiably better position in relation to comparable employers from other Member States. Finally, since the concept of ‘overriding mandatory provisions’ of Article 9(1) of Rome I is limited to provisions which are ‘crucial . . . for safeguarding . . . political, social or economic organisation’ of a country, the provisions contained in employment legislation will have an overriding effect, that is, apply when English law is not the law governing the employment contract, only if the stringent requirements of Article 9(1) are satisfied. It is, therefore, possible that the provisions concerning unfair dismissal of ERA 1996 will not be regarded as overriding mandatory provisions and will apply only if English (or Scottish) law governs the employment contract. In other words, Rome I and, to a certain extent, even the Rome Convention seem to have in effect largely merged contractual and statutory claims into a single category for the purposes of private international law. Consequently, the approach pursued in Lawson v. Serco is no longer correct, if it ever was, and should not be followed in the future. The following chapter examines whether and to what extent Rome I impacts tortious claims.

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7 Choice of law Tortious claims

The plaintiff can advance his claim, as he wishes, either in contract or in tort; and no doubt he will, acting on advice, advance his claim on the basis which is most advantageous to him. Goff LJ1

In English employment law, employees may bring claims in tort. An employee may commence proceedings for breach of the employer’s personal and non-delegable duty of care, for breach of duties imposed by health and safety legislation or on the basis of the employer’s vicarious liability for the torts of employees committed in the course of employment. Apart from suing in tort in such cases, employees may also bring a contractual claim for breach of the employer’s express or implied duty to take reasonable care for the health and safety of its employees.2 Employees are free not only to choose the basis on which to advance their claims but also to frame them in both tort and contract and get the best of both worlds,3 subject to the rule against double recovery. Employers also sometimes sue their employees on multiple bases. For example, an employee owes duties in relation to the employer’s intangible assets, in particular its intellectual property including commercial know-how and goodwill; these duties are both implied in the contract and form part of a general set of obligations to refrain from breach of confidence.4 Similarly, an employee owes a duty not to compete with the 1 2

3

4

Coupland v. Arabian Gulf Oil Co. [1983] 1 WLR 1136, 1153. Lister v. Romford Ice and Cold Storage Co. Ltd. [1957] AC 555, 573 (‘It is trite law that a single act of negligence may give rise to a claim either in tort or for breach of a term express or implied in a contract’, per Lord Simmonds). Henderson v. Merrett Syndicates Ltd. (No 1) [1995] 2 AC 145, 193–4 (‘the common law is not antipathetic to concurrent liability, and . . . there is no sound basis for a rule which automatically restricts the claimant to either a tortious or a contractual remedy’, per Lord Goff). M. Freedland, The Personal Employment Contract (Oxford University Press, 2003), pp. 173–4.

221

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employer’s interests or act negatively in relation to them during the employment.5 A breach of these duties can be conceptualised either as a breach of an implied contractual term or as a tort, for example, the tort of conspiracy. Do the parties to a transnational employment contract have an equivalent freedom in choice of law and, if so, under what conditions? In other words, may a party to such a contract advance his or her claim either on a tortious or on a contractual basis depending on whether he or she finds the law governing the tort (the lex delicti) or the law governing the contract (the lex contractus) more advantageous? May a party proceed on both bases and win the case if his or her claim succeeds under one of the governing laws? Most of this chapter deals with these questions by discussing the rules of the European choice-of-law instruments. Similar to statutory claims that have been examined in the previous chapter, the findings of this chapter support the conclusion that the traditionally perceived tortious claims are largely merged with contractual claims for choice-of-law purposes because of the relatively wide subject matter scope of Rome I and the operation of the choice-of-law rules for tort of Rome II. This channelling of legislative authority over an employment relationship to the country whose law is the lex contractus under Rome I leads effectively to an almost complete abolition of concurrent causes of action in choice of law. The second section of this chapter deals with another problem that lies at the intersection of contract and tort in choice of law, namely the validity and effect of contractual clauses excluding or limiting liability in tort.

7.1 Concurrent causes of action in choice of law The essence of the problem of concurrent causes of action in choice of law is best described by Briggs: does a claimant have and should he have ‘the freedom . . . to choose the choice of law rule which will dictate the result of the claim he advances against a defendant’?6 This question opens a host of other questions. Which law decides whether this freedom exists? Is this a question of procedure, governed by the law of the forum (lex fori)? Is it a question of substance, governed by the law applicable to the merits (the lex causae)? If it is the latter, is it governed by the 5 6

Ibid., p. 174. A. Briggs, ‘Choice of Choice of Law’ [2003] Lloyd’s Maritime and Commercial Law Quarterly 12.

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lex delicti or the lex contractus? What if the putative lex delicti and lex contractus are the laws of different countries that are in disagreement on whether the claimant is free to advance the claim, alternatively or simultaneously, on more than one basis? Or does European private international law provide an autonomous solution? Before dealing with these questions, the way in which the English common law conflict of laws handled concurrent causes of action is briefly described.

7.1.1 The common law With regard to concurrent causes of action, the common law conflict of laws mirrored substantive law. The claimant was free to formulate his or her claim for the defendant’s breach of essentially one duty (e.g. the employer’s duty to take reasonable care for the health and safety of its employees or the employee’s duty not to compete with the employer’s interests or act negatively in relation to them during the employment) on any basis for which there was a separate legal category (contract, tort, equity etc.) by pleading only the facts and the rules of law necessary to establish the relevant cause of action, thereby triggering the application of the corresponding choice-of-law rules. This is supported by Matthews v. Kuwait Bechtel Corp.,7 Coupland v. Arabian Gulf Oil Co.8 and Johnson v. Coventry Churchill International Ltd.9 The claimants in these cases suffered injury at work abroad and sued their employers in England for breach of duty to take reasonable care for their employees’ health and safety. According to Sellers LJ in Matthews, ‘It is at the election of the workman in circumstances such as these whether . . . he will sue in contract or sue in tort.’10 The quote from the speech of Goff LJ in Coupland cited at the beginning of this chapter is to the same effect. The reason for pursuing the claim on one or the other basis may lie, for example, in the differences between the substantive rules of the lex delicti and the lex contractus (e.g. as regards the scope of liability, limitation periods, the measure and nature of damages, defences to liability, the burden of proof, the recoverability of economic loss or damages for psychiatric injury, the tests of causation or remoteness) or in the possibility of invoking different heads of jurisdiction under the traditional English jurisdictional rules.11 The claimant in Matthews was allowed to 7 11

8 9 [1959] 2 QB 57. See n 1. [1992] 3 All ER 14. 10 See n 7, 67. Civil Procedure Rules Practice Direction 6B, para. 3.1 does not contain special heads of jurisdiction for employment matters. The basis on which the employment claim is advanced is therefore crucial because it allows the claimant to rely on different heads of

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frame his claim in contract; the claimant in Johnson advanced his claim in tort,12 whereas the claimant in Coupland formulated his claim on both bases.13 As suggested by Coupland, the claimant was free to accumulate causes of action in choice of law, that is, to advance his or her claim on as many bases for which there was a separate choice-of-law category. This was authoritatively decided in Base Metal Trading Ltd. v. Shamurin.14 Here, the claimant company sued its director, who was also one of its corporators and employed by it as a trader, for causing it loss by performing his trading activities negligently or incompetently. The claim was advanced on three bases: (1) for breach of the employment contract, (2) for breach of a duty of care owed under the general law and (3) for breach of the director’s equitable duty of care. Although the court noted that ‘the content of the duty alleged and the facts giving rise to its breach were alleged to be the same whether the case was put in contract, tort or equity’,15 it nevertheless examined each cause of action separately and found that the contractual and tortious causes of action were to be decided under a different law than the equitable one. The claim, however, failed under both governing laws. Shamurin, therefore, demonstrates that the common law conflict of laws permitted the claimant to advance his or her claim for the defendant’s breach of essentially one duty on multiple bases and under different laws and to win the case if he or she was successful under at least one of them. With this background in mind, the following text explores how European private international law deals with concurrent causes of action in choice of law, starting with the discussion of the view that the issue of concurrence is one of procedure, governed by the lex fori.

12

13

14

15

jurisdiction where the permission of the court is needed to serve the claim form on the defendant out of the jurisdiction. Similarly, McDermid v. Nash Dredging & Reclamation Co. Ltd. [1987] AC 906 (injury at work in Sweden; case decided under English tort law); Cook v. Square D Ltd. [1992] ICR 262 (injury at work in Saudi Arabia; case decided under English tort law). See also Thomson v. Cremin [1956] 1 WLR 103 (Note) (injury at work in Australia; case decided under the Scottish law of negligence). See also Booth v. Phillips [2004] EWHC 1437 (Comm); [2004] 1 WLR 3292 (injury at work in Australia; the claimant relied on the heads of jurisdiction of para. 3 of Civil Procedure Rules Practice Direction 6B for both contractual and tortious claims). [2002] CLC 322 and [2003] EWHC 2419 (Comm); [2004] 1 All ER (Comm) 159, affirmed in [2004] EWCA Civ 1316; [2005] 1 WLR 1157. [2004] EWCA Civ 1316; [2005] 1 WLR 1157, [14], per Tuckey LJ.

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7.1.2 A procedural issue? Rome I and Rome II do not apply to evidence and procedure.16 Should the question whether concurrent causes of action are permitted in choice of law be regarded as procedural, English courts could simply continue to follow the common law approach. There is some support for this view in Shamurin,17 an opinion of Advocate General Darmon,18 the explanatory memorandum accompanying Rome II19 and in the writings of some English academics.20 To resolve this problem of classification, that is, whether the issue of concurrence in choice of law is to be regarded as procedural, one must look into the origin of the common law approach. According to Weir,21 English substantive law permits concurrent causes of action because legal categories such as contract and tort are not intrinsic to the common law. Historically, English law was categorised by reference to procedural forms of action through which liability could be asserted. ‘[T]he whole development of English law may be traced through decisions where the judges finally allowed another and better remedy alongside an existing one.’22 Procedural forms were 16 17

18

19

20

21

22

Art. 1(3) Rome I; Art. 1(3) Rome II. [2002] CLC 322, [7] (‘The question whether Mr Shamurin owed the company one duty or three duties is one which in these proceedings falls to be judged by English law’, per Moore-Bick J); [2004] EWCA Civ 1316; [2005] 1 WLR 1157, [33] (‘Domestic law allows concurrent claims in contract and tort and it has always been assumed that English private international law does so also’, per Tuckey LJ). Case 189/87 Athanasios Kalfelis v. Bankhaus Schröder, Münchmeyer, Hengst and Co. [1988] ECR 5565, Opinion of AG Darmon, [23] (‘such an eventuality can arise only where national procedure allows the “overlapping” of grounds for a single court action, as appears to be the case in the Federal Republic of Germany, the Netherlands and the United Kingdom’). European Commission, ‘Proposal for a Regulation of the European Parliament and the Council on the Law Applicable to Non-Contractual Obligations (Rome II): Explanatory Memorandum’, COM(2003) 427 final, pp. 12–13. R. Fentiman, International Commercial Litigation (Oxford University Press, 2010), [5.34]– [5.35]; J. Hill and A. Chong, International Commercial Disputes: Commercial Conflict of Laws in English Courts, 4th edn (Oxford: Hart, 2010), [5.6.8], [15.4.5]; cf. Briggs, ‘Choice of Choice of Law’, pp. 19–21; A. Briggs, Conflict of Laws, 3rd edn (Oxford University Press, 2013), p. 228, fn. 59; A. Dickinson, ‘Applicable Law Arbitrage – An Opportunity Missed?’ (2005) 121 Law Quarterly Review 374, pp. 377–8; R. Garnett, Substance and Procedure in Private International Law (Oxford University Press, 2012), [6.07]; T. M. Yeo, ‘Choice of Law for Director’s Equitable Duty of Care and Concurrence: Base Metal v. Shamurin’ [2005] Lloyd’s Maritime and Commercial Law Quarterly 144, pp. 151–2; T. M. Yeo, Choice of Law for Equitable Doctrines (Oxford University Press, 2004), [3.33]. T. Weir, ‘Complex Liabilities’ in A. Tunc (ed.), International Encyclopedia of Comparative Law (Tübingen: Mohr Siebeck, 1983), vol. XI, Ch 12, [67]–[68]. Ibid., [67].

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abolished in the mid-nineteenth century and replaced with substantive categories such as contract and tort. Since it was not easy to reallocate to the categories of contract and tort liabilities that had existed under procedural forms, English lawyers struggled to classify various obligations that had been recognised. Concurrent liability (i.e. the existence of essentially one duty in different branches of the law) was permitted because the law had already been accustomed to the concurrence of procedural forms. The common law conflict of laws, under the influence of the old thinking, regarded the nature and extent of remedies as procedural issues.23 One might, therefore, assume that, from the English viewpoint, the question whether concurrent causes of action are permitted in choice of law should, by analogy with the closely related issue of remedies, also be regarded as procedural. But Article 15(c) of Rome II expressly provides that ‘the existence, the nature, and the assessment of damage or the remedy claimed’ are governed by the law applicable to the merits.24 Consequently, the view that, for the purposes of classification, the issue of concurrence should be treated in the same way as the issue of remedies goes against the classification of the former as procedural for the purposes of the European choice-of-law instruments. By way of comparison, it should be mentioned that the issue of concurrence is regarded as substantive in mainland Europe. For example, concurrent causes of action are not allowed in French law, where there is the rule of non cumul des responsabilités.25 Contractual liability prevails over delictual liability because Articles 1382 and 1383 of the Civil Code provide for delictual liability in the event that any fault causes harm of any kind: ‘Anyone who, through his act, causes damage to another by his fault shall be obliged to compensate the damage. Everyone is responsible for the damage caused not only by his act but also by his negligence or carelessness.’ If concurrent causes of action were allowed, almost all breaches of contract would also have to be treated as delict. In German 23

24 25

Harding v. Wealands [2006] UKHL 32; [2007] 2 AC 1; L. Collins (gen. ed.), Dicey, Morris and Collins on the Conflict of Laws, 15th edn (London: Sweet & Maxwell, 2012), [7–011][7–012]; J. J. Fawcett and J. M. Carruthers, Cheshire, North and Fawcett: Private International Law, 14th edn (Oxford University Press, 2008), pp. 94–5; Garnett, Substance and Procedure, [2.03]–[2.08]. See also Art. 12(1)(c) Rome I. H. G. Beale and others, Cases, Materials and Text on Contract Law, 2nd edn (Oxford: Hart, 2010), pp. 112–14; W. van Gerven, Cases, Materials and Text on National, Supranational and International Tort Law (Oxford: Hart, 2000), pp. 35–7, 40–3; Weir, ‘Complex Liabilities’, [52]–[57].

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law, concurrent causes of action are, in principle, allowed.26 In fact, concurrence was necessary:27 damages for pain and suffering were not available in contract law and it would have been intolerable to give such damages to a pedestrian and not to a passenger; the absence of any provision for positive breach of contract made it necessary for contractors to be able to sue each other in delict. Rules concerning concurrent causes of action in the substantive laws of France and Germany, as well as in English substantive law, therefore, reflect the balance struck between the constituent parts of the laws of obligations of these countries. A substantive classification of the issue of concurrence in these laws is another argument against a procedural classification of this issue for the purposes of the European choice-of-law instruments. There are other reasons not to treat the issue of concurrence in choice of law as procedural. Two Commonwealth cases are often cited for drawing the line between procedure and substance in private international law. In Tolofson v. Jensen,28 the Supreme Court of Canada stated that ‘the purpose of the substantive/procedural classification is to determine which rules will make the machinery of the forum court run smoothly as distinguished from those determinative of the rights of both parties’. In John Pfeiffer Pty. v. Rogerson,29 the High Court of Australia stated that ‘matters that affect the existence, extent or enforceability of the rights or duties of the parties to an action are matters that, on their face, appear to be concerned with issues of substance’. Concurrent causes of action in choice of law do not concern the smooth running of the machinery of the forum court. The machinery will run the same regardless of whether the claimant advances his or her claim in tort, contract or on both bases. But the ‘existence, extent or enforceability of the rights or duties of the parties’ may differ depending on whether 26

27 28

29

Beale and others, Cases, Materials and Text on Contract Law, pp. 114–15; Weir, ‘Complex Liabilities’, [58]–[66]. Weir, ‘Complex Liabilities’, [63]. [1994] 3 SCR 1022, 1071–2, per La Forest J, cited with approval in R. Plender and M. Wilderspin, The European Private International Law of Obligations, 3rd edn (London: Sweet & Maxwell, 2009), [17–067]; P. Rogerson, Collier’s Conflict of Laws, 4th edn (Cambridge University Press, 2013), p. 413. Similarly McKain v. R W Miller & Co. (SA) Pty. Ltd. (1991) 174 CLR 1, 26–7 (‘the essence of what is procedural may be found in those rules directed to governing or regulating the mode or conduct of proceedings’, per Mason CJ). (2000) 203 CLR 503, [104], cited with approval in A. Dickinson, The Rome II Regulation: The Law Applicable to Non-contractual Obligations (Oxford University Press, 2008), [14.59]–[14.60].

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concurrent causes of action are allowed. It is for this reason that the issue of concurrence in choice of law should not be regarded as procedural. Furthermore, the objectives of legal certainty, predictability, uniformity of result and discouraging forum shopping that underlie Rome I and Rome II also point away from a procedural classification of the issue of concurrence in choice of law. Suppose an English employee, habitually working for an English employer in Belgium, where he or she is also habitually resident, commences proceedings in England following an injury at work in France. If English courts always applied the English rules on concurrent causes of action in choice of law as procedural rules of the lex fori, the employee would be permitted to advance his or her claim in either contract or tort, or both. It is likely that, on these facts, the lex delicti would be French law and the lex contractus, in the absence of a choice-of-law clause, Belgian law.30 If the employee’s claim succeeded under one of the governing laws, he or she would win the case. But the problem is that neither Belgian nor French law permits concurrence. The application of the English rules on concurrent causes of action in choice of law in the English proceedings would undermine the mentioned objectives of the two regulations given that Belgian and French courts would, if they were to apply their rules on concurrence as procedural rules of the lex fori, allow the claimant to advance his or her claim in contract only, thus leading to the application of only one law, Belgian. The issue of concurrence in choice of law should, therefore, not be classified as procedural. This is in accordance with the general trend of limiting the category of procedure under the European choice-of-law instruments.31 This, however, does not mean that the issue of concurrence should automatically be treated as substantive, governed by the law applicable to the merits. This depends on whether European private international law provides an autonomous solution to the question whether concurrent causes of action are permitted in choice of law, which will be examined in the following subsection. 30 31

See the discussion in Section 7.1.4 of this chapter. See Garnett, Substance and Procedure; M. Illmer, ‘Neutrality Matters – Some Thoughts about the Rome Regulations and the So-Called Dichotomy of Substance and Procedure in European Private International Law’ (2009) 28 Civil Justice Quarterly 237; G. Panagopoulos, ‘Substance and Procedure in Private International Law’ (2005) 1 Journal of Private International Law 69; E. Shoeman, ‘Rome II and the SubstanceProcedure Dichotomy: Crossing the Rubicon’ [2010] Lloyd’s Maritime and Commercial Law Quarterly 81.

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Does European private international law allow concurrent causes of action in choice of law?

Choice-of-law rules for almost all obligations in English law are today of EU law origin, mainly contained in Rome I and Rome II. The reluctance of the CJEU to allow the application of the traditional English rules in situations covered by European private international law is notorious.32 The CJEU will certainly not allow the application of the English common law rules on concurrent causes of action in choice of law in situations falling within the scope of the two regulations. As Briggs puts it, ‘it is as though a metric choice of law rule has replaced one calibrated in imperial units of measurement’.33 Do Rome I and Rome II permit concurrent causes of action in choice of law? The answer depends on whether a claim for harm caused either by an act or by an omission of the defendant or a person for whom the defendant is vicariously liable, which gives rise to the defendant’s concurrent liability in more than one branch of substantive law, can simultaneously trigger the application of the choice-of-law rules of the two regulations. If so, concurrent causes of action in choice of law are permitted. The subject matter scope of Rome I and that of Rome II have been examined in Section 6.2.1 of the previous chapter. It will be remembered that the fields of application of the two regulations depend on the classification of the defendant’s obligation forming the basis of the claim. (Non)contractual obligations are autonomous concepts under the two regulations.34 By analogy with the CJEU case law on the concepts of ‘matters relating to a contract’ and ‘matters relating to tort, delict or quasi-delict‘ for the purposes of Articles 7(1) and 7(2) of the Brussels I Recast and their predecessors, the concepts of contractual and noncontractual obligations are mutually exclusive.35 If an obligation is 32

33 35

See Case C-281/02 Andrew Owusu v. N.B. Jackson, t/a ‘Villa Holidays Bal-Inn Villas’ and Others [2005] ECR I-1383; [2005] QB 801 (the doctrine of forum non conveniens has no role to play under the European jurisdictional instruments); Case C-159/02 Gregory Paul Turner v. Felix Fareed Ismail Grovit, Harada Ltd. and Changepoint SA [2004] ECR I-3565; [2005] 1 AC 101 and Case C-185/07 Allianz SpA and Generali Assicurazioni Generali SpA v. West Tankers Inc. [2009] ECR I-663; [2009] 1 AC 1138 (English courts cannot issue anti-suit injunctions to restrain proceedings in another Member State that fall within the scope of the lis pendens rules of the European jurisdictional instruments). Briggs, ‘Choice of Choice of Law’, p. 28. 34 Recital 11 Rome II; Recital 7 Rome I. Kalfelis (n 18), [18] (‘the term “matters relating to tort, delict or quasi-delict” . . . must be regarded as an independent concept covering all actions which seek to establish the liability of a defendant and which are not related to a “contract”’).

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classified as contractual for the purposes of Rome I, it cannot be regarded as non-contractual for the purposes of Rome II.36 The concept of ‘contract’ within the meaning of Article 7(1) of the Brussels I Recast and its predecessors has been interpreted broadly: ‘the phrase “matters relating to a contract” . . . is not to be understood as covering a situation in which there is no obligation freely assumed by one party towards another’.37 Similarly, Rome I should not apply to obligations that are not ‘freely assumed’ by one party towards another. Rome II applies to such obligations. What is the relevant obligation whose classification determines which set of choice-of-law rules applies? It must be emphasised here that the problem of concurrent causes of action in choice of law typically arises when the defendant’s breach of essentially one duty (e.g. the employer’s duty to take reasonable care for the health and safety of its employees or the employee’s duty not to compete with the employer’s interests or act negatively in relation to them during the employment) gives rise to concurrent liability in more than one branch of substantive law.38 In English employment law and the common law conflict of laws, unlike in the laws of some mainland European countries, the claimant is free to formulate his or her claim on any basis for which there is a separate substantive or choice-of-law category and plead only the facts and the rules of law necessary to establish the relevant cause of action. Therefore, by relying on certain facts and by framing his or her claim in a certain way, the claimant can achieve the application of the desirable substantive and choice-of-law rules under traditional English law. Can the claimant do the same in European private international law? The problem of concurrent causes of action has arisen under the European jurisdictional instruments, typically in the context of negligent provision of professional services. If a service provider provides services negligently, the question is whether the service receiver may choose to 36

37

38

Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [34–016]; Dickinson, The Rome II Regulation, [3.87], [3.104]–[3.105]; Cheshire, North and Fawcett: PIL, 14th edn (2008), p. 779; Hill and Chong, International Commercial Disputes, [15.4.4]; L. Merrett, Employment Contracts in Private International Law (Oxford University Press, 2011), [6.33]; Plender and Wilderspin, The European PIL of Obligations, [2–024]; A. Rushworth and A. Scott, ‘Rome II: Choice of law for Non-contractual Obligations’ [2008] Lloyd’s Maritime and Commercial Law Quarterly 274, p. 299. Case C-26/91 Jakob Handte & Co. GmbH v. Traitements Mécano-chimiques des Surfaces SA [1992] ECR I-3967; [1993] ILPr 5, [15]. See also Case C-27/02 Petra Engler v. Janus Versand GmbH [2005] ECR I-481; [2005] ILPr 8. See the quote from the speech of Tuckey LJ (n 15).

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bring a claim under Articles 7(1) and/or 7(2) of the Brussels I Recast. The recent Melzer judgment of the CJEU39 suggests that the answer is, to a certain extent at least, positive. Here, a German private investor brought a tortious claim in Germany against an English firm of brokers that traded futures in London. He invoked the jurisdiction of German courts on the basis that he had been solicited as a client in Germany by a German company, which opened an account for Mr Melzer with the English company. The defendant seems to have been sued both for its own alleged wrongdoing in England and for assisting the German company’s alleged wrongdoing in Germany.40 Furthermore, it seems to have been conceded that the only viable jurisdictional basis was with respect to the German company’s alleged wrongdoing in Germany, which the defendant had allegedly assisted.41 In an important paragraph, the CJEU said: As a preliminary point, it must be noted that, according to the referring court, despite the contractual nature of the relationship between Mr Melzer and [the defendant], the action in the main proceedings is based solely on the law of tort or delict. Therefore, the question referred for a preliminary ruling is limited to the interpretation of Article 5(3) of [Brussels I, the predecessor of Article 7(2) of the Brussels I Recast].42

The CJEU then continued with the examination of whether the rule of jurisdiction in tort gave jurisdiction to the German courts, untroubled by the fact that the rule of jurisdiction in contract pointed to England as the place of provision of services. The defendant in Melzer made some observations before the CJEU on the relationship between the rules of jurisdiction in contract and tort, but the court did not address them in its judgment. This is because, as Advocate General Jääskinen explained, ‘the national court alone establishes the subject-matter of its reference for a preliminary ruling and . . . since the question referred is not framed in that way by the national court there is no need for the Court to rule on a point raised by one of the parties to the main proceedings’.43 Be that as it may, the fact remains that the CJEU did not raise any concerns about the way in which the claimant formulated his claim. Had it thought that the parties bound by a contract could not invoke the rule of jurisdiction in tort to commence proceedings in respect of a related tort, the CJEU could and probably would have said so, regardless of the wording of the reference for a preliminary ruling. 39 41

Case C-228/11 Melzer v. MF Global UK Ltd., 16 May 2013, nyr. Ibid., [16]. 42 Ibid., [21]. 43 Ibid., AG Opinion, [29].

40

Ibid., [14].

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In the Voogsgeerd case,44 for example, the question referred for a preliminary ruling concerned the interpretation of the connecting factor of the engaging place of business for the purposes of the Rome Convention. Nevertheless, since the CJEU thought that the facts showed that the employee had a habitual place of work, it opened its judgment by addressing the relationship between the connecting factors of the habitual place of work and the engaging place of business. In doing so, it noted that according to the case-law of the Court, in the context of the preliminary ruling procedure, while it falls to the referring court to apply the rule of European Union law to a dispute before it and, thus, to characterise a provision of national law by reference to such a rule, it is the Court’s duty to provide that referring court with an interpretation of European Union law which may be useful to it in assessing the effects of that provision . . ., to extract from all the information provided by the national court, and, in particular, from the statement of grounds for the reference, the elements of European Union law requiring an interpretation, having regard to the subject-matter of the dispute.45

The fact that the CJEU in Melzer did not address the defendant’s observations on the relationship between the rules of jurisdiction in contract and tort signals that it had no objections about the way in which the claim was formulated. This is in line with other CJEU cases concerning concurrent causes of action under the European jurisdictional instruments. As mentioned, Articles 7(1) and 7(2) of the Brussels I Recast are mutually exclusive.46 But, as Zogg explains, there are two possible ‘objects of mutual exclusivity’: (1) ‘the “action as a whole” or the “entire dispute” which comprises so to speak “all causes of action contained in the proceedings/dispute”’ and (2) ‘the “respective single cause of action/claim” that is a “part of the action as a whole/entire dispute”’.47 The CJEU has recently had the chance to decide which of the two ‘object of mutual exclusivity’ is the relevant one. In Marc Brogsitter v. Fabrication de Montres Normandes EURL and Karsten Fräßdorf,48 a German seller of luxury watches concluded a contract with the two defendants for the development of two watch movements. In parallel to developing the two movements, the 44 46 47

48

C-384/10 Jan Voogsgeerd v. Navimer SA [2011] ECR I-13275. 45 Ibid., [30]. Kalfelis (n 18), [17]–[18]. S. Zogg, ‘Accumulation of Contractual and Tortious Causes of Action under the Judgments Regulation’ (2013) 9 Journal of Private International Law 39, pp. 41–2. Case C-548/12, 13 March 2014, nyr.

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defendants also developed and marketed other watch movements, cases and watch faces. The German party invoked the jurisdiction of the German courts under Article 5(3) of Brussels I, the predecessor of Article 7(2) of the Brussels I Recast, arguing that this amounted to a breach of the exclusivity clause in the contract and gave rise to tortious liability under German law. The CJEU rejected the argument that the mere fact that one contracting party brought a civil liability claim against the other was sufficient to consider that the claim concerned ‘matters relating to the contract’.49 It went on to say that That is the case only where the conduct complained of may be considered a breach of contract, which may be established by taking into account the purpose of the contract. This will a priori be the case where the interpretation of the contract which links the defendant to the applicant is indispensable to establish the lawful or, on the contrary, unlawful nature of the conduct complained of against the former by the latter. It is therefore for the referring court to determine whether the purpose of the claims brought by the applicant in the case in the main proceedings is to seek damages, the legal basis for which can reasonably be regarded as a breach of the rights and obligations set out in the contract which binds the parties in the main proceedings, which would make its taking into account indispensable in deciding the action.50

This judgment points to the second meaning of the ‘object of mutual exclusivity’. The parties who are bound by a contract can invoke the rule of jurisdiction in tort to commence proceedings in respect of a related tort provided that the interpretation of the contract is not ‘indispensable’ to establish the lawfulness of the defendant’s conduct, that is, that the taking into account of the contract is not ‘indispensable’ in deciding the action. Another leading CJEU case in this area, Kalfelis, also points to the second meaning.51 Here, the claimant commenced proceedings in contract, tort and unjust enrichment against his bank for a negligently given advice. By holding that ‘a court which has jurisdiction under Article 5(3) [of Brussels I, the predecessor of Article 7(2) of the Brussels I Recast] over an action in so far as it is based on tort or delict does not have jurisdiction over that action in so far as it is not so based’,52 the CJEU clearly established that the fact that the parties are bound by a contract does not automatically deprive the claimant of the possibility to invoke the

49

Ibid., [23].

50

Ibid., [25]–[27].

51

See n 18.

52

Ibid., [19].

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rule of jurisdiction in tort to commence proceedings in respect of a related tort. This may lead to the fragmentation of ‘different aspects of the same dispute’53 into different forums because the rule of jurisdiction in tort cannot confer accessory jurisdiction over the related contractual cause of action; similarly, the rule of jurisdiction in contract cannot confer accessory jurisdiction over the related tortious cause of action. In this respect, the CJEU departed from the view of its advocate general, who was of the opinion that ‘where there are overlapping grounds . . ., only Article 5(1) [of the Brussels Convention, the predecessor of Article 7(1) of the Brussels I Recast] will determine the jurisdiction of the court, since the matters relating to contract will “channel” all the aspects of the dispute’.54 Although the prevailing opinion among English academics seems to be that the parties bound by a contract cannot invoke the rule of jurisdiction in tort to commence proceedings in respect of a related tort,55 this opinion is arguably not supported by either the CJEU or English case law. The often-cited Court of Appeal decision in Source Ltd. v. TUV Rheinland Holding AG56 concerned a claimant who based his claim on a breach of 53 54

55

56

Ibid., [20]. Ibid., Opinion of AG Darmon, [29]. Similarly, ibid., [30]; Case C-89/91 Shearson Lehmann Hutton Inc. v. TVB Treuhandgesellschaft für Vermögensverwaltung und Beteiligungen mbH [1993] ECR I-139, Opinion of AG Darmon, [94]–[97], [105]–[111]; Case C-334/00 Fonderie Officine Meccaniche Tacconi SpA v. Heinrich Wagner Sinto Maschinenfabrik GmbH (HWS) [2002] ECR I-7357, Opinion of AG Geelhoed, [67]. Briggs, ‘Choice of Choice of Law’, pp. 29–30; A. Briggs and P. Rees, Civil Jurisdiction and Judgments, 5th edn (London: Informa, 2009), [2.149], [2.153], [2.171], [2.175]–[2.181]; Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [11–285]; Cheshire, North and Fawcett: PIL, 14th edn (2008), pp. 251–2; Hill and Chong, International Commercial Disputes, [5.6.8]. [1998] QB 54, affirmed in Rayner v. Davies [2002] 1 All ER (Comm) 620, [18]–[19] (‘Where a claim in tort alleges no more than what is alleged in the claim in contract, it seems to me that it is sensible to regard both claims as relating to a contract. The relationship between the parties which gives rise to the duty in tort is founded upon the contract’, per Morison J) and Barry v. Bradshaw [2000] ILPr 706, [10]. Similarly, Mazur Media Ltd. v. Mazur Media GmbH [2004] EWHC 1566 (Ch); [2004] 1 WLR 2966, [30]; Macritchie Bros. Ltd. v. Commercial Power Ltd., 2011 GWD 2–82 (decided under the Civil Jurisdiction and Judgments Act 1982). But see Raiffeisen Zentralbank Osterreich Aktiengesellschaft v. National Bank of Greece SA [1999] 1 Lloyd’s Rep 408, where Tuckey LJ held obiter, at p. 411, that Source was no longer good law in the light of Kleinwort Benson Ltd. v. Glasgow City Council (No.2) [1999] 1 AC 153 (decided under the Civil Jurisdiction and Judgments Act 1982). However, Raiffeisen is distinguishable from Source on the basis that the contract was not a necessary element of the tortious cause of action, so there was no reason to preclude the claimant from invoking the rule of jurisdiction in tort. Another case where the contractual and tortious causes of action arose independently and were in fact premised on opposite lines of argument is Domicrest

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a contractual obligation to exercise reasonable skill and care in the provision of services and a breach of the common law duty of care for the same reason. Staughton LJ in the Court of Appeal held firstly that ‘a claim which may be brought under a contract or independently of a contract on the same facts, save that the contract does not need to be established, is … excluded [from the scope of the rule of jurisdiction in tort] by the words “which are not related to a ‘contract’”’.57 He then held that the claimant could not rely on the rule of jurisdiction in tort in respect of the two causes of action ‘because they are both related to a contract’.58 Read together, the two quotes show that the claimant in Source was precluded from relying on the rule of jurisdiction in tort because the tortious cause of action could not succeed without establishing the contract between the parties. Had the tortious liability in question not pre-supposed the existence of a contract, Source indicates that the claimant would have been able to invoke the rule of jurisdiction in tort.59 But the fault line between contractual and tortious matters seems to lie at a different place for the purposes of the special rules of jurisdiction in employment matters of the Brussels I Recast. These rules apply ‘in matters relating to individual contracts of employment’60 and, as mentioned in Chapter 4, seem to cover all claims arising out of an employment relationship regardless of the facts the claimant pleads and the way in which he or she frames his or her claim. Thus, a claim against an employee for conspiracy to harm the employer’s business by soliciting fellow employees is a matter relating to the employment contract.61 So is a claim for breach of copyright, misuse of confidential information and unfair competition against an employee who obtained the employer’s design drawings by bribing a fellow employee for the purpose of facilitating unlawful competition against the employer.62 But if the claim concerns pre-contractual liability, for example, discrimination for not offering employment, the special jurisdictional rules of the Brussels I

57 60 61

62

Ltd. v. Swiss Bank Corp. [1999] QB 548, 561. The only case that supports an extensive interpretation of the rule of jurisdiction in contract seems to be the Irish High Court case of Burke v. Uvex Sports GmbH [2005] ILPr 26. Ibid., 63 (emphasis added). 58 Ibid. 59 Zogg, ‘Accumulation’, pp. 43–44. Art. 20(1) Brussels I Recast. CEF Holdings Ltd. v. Mundey [2012] EWHC 1524 (QB); [2012] IRLR 912, disapproving Swithenbank Foods Ltd. v. Bowers [2002] EWHC 2257 (QB); [2002] 2 All ER (Comm) 974. Alpha Laval Tumba AB v. Separator Spares International Ltd. [2012] EWCA Civ 1569; [2013] 1 WLR 1110.

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Recast do not seem to apply.63 The wide subject matter scope of these rules is justified by the principle of protection of employees. Employees would be disadvantaged if they had to bring tortious claims away from the habitual place of work or the employer’s domicile or defend tortious claims away from their home. Are the rules of jurisdiction and choice of law the same in respect of concurrent causes of action? The leading case is Shamurin,64 which was decided before the adoption of Rome I and Rome II. It may be recalled that the claimant advanced his claim on three grounds: for breach of the employment contract and breach of the common law and equitable duties of care. Russian law, the law applicable to the contract under the Rome Convention, imposed no liability on the defendant. The claimant attempted to circumvent this law by advancing his claim on two additional bases and arguing that the tortious and equitable causes of action were to be decided under English law. The English courts, therefore, had to deal with the classification of the common law and equitable duties of care. The defendant argued that, although imposed ex lege in English substantive law, these duties should be regarded as contractual for the purposes of the Rome Convention because he, as a director and an employee of the claimant company, had voluntarily assumed responsibility for his trading activities. The Court of Appeal disagreed. According to Tuckey LJ, a contractual obligation is by its very nature one which is voluntarily assumed by agreement. Terms may be implied into that agreement, but that is because they are necessary to make what has been agreed work and so this does not undermine the fact that the agreement is consensual. There is nothing consensual about the imposition of a tortious or equitable duty of care. It arises from a voluntary assumption of responsibility, but that is a state of affairs which is not dependant on agreement.65

Instead of determining whether the defendant’s duty to perform his trading activities with reasonable skill and care was essentially of a consensual or non-consensual nature or whether the contract between the parties was a necessary element of the tortious and equitable causes of 63

64 65

See Case C-334/00 Fonderie Officine Mecchaniche Tacconi SpA v. Heinrich Wagner Sinto Maschinenfabrik GmbH (HWS) (n 54); Recital 30 and Art. 12 Rome II; cf. Gerhard Fahey v. McKinsey & Co. Inc., EE/2001/146 (Irish Equality Tribunal). See n 14. [2004] EWCA Civ 1316; [2005] 1 WLR 1157, [28]; similarly [2002] CLC 322, [8], per Moore-Bick J; cf. [2003] EWHC 2419 (Comm); [2004] 1 All ER (Comm) 159, [35], per Tomlinson J.

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action, the court focused on classifying, for choice-of-law purposes, the various expressions of the duty in English substantive law. The court was aware that its approach to classification for the purposes of choice of law differed from the approach to classification for jurisdictional purposes, where the content of the putative applicable law(s) is irrelevant.66 Nevertheless, it justified its approach on the ground that the objectives of the European jurisdictional regime and the Rome Convention were not identical.67 An important objective of the European jurisdictional regime is the avoidance, so far as possible, of the fragmentation of jurisdiction. Since this concern is absent in choice of law, the application of multiple laws to the breach of essentially one duty did not trouble the Court of Appeal. The reasoning of the Court of Appeal is echoed in the manner some English academics approach the problem of classification. Although an autonomous classification of the concepts of (non)contractual obligations for the purposes of Rome I and Rome II is beyond doubt, an argument has been advanced that the scene for classification is set by the law(s) under which the claim is made. According to Rushworth and Scott, for example, [Rome II] choice of law rules look to the events out of which [noncontractual] obligations arise . . . Since the Regulation focuses on obligations and the events out of which they arise, these provide the data for characterization . . . [S]uch data must include an obligation’s nature, incidents and the constitutive elements of the event from which it arises. It is submitted that the only law that can provide this data is the law by reference to which the claimant pleads his claim.68

Applied to the facts of Shamurin, this approach would lead to English substantive law supplying the data for the choice-of-law classification of the alleged tortious and equitable duties and to Russian law doing the same in relation to the contractual cause of action. Since, in the words of Tuckey LJ, ‘[t]here is nothing consensual about the imposition of a tortious or equitable duty of care’ in English law, the data provided by English law would lead to the claim for the employee’s alleged breach of 66

67

68

Marc Brogsitter v. Fabrication de Montres Normandes EURL and Karsten Fräßdorf (n 48), [18]. [2004] EWCA Civ 1316; [2005] 1 WLR 1157, [34]. Moore-Bick J in Commercial Court also found that arguments derived from the European jurisdictional regime ‘raise quite different considerations’: [2002] CLC 322, [9]. Rushworth and Scott, ‘Rome II’, p. 296 (emphasis added and footnote omitted). Similarly, Dickinson, The Rome II Regulation, [3.67]–[3.72], [3.121].

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the common law and equitable duties of care triggering the application of Rome II and the claim for the employee’s alleged breach of contract triggering the application of Rome I.69 But this line of reasoning is not entirely persuasive. Relying on the law(s) under which the claim is made runs contrary to an autonomous classification of the concepts of (non)contractual obligations for the purposes of Rome I and Rome II. Statutory employment duties in English law, for example, are also neither express nor implied contract terms but are imposed by law. If the reasoning of Tuckey LJ were followed, statutory employment duties would have to be classified as non-contractual obligations and, as such, fall within the scope of Rome II. But it has been demonstrated in the preceding chapter that statutory employment duties are to be classified as contractual obligations in European private international law. The claim in Shamurin was based on the breach of the defendant’s duty to perform his trading activities with reasonable skill and care. It so happened that the duty existed in more than one branch of the law of obligations (contract, tort, equity) in one of the laws (English) closely connected with the parties’ relationship. But the duty flowed directly from the voluntary relationships (employee–employer and director–company) between the parties. Had there been no such relationships, the duty would have never existed. In other words, the contract between the parties was a necessary element of all causes of action. There is, therefore, a strong argument that the duty, regardless of its manifestations in the laws closely connected with the parties’ relationship, was ‘freely assumed’ and should have been classified as contractual for the purposes of the Rome Convention.70 If so, the entire dispute should have been determined exclusively by reference to the lex contractus. It is only if that law had allowed concurrent causes of action that the claimant could have advanced his claim on multiple bases. But even then only one law, the lex contractus, would have determined the outcome of the claim. There is, therefore, a great deal of similarity between the European jurisdictional and choice-of-law rules in respect of concurrent causes of action. Just as Articles 7(1) and 7(2) of the Brussels I Recast are mutually 69

70

Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [32–017], [33–274]– [33–275], [34–016]–[34–017]; Dickinson, The Rome II Regulation, [3.72], [3.128]– [3.139]; Merrett, Employment Contracts in PIL, [6.29]–[6.30], [6.32]–[6.33] (but cf. [6.33], fn. 66); see also Rushworth and Scott, ‘Rome II’, p. 298. Briggs, ‘Choice of Choice of Law’; Plender and Wilderspin, The European PIL of Obligations, [2–036]–[2–038], [2–065]; see also Yeo, Choice of Law for Equitable Doctrines, [7.10]–[7.11].

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exclusive, so are the concepts of contractual and non-contractual obligations for the purposes of Rome I and Rome II. The ‘object of mutual exclusivity’ in the area of jurisdiction is the respective single cause of action that is a part of the entire dispute. The object of mutual exclusivity in the area of choice of law is the defendant’s obligation forming the basis of the cause of action.71 In both areas, the problem of classification is resolved on the basis of autonomous criteria. The key criterion is whether the contract between the parties is a necessary element of the respective cause of action. If so, the rules of Rome I are engaged. If not, the rules of Rome II are. This solution upholds the objectives of legal certainty, predictability and the uniformity of result, which underlie Rome I and Rome II. But the European jurisdictional and choice-of-law rules concerning concurrent causes of action in employment disputes differ in one major respect. While the special rules of jurisdiction ‘in matters relating to individual contracts of employment’ seem to cover all claims arising out of an employment relationship, the objective of protection of employees does not require the classification of all such claims as contractual for choice-of-law purposes. Whereas the fragmentation of different aspects of the same employment dispute into different forums is particularly problematic from the standpoint of protection of employees, the potential application of multiple laws in a single set of proceedings is not, especially in the light of the accessory choice-of-law rule of Article 4(3) of Rome II, which will be examined in the following subsection. Leaving Shamurin aside, how should some other duties of the parties to an employment contract giving rise to the defendant’s concurrent liability in substantive law be classified for choice-of-law purposes? The employer’s personal and non-delegable duty of care should be classified as a contractual obligation. This duty flows directly from the employment relationship. If there is no employment relationship, this duty does not exist. By entering into an employment contract, the employer freely assumes liability for breach of this duty.72 The employer’s vicarious liability for the torts of other employees committed in the course of 71

72

In focusing on the classification of the entire dispute, not the defendant’s obligation forming the basis of the cause of action, many English academics reach the conclusion that situations giving rise to the defendant’s concurrent liability in more than one branch of substantive law fall exclusively under either the lex contractus or the lex delicti. In favour of the lex contractus: Briggs, ‘Choice of Choice of Law’; Briggs, Conflict of Laws, pp. 227–8; Yeo, Choice of Law for Equitable Doctrines, [3.32], [3.39], [7.10]–[7.14]. In favour of the lex delicti: Chitty on Contracts, 31st edn (2012), [30–288]; Cheshire, North and Fawcett: PIL, 14th edn (2008), p. 779; Rogerson, Collier’s Conflict of Laws, p. 363. Plender and Wilderspin, The European PIL of Obligations, [2–039].

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employment flows from the relationship between the employer and the tortfeasor and would exist even if there were no pre-existing relationship between the claimant employee and the employer. This duty should, therefore, be classified as non-contractual for choice-of-law purposes.73 If the employment contract contains an express or implied term that the employer is vicariously liable to the employee for the torts of other employees committed in the course of employment, a concurrent contractual obligation would also exist.74 The claim against an employee for conspiracy to harm the employer’s business by soliciting fellow employees should be classified as non-contractual if the employee’s duty not to induce fellow employees to break their employment contracts would have arisen irrespective of the employment contract between the employer and the tortfeasor. Since the employee will have a parallel contractual duty not to act negatively in relation to the employer’s interests during the employment, there will also be a concurrent contractual obligation. Claims for breach of copyright, misuse of confidential information and unfair competition against an employee who obtained the employer’s design drawings by bribing a fellow employee should be classified as non-contractual for choice-of-law purposes, since the relevant duty would exist even if the employment relationship did not. Since the employment contract usually imposes a duty of loyalty on the employee, a concurrent contractual obligation is also likely to arise in this situation. In conclusion, the answer to the question whether a claimant is free to choose the choice-of-law rule which will dictate the result of the claim he or she advances against a defendant depends on an autonomous classification of the defendant’s obligation forming the basis of the cause of action. In the majority of cases in which claimants advance concurrent causes of action, all causes of action will be based on obligations classified as contractual for the purposes of Rome I. The relatively wide subject matter scope of Rome I, therefore, often results in the channelling of legislative authority over an employment relationship to the country whose law is the lex contractus and, consequently, in an effective almost complete abolition of concurrent causes of action in choice of law. But in some cases the claim will be based on multiple obligations, some of which will fall within the scope of Rome I and others within the scope of Rome II. In such cases, the claimant is free to rely on either the lex contractus or

73

Ibid.

74

Ibid., [2–067]–[2–068].

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the lex delicti, or both. The following subsection explores how the rules of the European choice-of-law instruments deal with concurrent causes of action in choice of law.

7.1.4

Rome I and Rome II and concurrent causes of action in choice of law

European private international law permits concurrent causes of action in choice of law in certain cases. Rome I and Rome II, thus, have to deal with situations where the lex delicti and the lex contractus are the laws of different countries that are in disagreement on whether the claimant is free to advance his or her claim, alternatively or simultaneously, on more than one basis. Before examining how the two regulations deal with these situations, the relevant choice-of-law rules of Rome II will be presented. Rome II is a complex instrument that contains choice-of-law rules for various kinds of non-contractual obligations and various kinds of torts. Article 4, which lays down choice-of-law rules for torts in general, determines the law applicable to torts committed in the context of an employment relationship. Article 4(1) prescribes that the law applicable to a non-contractual obligation arising out of a tort shall be the law of the country in which the damage occurs irrespective of the country in which the event giving rise to the damage occurred and irrespective of the country or countries in which the indirect consequences of that event occurred. There is also an exception to this rule. According to Article 4(2), where the person claimed to be liable and the person sustaining damage both have their habitual residence in the same country at the time when the damage occurs, the law of that country shall apply.75 Both rules may be displaced by the operation of the escape clause contained in Article 4(3), which allows the application of the law of another country where it is clear from all the circumstances of the case that the tort is manifestly more closely connected with that country. ‘A manifestly closer connection with another country might be based in particular on a pre-existing relationship between the parties, 75

The habitual residence of companies is the place of central administration; the habitual residence of a natural person acting in the course of his or her business activity is his or her principal place of business: Art. 23 Rome II. There is not an autonomous definition of the concept of habitual residence of natural persons not acting in the course of their business activity.

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such as a contract, that is closely connected with a tort/delict in question.’76 Furthermore, Article 14(1) allows the parties to choose the lex delicti under certain conditions. The parties may agree on the applicable law either by an agreement entered into after the event giving rise to the damage occurred or, where all the parties are pursuing a commercial activity, by an agreement freely negotiated before the event giving rise to the damage occurred. Ex post choices of law are rare in employment disputes and the law governing torts committed in the context of an employment relationship will ordinarily be determined by Article 4. It should also be mentioned that, according to Article 17, in assessing the conduct of the person claimed to be liable, account may be taken of the rules of safety and conduct which were in force at the place and time of the event giving rise to liability. Thus, regardless of the lex delicti, the rules of health and safety at work of the country where the employee suffered injury may be taken into account to determine the tortfeasor’s negligence.77 The problem of concurrent causes of action in choice of law is mitigated in European private international law because the escape clause of Article 4(3) of Rome II contains a so-called accessory choice-of-law rule that is designed to lead to the unity of applicable law.78 The concept of accessory choice-of-law rule was developed in German and Swiss academic writing and case law, where it is referred to as akzessorische Anknüpfung.79 According to Nygh, It proceeds on the principle that where a specific relationship exists between the parties regulating their rights and obligations towards each other (such as one based on contract . . .), and in the course of carrying out the obligations of that relationship an obligation based on the general law (such as one arising out of the law of delict) is infringed, the claims arising out of the breach of the general duty should be subject to the same law as that which governs the existing relationship.80 76 77

78

79

80

Art. 4(3) Rome II. Art. 12(2) Rome I would also allow the court to take into account the rules of health and safety at work of the country where the employee suffered injury, regardless of the lex contractus. See M. Szepelak, ‘Concurrent Causes of Action in the Rome I and Rome II Regulations’ (2011) 7 Journal of Private International Law 393. Art. 41 of the German Introductory Act to the Civil Code (Einführungsgesetz zum Bürgerlichen Gesetzbuche); Art. 133(3) of the Swiss Federal Private International Law Code. See P. E. Nygh, Autonomy in International Contracts (Oxford: Clarendon, 1999), pp. 240–7. Ibid., p. 240.

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It comes as no surprise that such a rule was developed in Germany and Switzerland, whose substantive laws permit concurrent causes of action. If the claimant brought a claim in German or Swiss courts that could be framed, alternatively or simultaneously, on multiple bases in the laws of obligations of these countries, he or she was often permitted to advance his or her claim on multiple bases in choice of law. The accessory choiceof-law rule was invented in order to avoid the application of multiple laws to one claim, to promote legal certainty and predictability, to meet the reasonable expectations of the parties and to avoid favouring claimants.81 The following conditions had to be met for this rule to apply: (1) there had to exist at the time of the commission of the tort a pre-existing legal relationship between the parties; (2) there had to be a close connection between the tort and the pre-existing relationship, and the conduct complained of had to be seen to operate in the legal setting of the preexisting relationship.82 How does the accessory choice-of-law rule contained in the escape clause of Article 4(3) of Rome II apply in employment disputes? The choice-of-law rules of Articles 4(1) and 4(2) may be displaced only where it is clear from all the circumstances of the case that the tort is manifestly more closely connected with another country. The words ‘clear’ and ‘manifestly’ are there to ensure that the displacement occurs only exceptionally.83 A contract between the parties that is closely connected with the tort in question is given as an example of a typical basis for establishing a manifestly closer connection with another country. It will be remembered that Rome I provides that the parties to an employment contract are free to choose the applicable law and that the choice cannot deprive the employee of the protection afforded to him or her by the mandatory provisions of the objectively applicable law.84 Two types of situation should, therefore, be distinguished: situations where the tort is closely connected with an employment contract whose objectively applicable law and the chosen law differ and situations where the tort is closely connected with an employment contract that has only one applicable law. The escape clause of Article 4(3) of Rome II does not deal adequately with the first type of situation. Suppose an English employee, habitually working for an English employer in the Netherlands where he or she is 81 83 84

Ibid., p. 241. 82 Ibid., pp. 246–7. European Commission, ‘Proposal for Rome II: Explanatory Memorandum’, p. 12. Art. 8(1) Rome I.

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also habitually resident, suffers injury at work in France. The injury is caused by a fellow employee, so the victim advances his or her claim in contract and in tort on the basis of the employer’s vicarious liability. Suppose further that the employment contract is governed by Dutch law as the objectively applicable law and by English law as the chosen law. According to Article 4(1), French law would govern the tort.85 Article 4 (2) would not apply because the parties have their habitual residences in different countries. Would the escape clause lead to the application of Dutch or English law? Arguably, the tort would be more closely connected with both the Netherlands and England than France, but would it be clear that it is manifestly more closely connected with either the Netherlands or England? The European Commission argues that, in this situation, the escape clause could lead to the tort being simultaneously governed by both leges contracti.86 But this interpretation is not supported by the wording of the escape clause, which allows the application of the law of ‘a country’ that is manifestly more closely connected with the tort. It is unlikely that it would be clear that either the Netherlands or England is manifestly more closely connected with the tort. Consequently, the claim is likely to fall to be decided under the lex loci delicti and the two leges contracti, which would hold conflicting views as to whether concurrent causes of action in substantive law are permitted. It should also be noted that, since Rome II does not allow the parties to an employment contract to choose the lex delicti before the event giving rise to the damage occurred,87 there is a good argument that the choice-of-law clause in an employment contract should not greatly influence the determination of the lex delicti.88 Since Article 4(3) does not adequately deal with situations of this type, it should be amended accordingly. How does the accessory choice-of-law rule apply to situations where the tort is closely connected with an employment contract that has only one applicable law? Article 4(3) of Rome II will lead to the unity of 85

86

87 88

See Recital 17 Rome II (‘in cases of personal injury . . . the country in which the damage occurs should be the country where the injury was sustained’). See European Commission, ‘Proposal for Rome II’, p. 13; also Plender and Wilderspin, The European PIL of Obligations, [18–106], fn. 223; cf. Cheshire, North and Fawcett: PIL, 14th edn (2008), p. 801; Merrett, Employment Contracts in PIL, [6.90]. Art. 14(1) Rome II. Dickinson, The Rome II Regulation, [4.93] (‘the fact that the relationship between the parties is governed by a non-negotiable contract containing a choice of law provision may be taken into account as a factor diluting the strength of the connection to the law applicable to that contract’).

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applicable law in most, but not all, such cases. Returning to the example from the previous paragraph, suppose that the contract between the parties is governed solely by Dutch law as the law of the habitual place of work. Which law would be the lex delicti? According to Article 4(1), the applicable law would be French. Article 4(2) would not apply. Would the escape clause of Article 4(3) lead to the application of Dutch law? The Netherlands would be more closely connected with the tort than France. But would it be clear that it is manifestly more closely connected? This would be unlikely given that the tort would also have a close connection with England: both the employer and the employee are English; the employee might also be socially insured and pay taxes in the UK and suffer indirect consequences of his or her injury there. Furthermore, the connection between the tort and France might also be substantial, especially if there is more than one victim of the defendant’s tortious action. If it was not clear that the tort is manifestly more closely connected with the Netherlands, the result would be that the lex delicti and the lex contractus would be the laws of two different countries holding conflicting views as to whether concurrent causes of action in substantive law are permitted. Somewhat ironically, the lex delicti, French law, would not permit concurrence. Although the accessory choice-of-law rule contained in the escape clause of Article 4(3) of Rome II goes a long way to mitigate the problem of concurrent causes of action in choice of law, it does not solve it entirely. Rome I and Rome II, thus, have to deal with situations where the lex delicti and the lex contractus are the laws of different countries that are in disagreement on whether the claimant is free to advance his or her claim, alternatively or simultaneously, on more than one basis. There are several possible solutions to this problem:89 to prefer the view of the lex contractus; to prefer the view of the lex delicti; to adopt a sui generis solution that consists in applying the view common to the lex delicti and the lex contractus or, if the views of the two laws differ, to apply the view of the lex fori. The sui generis solution is untenable for at least three reasons.90 First, this solution is difficult to apply as it requires the 89

90

See J. J. Fawcett, J. M. Harris and M. Bridge, International Sale of Goods in the Conflict of Laws (Oxford University Press, 2005), [20.28]–[20.52]; Nygh, Autonomy, pp. 238–47; Yeo, Choice of Law for Equitable Doctrines, [3.32]–[3.40]. These books were written before the adoption of Rome I and Rome II, but after the adoption of the Rome Convention and contain a general discussion of the problem of concurrent causes of action in choice of law. This solution is advocated by Fawcett, Harris and Bridge, International Sale of Goods, [20.48]–[20.52], Merrett, Employment Contracts in PIL, [6.33] and Plender and Wilderspin, The European PIL of Obligations, [2–063]–[2–070]. It is important to note

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determination of the governing laws and their views concerning concurrent causes of action. This is a very complex, time-consuming and expensive exercise, inappropriate for employment disputes. Second, this solution works well in easy cases, that is, when the views of the two governing laws coincide. But in more complex cases this solution imposes the view of the lex fori. If the lex fori is not a lex causae, this solution imposes the application of substantive provisions of the forum law. But the only situation where Rome I and Rome II allow the application of the forum’s substantive provisions where the lex fori is not a lex causae is where those provisions are overidingly mandatory.91 No one seems to have suggested, nor would such a view be defensible, that the rules on concurrent causes of action are rules ‘the respect for which is regarded as crucial . . . for safeguarding public interests [of the forum]’.92 Third, the sui generis solution does not accord with the objectives of the two regulations of legal certainty, predictability, uniformity of result and discouraging forum shopping.93 The solution to this problem, therefore, lies in preferring the view of either the lex contractus or the lex delicti. Article 15 of Rome II, which delineates the scope of the law applicable under this instrument, is relevant in this respect. The essence of the problem from the previous paragraph is whether there is a tortious liability in situations where the claim is brought in tort under one law when it could have been brought in contract under another law or where the claim is brought on multiple bases under different laws and these laws have conflicting views as to whether concurrent causes of action in substantive law are permitted. This question should be governed by the lex delicti. This is supported by points (a) and (c) of Article 15 of Rome II, which state that the law applicable to non-contractual obligations under this instrument governs in particular ‘the basis and extent of liability . . . ’ and ‘the existence [and] the nature [of] the remedy claimed’.94 In conclusion, the accessory choice-of-law rule contained in the escape clause of Article 4(3) of Rome II will often lead to the unity of applicable law in cases of concurrent causes of action in choice of law. The operation of the choice-of-law rules for tort of Rome II, therefore, often results in the

91 93 94

that Fawcett, an author of the first book, now argues that Rome I and Rome II are mutually exclusive and that the issue of concurrence is always governed by the lex delicti: Cheshire, North and Fawcett: PIL, 14th edn (2008), p. 779. Art. 9(2) Rome I; Art. 16 Rome II. 92 Art. 9(1) Rome I. See text accompanying n 30 above. Similarly, Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [34–017]; Dickinson, ‘Applicable Law Arbitrage’, p. 378.

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channelling of legislative authority over an employment relationship to the country whose law is the lex contractus under Rome I and the consequent effective almost complete abolition of concurrent causes of action in choice of law. In cases where the operation of Article 4 of Rome II does not lead to the unity of applicable law, the lex delicti will determine whether a claim can be brought in tort when it has been or could have been brought concurrently in contract.

7.1.5

Conclusion

The application of one law in situations giving rise to the defendant’s concurrent liability in substantive law is a worthy objective. It is . . . important not to perceive concurrent liabilities as an isolated problem but rather as the outcome of the historical evolution of a legal system and part of the interplay between its numerous components . . . The way each legal order organises relations between various liability regimes intrinsically corresponds to the way it organises these regimes. Preserving this integrity lies in the best interests of private international law and . . . in the interests of justice.95

The rejection of a procedural classification of the issue of concurrent causes of action in choice of law, the relatively wide subject matter scope of Rome I and the operation of the choice-of-law rules for tort of Rome II preserve the integrity of applicable law in the majority of situations giving rise to concurrent liability. The result is that, similar to statutory claims that have been examined in the previous chapter, the traditionally perceived tortious claims are largely merged with contractual claims for choice-of-law purposes.96 Consequently, concurrent causes of action are effectively also almost completely abolished in choice of law. The accessory choice-of-law rule contained in the escape clause of Article 4(3) of Rome II inadequately deals with cases where the objectively applicable law of the employment contract and the chosen law differ. An amendment of Article 4(3) catering for this possibility is needed.

7.2

Exemption clauses

Contractual clauses excluding or limiting liability in tort have caused considerable problems in choice of law. The following text describes the 95 96

Szepelak, ‘Concurrent Causes of Action’, p. 403. See OJSC TNK-BP Holding v. Lazurenko [2012] EWHC 2781 (Ch), [10].

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problems and how they were dealt with in the English common law conflict of laws before discussing how they are addressed today.

7.2.1

The common law

In the common law conflict of laws, if the claimant advanced his or her claim in contract, both the claim and the validity, effect and interpretation of an exemption clause were decided under the lex contractus. What if the claimant advanced his or her claim in tort and the defendant relied on an exemption clause as a defence? Similar issues arose where a contract was relied on by the defendant as a defence to tortious liability97 and where the parties entered ex post into a contract constituting a waiver or release from tortious liability. The leading common law case on exemption clauses in choice of law is Sayers v. International Drilling Co. NV.98 After having suffered injury at work in Nigeria through the negligence of a fellow employee, Mr Sayers brought a claim in tort in England against his Dutch employer. The employer invoked a clause in the employment contract whereby Mr Sayers accepted the employer’s compensation programme as his exclusive remedy in case of injury. The court had to decide whether this exemption clause represented a good defence to the claim. The majority, Salmon and Stamp LJJ, disregarded the complexities of the issue before them and decided the case by reference only to the lex contractus.99 Lord Denning, on the other hand, held that the claim in tort was governed by ‘the proper law of tort’ and that the exemption clause was governed by the proper law of the contract.100 But, in his Lordship’s view, two systems of law could not be applied to essentially one issue; one system of law, a socalled ‘proper law of the issue’, was to be applied to both claim and defence.101 Although they employed different choice-of-law rules, all the members of the Court of Appeal decided the case by reference to the same law, Dutch, under which the exemption clause was a good defence. Consequently, the provisions of the UK Law Reform (Personal Injuries) 97

98 99

100

Galaxias Steamship Co. Ltd. v. Panagos Christofis (1947–48) 81 Ll L Rep 499 (the defendant seamen went on strike and refused to leave the ship; as a defence to a claim in trespass, they claimed that under their employment contracts they were entitled to remain on board). [1971] 1 WLR 1176. See also Coupland v. Arabian Gulf Oil Co. (n 1) 1153 (‘the contract is only relevant to the claim in tort in so far as it does, on its true construction in accordance with the proper law of the contract, have the effect of excluding or restricting the tortious claim’, per Lord Goff LJ). See n 98, 1180. 101 Ibid., 1181.

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Act 1948, which abolished the defence of common employment and rendered void any term in an employment contract giving such a defence, were inapplicable. Another important case is Brodin v. A/R Seljan.102 The claimant’s husband was a seaman, employed by a Norwegian employer under a contract governed by Norwegian law. He died after having suffered injury at work in Scotland through the negligence of a fellow employee. The claimant brought an action in tort in Scotland and the employer invoked an exemption clause. The claimant argued that the exemption clause was void by virtue of section 1(3) of the Law Reform (Personal Injuries) Act 1948. Lord Kissen held that Scottish law applied as the lex delicti and furthermore that a contract was unenforceable in Scotland if it required doing what was expressly forbidden by a statute which was binding on the Scottish courts. The use of exemption clauses as a defence to tortious liability caused considerable legal uncertainty in the common law conflict of laws. In Sayers and Brodin, four judges came up with three different solutions: two preferred the application of the lex contractus, one preferred the application of the lex delicti and one invented a sui generis solution of applying the proper law of the issue. Moreover, the majority of English academics rejected all of these solutions.103 It is the prevailing opinion among English academics that both the lex contractus and the lex delicti should have been applied, but each in its own sphere of application. The lex delicti governed the tort, including the issue of whether an exemption clause was available as a defence to tortious liability; the lex contractus decided whether the clause was valid.104 But which choice-of-law rules 102 103

104

1973 SLT 198. L. Collins, ‘Exemption Clauses, Employment Contracts and the Conflict of Laws’ (1972) 21 International and Comparative Law Quarterly 320; Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [33–277], [34–019]; Fawcett, Harris and Bridge, International Sale of Goods, [20.53]; Hill and Chong, International Commercial Disputes, [15.4.11]–[15.4.14]; Merrett, Employment Contracts in PIL, [6.91]; C. G. J. Morse, Torts in Private International Law (Amsterdam: North-Holland, 1978), pp. 187–94; P. M. North, ‘Contract as a Tort Defence in the Conflict of Laws’ (1977) 26 International and Comparative Law Quarterly 914, pp. 920–7; Plender and Wilderspin, The European PIL of Obligations, [2–074], [2–076]–[2–077]; R. Smith, ‘International Employment Contract: Contracting Out’ (1972) 21 International and Comparative Law Quarterly 164; cf. in favour of the lex contractus: Briggs, ‘Choice of Choice of Law’, pp. 33–4; P. B. Carter, ‘Coupland v. Arabian Gulf Oil Co.’ (1983) 54 British Yearbook of International Law 301, pp. 305–6; Nygh, Autonomy, pp. 244–9. This solution was first advanced by O. Kahn-Freund, ‘Delictual Liability and the Conflict of Laws’ (1968-II) 137 Recueil des Cours 5, pp. 142–5.

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determined the lex contractus: those of the forum or of the lex delicti? According to one view, the choice-of-law rules of the lex delicti should be applied because, to know whether an exemption clause was a good defence under the lex delicti, it was important to know whether under that country’s law, including its choice-of-law rules, the clause was a good defence.105 A pragmatic view favoured the choice-of-law rules of the forum.106 Briggs criticised the solution favoured by the majority of English academics for leading to the application of two laws to essentially one issue of whether an exemption clause had the effect of limiting or excluding tortious liability.107

7.2.2

Rome I and Rome II

The relatively wide subject matter scope of Rome I and the operation of the choice-of-law rules for tort of Rome II preserve the integrity of applicable law in the majority of situations giving rise to the defendant’s concurrent liability in substantive law. Since most employment claims are decided under the lex contractus, this law typically governs both the issue of whether an exemption clause is available as a defence to tortious liability and the issues of validity and interpretation of the exemption clause. Problems arise in rare situations where the claimant advances a claim triggering the application of both Rome I and Rome II and where the lex delicti and the lex contractus differ. Rome I and Rome II provide the answer to the question whether an exemption clause is a good defence to tortious liability in such situations. Article 15(b) of Rome II, which 105 106

107

North, ‘Contract as a Tort Defence’, p. 927. L. Collins, ‘Interaction between Contract and Tort in the Conflict of Laws’ (1967) 16 International and Comparative Law Quarterly 103, p. 115; Hill and Chong, International Commercial Disputes, [15.4.15]; Morse, Torts in PIL, p. 191; P. M. North, ‘Reform, but not Revolution’ (1990-I) 220 Recueil des Cours 9, pp. 230–1. Briggs, ‘Choice of Choice of Law’, pp. 33–4: ‘if one understands an exclusion clause not as furnishing a defence to accrued liability, but as a provision by which the parties . . . modify the duty of care which might otherwise have arisen, it is . . . a definitional part of the underlying duty. For the indissociable components of a single duty to be governed by separate choice of law rules . . . denatures what is a single issue: whether there was a breach of duty of care by the defendant’ (footnote omitted); cf. Kahn-Freund, ‘Delictual Liability’, p. 144: ‘There is all the difference in the world between inadmissibility [of an exemption clause] and [its] invalidity. Inadmissibility in our context is a rule designed to safeguard the application of the principles of delictual liability . . . Invalidity, however, has to do with some defect of the exceptions clause itself, not with its specific relation to the law of delict.’

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delineates the scope of the law applicable under this instrument, prescribes that the lex delicti governs ‘the grounds for exemption of liability, any limitation of liability and any division of liability’. The issue of whether an exemption clause is available as a defence to tortious liability, therefore, undoubtedly falls to be decided under the lex delicti. If an exemption clause is available as a defence to tortious liability under the lex delicti, it can be a good defence only if it is valid and if the liability falls within its scope. These two issues are of a contractual nature and fall to be decided under the lex contractus. This is supported by Article 10(1) of Rome I, which provides that the existence and validity of a contract, or of any term of a contract, shall be determined by the law which would govern it under this regulation if the contract or term were valid, and Article 12 of Rome I, which provides that the law applicable to a contract governs in particular its interpretation.108 The same solution applies in a situation where a contract is relied on by the defendant as a defence to tortious liability and where the parties enter ex post into a contract constituting a waiver or release from tortious liability. In any event, the two regulations safeguard the application of the overriding mandatory provisions of the forum.109 There is a good argument for applying section 6(3) of the Law Reform (Personal Injuries) Act 1948 whenever the injury occurs in the UK, regardless of the applicable law. According to Article 3(1) of the Posted Workers Directive, which is regarded as the implementation of Article 9 of Rome I, the provisions concerning health, safety and hygiene at work are considered to be overriding mandatory provisions. Since the 1948 Act is concerned with health and safety at work, its provisions can override the applicable law whenever the injury occurs in England (or Scotland).110 108

109

Similarly Dicey, Morris and Collins on the Conflict of Laws, 15th edn (2012), [33–277], [34–019]; Dickinson, The Rome II Regulation, [14.15]; Fentiman, International Commercial Litigation, [16.76]; Merrett, Employment Contracts in PIL, [6.91]; Plender and Wilderspin, The European PIL of Obligations, [16–029]. Cheshire, North and Fawcett: PIL, 14th edn (2008), pp. 843, 865–7 and Hill and Chong, International Commercial Disputes, at [15.4.21] subject the question of whether an exemption clause has the effect of limiting or excluding tortious liability in its entirety to the lex delicti. They find support for this solution in the fact that it seems to be adopted under Art. 8 of the Hague Convention on the law applicable to traffic accidents, 4 May 1971, 965 UNTS 416, which was the template for Art. 15 Rome II. See E. W. Esen, ‘Convention on the Law Applicable to Traffic Accidents: Explanatory Report’ (October 1969), available at www. hcch.net/upload/expl19e.pdf, p. 29, [5.1] (‘the text as it has been adopted would admit that the problem of ascertaining whether such exemption clauses are valid also falls within the scope of the law applicable to liability’). Art. 9(2) Rome I; Art. 16 Rome II. 110 Brodin v. A/R Seljan (n 102).

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7.3 Conclusions The borderland between contract and tort in private international law is traditionally a field fraught with legal uncertainty. With regard to concurrent causes of action, English courts simply transposed the rules of English substantive law into the common law conflict of laws. Even after the adoption of the Rome Convention, English courts continued to apply those rules. Today, however, the solution to the problem of concurrent causes of action in choice of law is found exclusively in Rome I and Rome II because the two regulations reject a procedural classification of the issue of concurrence. The relatively wide subject matter scope of Rome I and the operation of the choice-of-law rules for tort of Rome II lead to the unity of applicable law in the majority of situations giving rise to concurrent liability in substantive law. The result is that the traditionally perceived tortious claims have largely been merged with contractual claims for choice-of-law purposes. Concurrent causes of action are consequently also effectively almost completely abolished in choice of law. This is to be welcomed because concurrent liability, which is accepted in many legal systems, represents the outcome of the evolution of these systems and reflects the way in which they organise various liability regimes. Concurrent liability is, therefore, a category of substantive law and should mainly be confined to substantive law. In rare cases, however, the European choice-of-law instruments do not lead to the unity of applicable law. In such cases, the claimant is free to rely on either the lex contractus or the lex delicti, or both, and it is the lex delicti that will determine whether the claim can be brought in tort when it has been or could have been brought concurrently in contract. With regard to exemption clauses, the common law conflict of laws failed to produce a clear solution. Rome I and Rome II are clearer in this respect. Whenever there is a unity of applicable law, exemption clauses do not cause any particular problems in choice of law. In rare cases where the European choice-of-law instruments do not lead to the unity of applicable law, the two regulations provide that the issue of whether an exemption clause is available as a defence to tortious liability is governed by the lex delicti and the issues of whether the exemption clause is valid and whether the liability falls within its scope are governed by the lex contractus. Before moving to the next chapter, a brief summary of the main arguments of Chapters 5 to 7 dealing with choice of law and the relationship between them is in order. Chapter 5 discussed the operation of the choice-of-law rules concerning employment of Rome I, which

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undoubtedly determine the law applicable to contractual employment claims. The aim of Chapters 6 and 7 was to examine whether Rome I and Rome II allow English courts to adhere to the traditional choice-of-law treatment of statutory and tortious employment claims or whether they mandate a radically different approach. Chapter 6 shows that English courts should not approach the task of determining the territorial scope of employment statutes forming part of English law as one of purely statutory construction. Claims for breach of statutary employment rights fall within the scope of Rome I and the law applicable to them is determined by the choiceof-law rules of this instrument. Consequently, many statutory rights, including the right not to be unfairly dismissed, apply only when English (or Scottish) law governs the employment contract pursuant to the choice-oflaw rules of Rome I. Chapter 7 demonstrates that the relatively wide subject matter scope of Rome I and the operation of the choice-of-law rules for tort of Rome II lead to the unity of applicable law in the majority of situations giving rise to concurrent liability in substantive law, thus largely abolishing concurrent causes of action in choice of law. The combined impact of Rome I and Rome II on the traditional perceptions and rules in the English conflict of laws of employment is profound. The European choice-of-law regulations effectively largely merge the traditionally perceived contractual, tortious and statutory claims into one claim for choice-of-law purposes and subject them to the same governing law. In other words, Rome I and Rome II channel the legislative authority over a transnational employment contract, in principle, to one country only, that of the employee’s origin. Chapters 5 to 7 have focused on the way in which the Member State courts deal with ‘horizontal’ conflict of laws, which arise in horizontal relationships between employers and employees because of the diversity of the Member States’ labour laws.111 The following chapter addresses a unique type of ‘diagonal’ conflicts that arise in the area of posting of workers in Europe in which the EU is competent to regulate one aspect of the problem (freedom of establishment and to provide services), whereas the Member States remain competent to regulate another aspect (industrial action).

111

See C. Joerges, ‘European Challenges to Private Law: On False Dichotomies, True Conflicts and the Need for a New Constitutional Perspective’ (1998) 18 Legal Studies 146; C. Joerges, ‘The Challenges of Europeanization in the Realm of Private Law: A Plea for a New Legal Discipline’ (2004) 14 Duke International and Comparative Law Journal 149; C. Joerges, ‘Unity in Diversity as Europe’s Vocation and Conflicts Law as Europe’s Constitutional Form’, LEQS Paper No. 28/2010 (December 2010, revised version: April 2013), available at www.lse.ac.uk/europeanInstitute/LEQS/LEQSPaper28.pdf.

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8 Posting of workers in Europe

Jacques Chirac, the French president, has branded the proposal ‘unacceptable’. Gerhard Schröder, the German chancellor, wants to prevent it ‘under all circumstances’. Even Charlie McCreevy, the European Union internal market commissioner whose officials drafted the initiative, warns it will ‘simply not fly’. On Saturday, some 50,000 protesters are due to march through Brussels to vent their fury at what they describe as the ‘Frankenstein directive’. The Financial Times1

Shortly before this march through Brussels, a protest taking place in Sweden also hit the headlines.2 Between November 2004 and February 2005, Swedish workers, carrying banners that read ‘Swedish law in Sweden’, blockaded a construction site in Vaxholm, a Stockholm suburb. They demonstrated against the employment on the site of low-wage Latvian workers. The blockade was so effective that it forced the Latvian company supplying the workers to withdraw from Sweden and caused the bankruptcy of its Swedish affiliate. Similar events occurred in the UK a few years later. In the early spring of 2009, at a time of deep recession and rising unemployment, hundreds of workers gathered at the Lindsey oil refinery in Lincolnshire.3 They staged a wildcat strike in response to the decision of an Italian company performing construction work at the refinery to use around 300 of its Italian and Portuguese workforce to fulfil the construction contract. The slogan of the strike was ‘British jobs for British workers’. The protest spread quickly across 1

2

3

‘Barriers to Cross-border Expansion Are Prohibitive to Many Companies Yet the Services Directive Drafted in Brussels Is Likely to Be Watered Down’, 15 March 2005. The described events form the factual background of Case C-341/05 Laval un Partneri Ltd. v. Svenska Byggnadsarbetareförbundet, Svenska Byggnadsarbetareförbundets avdelning 1, Byggettan and Svenska Elektrikerförbundet [2007] ECR I-11767; [2008] 2 CMLR 9. C. Barnard, ‘“British Jobs for British Workers”: The Lindsey Oil Refinery Dispute and the Future of Local Labour Clauses in an Integrated EU Market’ (2009) 38 Industrial Law Journal 245 .

254

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the UK, with several thousand demonstrators gathering at other places in support of the striking refinery workers. At the height of the protest, the foreign workers had to be held on their floating accommodation in Grimsby harbour for their own safety. The dispute was resolved after the company pledged to hire 102 ‘British workers’ at the construction site. One might wonder what the failure of the ‘Frankenstein directive’ and the protests held under the mottos ‘Swedish law in Sweden’ and ‘British jobs for British workers’ have to do with private international law? The short answer is that the European private international law of employment was at the centre of the legal background of these events. As demonstrated in Chapters 6 and 7, in the European private international law of employment, statutory and tortious claims are largely merged with contractual claims into a single category for the purposes of choice of law, which also largely abolishes concurrent causes of action in choice of law. Under Article 8 of Rome I, the law applicable to an employment contract is stable. The governing law does not change when the employee is temporarily posted abroad. The law chosen by the parties changes only if the parties agree that it will. With regard to the law applicable in the absence of choice, Article 8(2), which lays down a choice-of-law rule based on the connecting factor of the habitual place of work, is explicit: ‘The country where the work is habitually carried out [and thus the objectively applicable law] shall not be deemed to have changed if [the employee] is temporarily employed in another country.’ Recital 36 clarifies that ‘work carried out in another country should be regarded as temporary if the employee is expected to resume working in the country of origin after carrying out his tasks abroad’. Even if the objectively applicable law is the law of the country of the engaging place of business or the law of another country more closely connected with the employment contract, the applicable law does not change merely because the employee is temporarily posted abroad. In other words, Article 8 lays down a kind of a country-of-origin rule. Employment contracts are essentially governed by the law of the country of the employee’s origin or, in the words of the CJEU, the law of the country ‘in which . . . the employee performs his economic and social duties and [where] the business and political environment affects employment activities’.4 Similarly, as discussed in Chapter 4, a temporary posting abroad neither 4

Case C-29/10 Heiko Koelzsch v. Luxembourg [2011] ECR I-1595, [42]. See also Case C-384/ 10 Jan Voogsgeerd v. Navimer SA [2011] ECR I-13275, [52] and the Opinion of AG Wahl in Case C-64/12 Anton Schlecker v. Melitta Josefa Boedeker, 16 April 2013, nyr, [26].

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deprives the courts competent under the Brussels I Recast of their jurisdiction nor confers jurisdiction on the courts of the country where the employee is temporarily posted. Rome I and the Brussels I Recast complement Article 56(1) of the Treaty on the Functioning of the European Union, which guarantees free movement of services within the EU. The freedom to provide services entails the right of a service provider established in one Member State to move freely with all its workers whom it lawfully employs in that country to other Member States for the purpose of providing services there.5 Whenever an out-of-state service provider posts its workforce to the host Member State, the rules of the two regulations support its freedom to provide services. The service provider is guaranteed that the law governing the employment contracts with its workers and the courts having jurisdiction over disputes concerning those contracts will not change with the temporary posting of workers abroad. Service providers are more likely to venture across borders if they are accorded legal certainty, foreseeability and an assurance that they will not have to bear the cost of adapting to the employment standards of each and every country to which they temporarily post workers. In addition to benefitting service providers, the rules of the two regulations also benefit, to a certain extent, posted workers. Apart from granting them legal certainty and foreseeability, these rules guarantee the application of the law and the jurisdiction of the courts of their country of origin, with which they are ordinarily most closely connected and familiar. The interests of that country are also protected because its law remains applicable and its courts retain jurisdiction notwithstanding temporary postings abroad. Moreover, and most importantly, in practice the rules of the two regulations especially benefit service providers from Member States with relatively low employment standards, in particular from southern and former communist European countries.6 Low cost per unit of labour is a comparative advantage that such service providers enjoy over service providers from Member States with relatively high employment 5

6

Case C-113/89 Rush Portuguesa Lda v. Office national d’immigration [1990] ECR I-1417; [1991] 2 CMLR 818, [12]; Case C-43/93 Raymond Vander Elst v. Office des Migrations Internationales [1994] ECR I-3803; [2005] 1 CMLR 513. Cremers, for example, estimates that the five biggest net exporters of posted workers in Europe are Poland (estimated 190,000 net posted workers in 2009), Portugal (52,000), Luxembourg (32,000), Hungary (29,000), Slovakia and Romania (17,000 each): J. Cremers, ‘Free Provision of Services and Cross-border Labour Recruitment’ (2013) 34 Policy Studies 201, p. 220.

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standards. Since such service providers have relatively low labour costs, they can undercut service providers from other Member States. This phenomenon occurs in particular in labour-intensive industries such as construction, transport and agency work. Workers from Member States with relatively low employment standards also indirectly benefit from the increased ability of their employers to win services contracts abroad. The interests of those countries are also advanced because the increased competitiveness of their service providers leads to more employment and revenue. But the joint effect of the rules of Rome I and the Brussels I Recast and the provisions on the freedom to provide services of the TFEU, namely the ability of service providers from Member States with relatively low employment standards to profit from their comparative advantage, is often perceived as ‘unfair competition’ and ‘social dumping’ in Member States with relatively high employment standards. Workers, trade unions and service providers (but not service receivers) from the latter Member States often exert political pressure on their governments to impose local employment standards on out-of-state service providers, as seemingly permitted by Article 9 (‘overriding mandatory provisions’) of Rome I, in order to achieve a level-playing field between local and posted workers and local and out-of-state service providers. An example of such pressure is the march through Brussels against the European Commission’s proposal for a directive on services in the internal market,7 also known as the ‘Bolkestein’ directive.8 The proposed directive aimed at opening up the European market for services by eliminating obstacles to the freedom of establishment of service providers and the free movement of services within the EU. The latter goal was to be achieved by strengthening the country-of-origin principle, according to which a service provider was subject, in principle, only to the law of the country in which it was established. Although the proposed directive contained an exception from the country-of-origin principle that safeguarded the application of some of the host Member State employment standards to posted workers,9 the opponents of the proposal, nevertheless, feared that it would lead to social dumping. The controversy surrounding the proposed directive was such that it contributed significantly to the negative outcomes of the 7

8

9

European Commission, ‘Proposal for a Directive of the European Parliament and of the Council on Services in the Internal Market’, COM(2004) 2 final/3. Named after Frits Bolkestein, a former European commissioner for the internal market, who ardently supported the proposed directive. Art. 17.

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French and Dutch referenda on the European Constitution.10 The Services Directive that was eventually adopted11 is a watered-down measure, which expressly provides that it does not affect labour law and social security legislation of the Member States.12 Furthermore, as the Laval and Lindsey oil refinery disputes demonstrate, workers and unions can exert pressure directly, by means of industrial action, on outof-state service providers to adopt and comply with local employment standards and hire local workers. Incidentally, the imposition of local employment standards can benefit posted workers as they can invoke the most favourable of the employment standards set by either the home or the host country. But the imposition of certain host Member State employment standards on service providers from other Member States represents a restriction of their freedom to provide services. A service provider that has to comply with certain employment standards, for example, concerning wages, of the home and each and every host country is exposed to substantial compliance costs that might deter it from venturing abroad. That service provider is in a disadvantageous position in comparison to local service providers that have to comply only with local employment standards. Furthermore, although posted workers can sometimes benefit from the imposition of the host Member State employment standards, their position is ambiguous. If relatively low labour costs are the reason for their employers winning foreign contracts, the imposition of local employment standards could annul their employers’ comparative advantage and lead to a loss of jobs. The CJEU has on a number of occasions dealt with complicated issues concerning the compatibility of the imposition of the host Member State employment standards on out-of-state service providers with fundamental economic freedoms guaranteed by the TFEU and its predecessors. The Posted Workers Directive attempts to strike a proper balance between the competing interests involved. As will be seen, the implementation, application and enforcement of the directive have been fraught with difficulties. The question where the balance between the competing interests

10

11

12

Editorial comments, ‘The Services Directive Proposal: Striking a Balance between the Promotion of the Internal Market and Preserving the European Social Model?’ (2006) 43 Common Market Law Review 307, p. 308 . Directive 2006/123/EC of the European Parliament and of the Council of 12 December 2006 on services in the internal market [2006] OJ L376/36. Art. 1(6); see also Art. 1(7).

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should lie is at the centrepiece of current debates in EU constitutional and labour law13 and efforts aimed at legislative reform. As a result of these efforts, the European Commission has proposed two instruments aimed to improve the implementation, application and enforcement of the directive, namely the regulation on the exercise of the right to take collective action within the context of the freedom of establishment and the freedom to provide services14 and the Posting of Workers 13

14

The literature is immense. The majority view is that the interests of host Member States and host Member State workers and trade unions should be better protected: see. e.g. L. Azoulai, ‘The Court of Justice and the Social Market Economy: The Emergence of an Ideal and the Conditions for its Realisation’ (2008) 45 Common Market Law Review 1335; Barnard, ‘“British Jobs for British Workers”’; C. Barnard, ‘A Proportionate Response to Proportionality in the Field of Collective Action’ (2010) 37 European Law Review 117; H. Collins, ‘The European Economic Constitution and the Constitutional Dimension of Private Law’ (2009) 5 European Review of Contract Law 71; A. C. L. Davies, ‘One Step Forward, Two Steps Back? The Viking and Laval Cases in the ECJ’ (2008) 37 Industrial Law Journal 126; S. Deakin, ‘Regulatory Competition after Laval’ (2007–2008) 10 Cambridge Yearbook of European Legal Studies 581; R. Eklund, ‘A Swedish Perspective on Laval’ (2008) 29 Comparative Labour Law and Policy Journal 551; S. Evju, ‘Revisiting the Posted Workers Directive: Conflict of Laws and Laws in Contrast’ (2009–2010) 12 Cambridge Yearbook of European Legal Studies 151; S. Giubboni, ‘Social Rights and Market Freedom in the European Constitution: A Re-Appraisal’ (2010) 1 European Labour Law Journal 161; C. Joerges and F. Rödl, ‘Informal Politics, Formalised Law and the “Social Deficit” of European Integration: Reflections after the Judgments of the ECJ in Viking and Laval’ (2009) 15 European Law Journal 1; C. Kilpatrick, ‘British Jobs for British Workers? UK Industrial Action and Free Movement of Services in EU Law’, LSE Law, Society and Economy Working Papers 16/2009 (July 2009), available at www.lse.ac. uk/collections/law/wps/WPS2009–16_Kilpatrick.pdf; J. Malmberg and T. Sigeman, ‘Industrial Actions and EU Economic Freedoms: The Autonomous Collective Bargaining Model Curtailed by the European Court of Justice’ (2008) 45 Common Market Law Review 1115; F. Scharpf, ‘The Asymmetry of European Integration, or why the EU cannot be a “Social Market Economy”’ (2010) 8 Socio-Economic Review 211; P. Syrpis and T. Novitz, ‘Economic and Social Rights in Conflict: Political and Judicial Approaches to Their Reconciliation’ (2008) 33 European Law Review 411; H. Verschueren, ‘Cross-Border Workers in the European Internal Market: Trojan Horses for Member States’ Labour and Social Security Law?’ (2008) 24 International Journal of Comparative Labour Law and Industrial Relations 167. The minority view is in favour of the interests of the internal market and thereby home Member States and home Member State actors: see e.g. D. Kukovec, ‘Whose Social Europe? The Laval/Viking Judgments and the Prosperity Gap’, Harvard Institute for Global Law and Policy Working Paper Series 2011/#3, available at www.harvardiglp.org/category/allresources/working-papers/; see also N. Reich, ‘Free Movement v. Social Rights in an Enlarged Union: The Laval and Viking Cases before the ECJ’ (2008) 9 German Law Journal 125, p. 160. European Commission, ‘Proposal for a Council Regulation on the Exercise of the Right to Take Collective Action within the Context of the Freedom of Establishment and the Freedom to Provide Services’, COM(2012) 130 final.

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Enforcement Directive.15 However, the proposed regulation has been withdrawn following its rejection by the social partners16 and the opposition of twelve national parliaments.17 The proposed directive, in contract, is very likely to be adopted in the near future.18 The focus of this chapter is on the role that the European private international law of employment plays in the context of the posting of workers. The following section focuses on the Posted Workers Directive and examines the balance that is currently struck between the competing interests. The way in which the CJEU has been tilting the balance in favour of the interests of the internal market is described. Wherever the proper balance may be, private international law comes primarily into play when posted workers attempt to enforce, through labour litigation, the host Member State employment standards that can be imposed on out-of-state service providers. To assess the relative importance of the ‘private’ enforcement of the relevant host Member State standards, and thereby of the rules of private international law in the context of the posting of workers, the second section examines the current state of (in) effectiveness of the other two ways of enforcing the relevant standards, namely ‘public’ and ‘collective’ enforcement. Finally, the implementation of the Posted Workers Directive in England is explored from a private international law perspective, in particular from the standpoint of the posting of workers to England and the posting of workers from England. An outline of some of the key provisions of the Posting of Workers Enforcement Directive is also provided, where relevant. The aim is to determine how the European private international law of employment deals with one of the most pressing issues of European integration.

15 16

17

18

COM(2012) 131 final. Business Europe (representing mainly private-sector employers and employers’ organisations), ‘Position Paper on the Regulation on the Exercise of the Right to take Collective Action’ (21 May 2012), available at www.businesseurope.eu; European Trade Union Confederation, ‘ETUC Declaration on the Commission Proposals for a Monti II Regulation and Enforcement Directive of the Posting of Workers Directive’ (19 April 2012), available at www.etuc.org. F. Fabbrini and K. Granat, ‘“Card, but no Foul”: The Role of the National Parliaments under the Subsidiarity Protocol and the Commission Proposal for an EU Regulation on the Right to Strike’ (2013) 50 Common Market Law Review 115. The proposed directive is definitely adopted by the European Council: European Commission, ‘Commission Welcomes Council Adoption of Posting of Workers Enforcement Directive’ (13 May 2014), available at http://europa.eu/rapid/pressrelease_IP-14-542_en.htm.

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8.1 Posted Workers Directive: at the crossroad of competing interests Originally, the project of European integration was of an economic nature, aimed at establishing a common market based on the four fundamental economic freedoms and competition policy. The Member States retained almost exclusive competence in the social field. This was reflected in the very name of the original European Economic Community. Over time, the European institutions acquired a degree of competence in the social sphere. Nevertheless, social issues remain mainly the concern of individual Member States. This is reflected in Article 153(5) of the TFEU, which rules out EU legislation over some of the most important labour law issues such as pay, collective bargaining, industrial action, as well as in the lack of EU legislation concerning many important labour law issues such as unfair dismissal. The optimum rate of economic growth that was to be achieved by means of the common market was to eventually lead to a harmonisation and gradual improvement of working conditions and living standards across Europe.19 But the economic liberalisation quickly proved to possess a great potential for undermining domestic labour law systems. For example, if service providers from Member States with relatively low employment standards can easily win services contracts in Member States with relatively high employment standards by relying on the lower labour costs in their home countries, the latter Member States’ employment standards are put under strain. While the project of European integration was confined to countries with similar levels of social protection, this potential remained largely hidden. But with the accession of, first, southern and, then, the former communist countries to the European Community, the potential of the economic liberalisation for producing socially negative effects in affluent Member States came to light. At first, the understanding was that a worker who moved from one Member State to another for the purpose of performing a services contract that his or her employer had won in the latter Member State 19

See the Ohlin and Spaak reports that preceded the Treaty establishing the European Economic Community: International Labour Office, ‘Social Aspects of European Economic Co-operation’ (1956) 74 International Labour Review 99; Intergovernmental Committee on European Integration, ‘The Brussels Report on the General Common Market’ (June 1956), available at http://aei.pitt.edu/995/1/Spaak_report.pdf.

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exercised his or her own freedom of movement, today guaranteed by Article 45 of the TFEU.20 Since Article 45(2) of the TFEU provides that ‘Such freedom of movement shall entail the abolition of any discrimination based on nationality between workers of the Member States as regards employment, remuneration and other conditions of work and employment’, host Member States were thought to be able to apply their employment standards to foreign workers posted to their territory just as they applied those standards to local workers. But in Rush Portuguesa21 the CJEU adopted a different view. Here, a Portuguese company entered into a subcontract with a French company for the carrying out of construction work in France. It employed its own Portuguese workers who, according to the transitional arrangements for Portuguese accession to the Community, were treated as third country nationals. French authorities imposed certain conditions on the employment of such workers in France. But the CJEU held that the provisions of the treaty preclude a Member State from prohibiting a person providing services established in another Member State from moving freely on its territory with all his staff and preclude that Member State from making the movement of staff in question subject to restrictions such as a condition as to engagement in situ or an obligation to obtain a work permit. To impose such conditions on the person providing services established in another Member State discriminates against that person in relation to his competitors established in the host country who are able to use their own staff without restrictions, and moreover affects his ability to provide the service.22

Subsequent cases confirmed that the freedom to provide services entails the right of a service provider established in one Member State to move freely with all its workers whom it lawfully employs in that country (regardless of whether they themselves, on the basis of their nationality, have the right to free movement under the TFEU) to other Member States for the purpose of providing services there.23 Furthermore, the CJEU explicitly held in Finalarte that the treaty provisions on the free movement of workers do not apply to workers employed by a business established in one Member State who are temporarily sent to another

20

21

Evju, ‘Revisiting the Posted Workers Directive’, pp. 152–64; M. Houwerzijl, ‘Towards a More Effective Posting Directive’ (2006) 58 Bulletin of Comparative Labour Law 179, pp. 180–3; Verschueren, ‘Cross-Border Workers’, pp. 169–77. See n 5. 22 Ibid., [12] (emphasis added). 23 See Vander Elst (n 5).

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Member State to provide services there.24 This is because posted workers do not, in any way, seek access to the labour market of the latter Member State if they return to their country of origin or residence after completion of their work.25 The importance of Rush Portuguesa and Finalarte is immense. After those decisions, the imposition of certain host Member State employment standards, which represent a burden on out-of-state service providers, was to be seen as a restriction of the free movement of services. In order to be lawful, such restriction had to be nondiscriminatory, justified and proportionate. At first, the CJEU showed considerable deference towards the interests of host Member States. In Rush Portuguesa, it stated obiter the following: ‘Community law does not preclude Member States from extending their legislation, or collective labour agreements entered into by both sides of industry, to any person who is employed, even temporarily, within their territory, no matter in which country the employer is established; nor does Community law prohibit Member States from enforcing those rules by appropriate means.’26 The CJEU offered no explanation or reasoning for this sweeping statement. Encouraged by this dictum, many Member States and candidate countries, net importers of posted workers, sought to safeguard their labour law systems by enacting or strengthening legislation that imposed local employment standards on out-of-state service providers. The German Posting of Workers Act (Arbeitnehmerentsendegesetz) of 1996 is one example. The adoption of this act was justified by the following reasons: protection of the national construction industry against unfair competition; reduction of unemployment in the domestic construction industry; avoidance of a breakdown of the national collective bargaining 24

25

26

Joined Cases C-49/98, C-50/98, C-52/98 to C-54/98 and C-68/98 to C-71/98 Finalarte Sociedade de Construção Civil Lda (C-49/98), Portugaia Construções Lda (C-70/98) and Engil Sociedade de Construção Civil SA (C-71/98) v. Urlaubs- und Lohnausgleichskasse der Bauwirtschaft and Urlaubs- und Lohnausgleichskasse der Bauwirtschaft v. Amilcar Oliveira Rocha (C-50/98), Tudor Stone Ltd. (C-52/98), Tecnamb-Tecnologia do Ambiante Lda (C-53/98), Turiprata Construções Civil Lda (C-54/98), Duarte dos Santos Sousa (C-68/98) and Santos & Kewitz Construções Lda (C-69/98) [2001] ECR I-7831; [2003] CMLR 11, [21]-[23]; but see Joined Cases C-307/09 to C-309/09 Vicoplus SC PUH (C-307/09), BAM Vermeer Contracting sp. zoo (C-308/09) and Olbek Industrial Services sp. zoo (C-309/09) v. Minister van Sociale Zaken en Werkgelegenheid [2011] ECR I-453, [28] (posted agency workers in certain circumstances fall under the treaty provisions on the free movement of workers). Ibid., [22]; but see Vicoplus, ibid., [28]–[31] (posting of agency workers directly affects both relations on the labour market and the lawful interests of the workforce concerned; such workers do seek access to the labour market of the host country). See n 5, [18].

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system and, somewhat incidentally, the safeguarding of suitable working conditions for posted workers.27 The Commission’s response to Rush Portuguesa and the domestic legislation was the Posted Workers Directive. The directive seeks to coordinate the laws of the Member States with regard to the employment standards that are applicable to service providers from a Member State that post workers within the EU.28 It pursues multiple objectives.29 On the one hand, it protects the interests of host Member States in safeguarding their labour law systems by imposing certain local employment standards on foreign service providers.30 It also aims to protect posted workers by entitling them to certain host Member State employment standards when those standards are more favourable for them than the otherwise applicable equivalent standards.31 However, the directive seems to be primarily concerned with harnessing the wide-ranging regulatory freedom that Rush Portuguesa apparently gave host Member States by limiting the range and type of local employment standards that can be imposed on out-of-state service providers, thus supporting the free movement of services. The primacy of this objective is reflected in the treaty bases used for the adoption of the directive, the equivalents of Articles 53(1) and 62 of the TFEU, which refer to the treaty chapter on the free movement of services, not the social policy provisions. The Posted Workers Directive applies to service providers established in a Member State which, in the framework of the transnational provision of services, post workers to the territory of another Member State.32 The directive does not apply to all postings of workers, but only in the following three situations: (1) the service provider posts workers on its account and under its direction, under a contract concluded with the service receiver operating in the host country; (2) the service provider, a member of a corporate group, posts workers to an establishment or to an undertaking owned by the group in the host country; (3) the service provider, an employment agency, hires out a worker to an end-user 27

28 29

30

O. Deinert, ‘Posting of Workers to Germany: Previous Evolutions and New Influences throughout EU Legislation Proposals’ (2000) 16 International Journal of Comparative Labour Law and Industrial Relations 217, pp. 217–18. Also Finalarte (n 24), [38]; Case C164/99 Portugaia Construções Lda [2002] ECR I-787; [2003] 2 CMLR 35, [12]. Recital 13. P. Davies, ‘Posted Workers: Single Market or Protection of National Labour Law Systems’ (1997) 34 Common Market Law Review 571. Recitals 5, 12–14. 31 Recitals 5, 13, 14 and 17. 32 Art. 1(1).

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established or operating in the host country.33 In all three situations, there has to be an employment relationship between the service provider and the posted workers during the period of posting.34 Non-EU service providers must not be given more favourable treatment than service providers from the EU.35 For the purposes of the directive, ‘posted worker’ is a worker who, for a limited period, carries out his or her work in the territory of a Member State other than the Member State in which he or she normally works.36 The meaning of the terms ‘posting’ and ‘posted worker’ and their relationship with the concept of ‘temporary posting’ under Rome I are not clear.37 The Posting of Workers Enforcement Directive aims to introduce legal certainty by providing, in Article 3, a non-exhaustive list of indicative factual elements characterising both the temporary nature inherent in the notion of posting and the existence of a genuine link between the employer and the Member State from which the posting takes place. The purpose of this provision is to help the Member State authorities combat abuse of the posted workers regime in order to circumvent the applicable rules, in particular through incorporating ‘letter-box’ companies solely for the purpose of posting workers, through consecutive ‘postings’ of a single worker to a single Member State by different ‘employers’ from different Member States and through rotational postings of different workers to a single Member State who effectively share a single job. The scope of the Posted Workers Directive is further limited to ‘workers’, as defined in the law of the host Member State.38 No problem of classification in private international law, therefore, arises in this respect. The directive also contains a number of derogations.39 With regard to the range of the host Member State employment standards, the Posted Workers Directive distinguishes those that must and those that may be imposed on out-of-state service providers. According to Article 3(1), the local standards that must be afforded posted workers, regardless of the law applicable to the employment contract (so-called ‘nucleus’ of mandatory rules for minimum protection or ‘hard core’ of protective rules),40 concern the following seven matters: 33 35 37

38 40

Art. 1(3). For the interpretation of the third point see Vicoplus (n 24). 34 Art. 1(3). Art. 1(4). 36 Art. 2(1). A. van Hoek and M. Houwerzijl, ‘“Posting” and “Posted Workers”: The Need for Clear Definitions of Two Key Concepts of the Posting of Workers Directive’ (2011–2012) 14 Cambridge Yearbook of European Legal Studies 419. Art. 2(2). 39 Arts. 1(2) and 3(2)-(6). See text accompanying nn 138–42 below. Recitals 13 and 14.

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• • • •

maximum work periods and minimum rest periods;41 minimum paid annual holidays; minimum rates of pay, including overtime rates;42 the conditions of hiring-out of workers, in particular the supply of workers by employment agencies;43 • health, safety and hygiene at work; • protection of pregnant women, women who have recently given birth, children and young people; • non-discrimination. The reason why these matters are listed, and not also, for example, unfair dismissal and redundancy, is that the employment standards pertaining to the listed matters are of ‘immediate interest during the period of posting’.44 Pursuant to the first indent of Article 3(10), host Member States may also impose, in compliance with the TFEU and on a basis of equality of treatment between the host Member State and out-ofstate service providers, employment standards concerning non-listed matters ‘in the case of public policy provisions’. Regarding the sources of the relevant host Member State employment standards, the Posted Workers Directive distinguishes those set legislatively and those set collectively. With regard to the former category, the directive mandates the application of standards set ‘by law, regulation or administrative provision’.45 With regard to the latter category, the key questions are which types of collectively set standards can be imposed on out-of-state service providers and in which sectors of the economy. The directive attempts to accommodate various traditions of collective standard setting that exist within the EU. On the one hand, it mandates the application of standards set by ‘collective agreements or arbitration awards which have been declared universally applicable’,46 that is, ‘collective agreements or arbitration awards which must be observed by all 41 42

43

44

45

See Case E-2/11 STX Norway Offshore AS v. Norway [2012] 2 CMLR 12 (EFTA Court). See Case C-341/02 Commission v. Germany [2005] ECR I-2733; Laval (n 2); Case C-522/ 12 Tevfik Isbir v. DB Services GmbH, 7 November 2013, nyr; Case C-396/13 Sähköalojen ammattiliitto ry v. Elektrobudowa Spółka Akcyjna, Opinion of AG Wahl, 18 September 2014, nyr. See also Case E-12/10 EFTA Surveillance Authority v. Iceland [2011] 3 CMLR 31 (EFTA Court); STX Norway Offshore AS v. Norway, ibid. Pursuant to Art. 3(9), host Member States may provide that posted agency workers should be guaranteed equal protection to that of domestic agency workers. P. Davies, ‘Posted Workers, p. 579. See also European Commission, ‘Proposal for a Council Directive Concerning the Posting of Workers in the Framework of the Provision of Services: Explanatory Memorandum’, COM(91) 230 final/2-SYN 346, [25]. Art. 3(1). 46 Ibid.

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undertakings in the geographical area and in the profession or industry concerned’.47 These provisions accommodate the interests of countries such as France and Germany that provide for the extension of application of collectively set standards. On the other hand, Member States that do not have a system for declaring collective agreements or arbitration awards to be of universal application may, ‘if they so decide’, impose, on a basis of equality of treatment, employment standards set by ‘collective agreements or arbitration awards which are generally applicable to all similar undertakings in the geographical area and in the profession or industry concerned’ and/or ‘collective agreements which have been concluded by the most representative employers’ and labour organisations at national level and which are applied throughout national territory’.48 These provisions accommodate the interests of countries such as Denmark and Sweden that have neither legislatively set standards concerning some of the listed matters, most importantly the minimum wage, nor a system for extending the application of collectively set standards. The provisions concerning the imposition of collectively set standards apply by default and mandatorily in the building sector.49 The directive provides that collectively set standards in other sectors may also be imposed in compliance with the TFEU and on a basis of equality of treatment.50 Two issues have proven to be particularly problematic in the interpretation and application of the Posted Workers Directive.51 The first concerns the host Member State employment standards that may be imposed on out-of-state service providers; the second concerns the application of collectively set standards. Many Member States took advantage of the possibility afforded by the first indent of Article 3(10) and proclaimed all or much of their 47 49

50 51

Art. 3(8), first subparagraph. 48 Art. 3(8), second subparagraph. Art. 3(1). Annex to the directive defines widely the building sector as encompassing ‘all building work relating to the construction, repair, upkeep, alteration or demolition of buildings’. Art. 3(10), second indent. For a thorough account of the many problems concerning the interpretation and application of the directive see A. van Hoek and M. Houwerzijl, ‘Comparative Study on the Legal Aspects of the Posting of Workers in the Framework of the Provision of Services in the European Union’ (21 March 2011), available at www.ec.europa.eu/social/BlobServlet? docId=6677&langId=en and A. van Hoek and M. Houwerzijl, ‘Complementary Study on the Legal Aspects of the Posting of Workers in the Framework of the Provision of Services in the European Union’ (November 2011), available at www.ec.europa.eu/social/ BlobServlet?docId=7510&langId=en.

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employment legislation to be of public policy nature. As discussed in Section 6.2.2. of Chapter 6, the CJEU decision in Commission v. Luxembourg52 shows that such an extension of the host Member State employment standards is unlawful. Here, the CJEU adopted a very narrow interpretation of the concept of ‘public policy provisions’ under Article 3(10) that had been favoured by the European Commission. In its communication of July 2003,53 the Commission stated that this concept referred to ‘mandatory rules from which there can be no derogation and which, by their nature and objective, meet the imperative requirements of the public interest. These may include, in particular, the prohibition of forced labour or the involvement of public authorities in monitoring compliance with legislation on working conditions’.54 Furthermore, the Commission referred to the CJEU case law on the concept of public policy in the context of fundamental economic treaty freedoms. In this context, the concept of public policy (together with concepts such as ‘public morality’, ‘public security’, ‘public health’) is used to justify limitations of these freedoms. According to the Commission, ‘recourse to the concept of public policy must be justified on overriding general interest grounds, must presuppose the existence of a genuine and sufficiently serious threat affecting one of the fundamental interests of society and must be in conformity with the general principles of law’.55 It is unlikely that many labour law provisions concerning non-listed matters, if any, can satisfy this test.56 None of the challenged provisions of 52 53

54 55

56

Case C-319/06 [2008] ECR I-4323. European Commission, ‘Communication from the Commission to the Council, the European Parliament, the Economic and Social Committee and the Committee of the Regions: The Implementation of Directive 96/71/EC in the Member States’, COM(2003) 458 final, pp. 12–14. Ibid., p. 13, affirmed in Case C-319/06 Commission v. Luxembourg (n 52), [32]. Ibid. (footnotes omitted), affirmed in Case C-319/06 Commission v. Luxembourg (n 52), [50]. In its communication of July 2003, at p 14, the Commission left some space for the application of Art. 3(10) of the directive when it referred to the finding of a group of experts advising the Commission that the concept of ‘public policy provisions’ covered ‘provisions concerning fundamental rights and freedoms . . . such as freedom of association and collective bargaining, prohibition of forced labour, the principle of nondiscrimination and elimination of exploitative forms of child labour, data protection and the right to privacy.’ (footnote omitted) But these fundamental rights and freedoms are already protected by international and European human rights instruments. The imposition of the host Member State employment standards concerning these matters will rarely add to the protection of posted workers falling within the scope of the directive, since these fundamental rights and freedoms already receive a similar level of protection in the law of their country of origin.

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Luxembourg law met this standard. In effect, in Commission v. Luxembourg the CJEU held that the host Member State’s ‘nucleus of mandatory rules for minimum protection’ or the ‘hard core of clearly defined protective rules’57 set not only the floor but also the ceiling of protection for posted workers. The court adopted the same view in Rüffert, a case concerning social clauses in public contracts.58 As mentioned, some countries have neither legislatively set standards concerning some of the listed matters nor a system for extending the application of collectively set standards. The second subparagraph of Article 3(8) of the Posted Workers Directive provides that such countries may, ‘if they so decide’, impose on out-of-state service providers employment standards laid down by collective agreements that satisfy the requirements of general applicability or of the representative status of the collective partners. When implementing the directive, Sweden introduced legislation laying down employment standards concerning all of the listed matters apart from the minimum wage. With regard to wages, Sweden did not avail itself of the second subparagraph of Article 3(8), but instead relied on the suitability and effectiveness of its existing model of industrial relations.59 In Sweden unions are responsible for safeguarding the level of wages and other employment and working conditions. Most employers and their employees are covered by collective agreements. An employer not belonging to an employers’ organisation is expected to enter into an ‘application agreement’ by which it undertakes to comply with the terms and conditions of employment laid down in the collective agreement covering the profession or industry concerned. Sectoral collective agreements, in principle, do not regulate wages. Instead, the level of wages is left to be negotiated on a case-by-case basis at the level of each workplace, having regard to the qualifications and tasks of the employees concerned. If an employer who is not a member of an employers’ organisation refuses to enter into an ‘application agreement’, unions will force it to do so by means of primary and secondary industrial action. The existence of an extensive right to undertake industrial action against recalcitrant employers is of crucial importance for the 57 58

59

Recitals 13 and 14 Posted Workers Directive. Case C-346/06 Dirk Rüffert v. Land Niedersachsen [2008] ECR I-1989; [2002] 2 CMLR 39. See also Re Posting of Workers Act: Surveillance Authority v. Iceland (n 42); STX Norway Offshore AS v. Norway (n 41). See M. Rönnmar, ‘Free Movement of Services versus National Labour Law and Industrial Relations Systems: Understanding the Laval Case from a Swedish and Nordic Perspective’ (2007–2008) 10 Cambridge Yearbook of European Legal Studies 493.

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functioning of the Swedish model of industrial relations. However, the right to undertake industrial action is not absolute. For example, industrial action is forbidden during the period of validity of the collective agreement between the social partners. Out-of-state service providers, who ordinarily do not belong to a Swedish employers’ organisation, were similarly expected to enter into an ‘application agreement’ with the relevant union and to negotiate the level of wages of posted workers on a case-by-case basis at the workplace level. The right to undertake industrial action against recalcitrant out-of-state employers was wider than in relation to Swedish employers, since the so-called Lex Britannia removed the prohibition to undertake industrial action against out-ofstate employers who were bound by a foreign collective agreement, that is, in their country of origin. But Laval60 not only disclosed the shortcomings of the Swedish implementation of the Posted Workers Directive but also raised several general questions regarding collective standard setting in the context of the posting of workers. Laval, a Latvian company, posted its Latvian workers to Sweden in connection with a construction contract that its Swedish affiliate had won there. Employment standards, and in particular the level of wages, are considerably lower in Latvia than in Sweden. The ability to undercut local competitors was a reason that the Laval group had won the contract. Following unsuccessful negotiations with a major Swedish construction union, Laval and its subsidiary refused to enter into an ‘application agreement’ to the Swedish collective agreement for the building sector and to pay Swedish wages to its Latvian workers. The union then organised a blockade of all Laval’s construction sites in Sweden, which was followed by a sympathy industrial action undertaken by a major electricians’ union. The fact that Laval entered into a collective agreement with a Latvian union regulating the work in Sweden did not make the industrial action illegal because of the Lex Britannia. The industrial action was unusually effective. It forced the Latvian company to withdraw from Sweden and to file for bankruptcy of its Swedish affiliate. Laval then brought proceedings in Sweden seeking a declaration that the industrial action was unlawful and remedies for the violation of its freedom to provide services. The Swedish court referred a series of questions to the CJEU on issues concerning the Posted Workers Directive and EU law. The CJEU identified several problems with the Swedish implementation of the Posted Workers Directive. First, Sweden had not made use of 60

See n 2.

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the possibility provided for in the second subparagraph of Article 3(8) because ‘recourse to . . . [that] possibility requires . . . that the Member State must so decide’.61 Since Sweden had not referred, in the implementing legislation or elsewhere, to any collective agreement meeting the necessary requirements, provisions contained in any such agreement could not be imposed on the Latvian service provider. Furthermore, the directive did not allow the imposition of the running wage on outof-state service providers, only the minimum wage.62 Consequently, foreign service providers could not be required to enter into negotiations on the level of wages for each workplace on a case-by-case basis.63 Third, where employment standards concerning the listed matters were laid down in the implementing legislation, out-of-state service providers could not be required to comply with more favourable collectively set standards.64 Article 3(7), which provides that Articles 3(1)-(6) ‘shall not prevent application of terms and conditions of employment which are more favourable to workers’, did not allow host Member States to impose terms and conditions of employment concerning the listed matters that went beyond the mandatory minimum laid down in legislation.65 Article 3(7) applied to the situation of out-of-state service providers voluntarily entering into a collective agreement in the host state that offered more favourable terms and conditions of employment to their employees and the situation where such terms and conditions were contained in home Member State laws or collective agreements.66 Fourth, collectively set standards concerning non-listed matters could not be imposed on outof-state service providers because such standards, formulated without state authorities having had recourse to the first indent of Article 3(10), could not be regarded as ‘public policy provisions’.67 Finally, the Lex Britannia discriminated against service providers from other Member States and was therefore unlawful.68 Laval raises a more general question of whether, where there is a system for declaring collective agreements to be of universal application or where the host Member State avails itself of the second subparagraph of Article 3(8), the imposition of collectively set standards that go above legislatively set standards is lawful. On the one hand, Article 3(1) prescribes that, as regards the building sector, the Member States shall ensure the application of the relevant standards set by collective agreements that have been declared universally applicable. Furthermore, 61 65

Ibid., [66] (emphasis added). Ibid., [80]. 66 Ibid., [81].

62 67

Ibid., [70]. Ibid., [84].

63 68

Ibid., [71]. 64 Ibid., [78]–[80]. Ibid., [116]–[119].

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Article 3(1) refers to Article 3(8), which provides, with regard to countries that do not have a system for declaring collective agreements to be of universal application, for the application of the relevant standards set by collective agreements meeting the requirements of general applicability or of the representative status of the collective partners. On the other hand, the statements in Laval to the effect that out-of-state service providers cannot be required to comply with more favourable collectively set standards in situations where there are legislatively set standards suggest that the imposition of collectively set standards in such situations is unlawful.69 The European Free Trade Area Court addressed this question in STX Norway Offshore AS v. Norway.70 It was held that the provisions concerning ‘maximum normal working hours’ that were contained in a universally applicable collective agreement, which was for the domestic court to verify, would be applicable in situations where there were also legislatively set standards.71 Another general question raised by Laval is whether the ‘public policy provisions’ test of Article 3(10) can be used as a basis for imposing collectively set standards concerning non-listed matters. Since both the extension of the application of a collective agreement and the decision to impose standards set by a collective agreement that satisfies the requirements of general applicability or of the representative status of the collective partners imply state involvement, Laval would suggest that this is possible. However, in the light of Commission v. Luxembourg,72 this seems to be only a theoretical possibility, since collective agreements do not deal with ‘genuine and sufficiently serious threats affecting fundamental interests of society’. To sum up, EU law has always allowed the imposition of some host Member State employment standards on out-of-state service providers. But the range and type of standards that can be imposed have been curtailed over time. The evolution of the law in this field from the perception that posted workers fall within the treaty provisions on the free movement of workers, to the CJEU decisions in Rush Portuguesa and Finalarte, to the adoption of the Posted Workers Directive, to the recent decisions in Commission v. Luxembourg, Laval and Rüffert shows a clear pattern. The interests of the internal market prevail over those of host Member States. 69

70

Eklund, ‘A Swedish Perspective on Laval’, pp. 570–1; Kilpatrick, ‘British Jobs for British Workers?’, p. 17. See n 41. 71 Ibid., [47]–[55]. 72 Case C-319/06 (n 52).

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8.2 Enforcing the Posted Workers Directive Although there is a trend of curtailing the range and type of the host Member State employment standards that can be imposed on out-ofstate service providers, the Posted Workers Directive continues to safeguard some of those standards. Wherever the proper balance of the competing interests may be, the objectives of the law in this field cannot be achieved unless there is an effective mechanism for enforcing the relevant standards. Effective enforcement, in turn, presupposes an effective mechanism for the monitoring of compliance. There are essentially three ways of monitoring and enforcing the relevant standards, which will be referred to as ‘public’, ‘collective’ and ‘private’ enforcement.73 Public enforcement refers to the monitoring and enforcement by public authorities, primarily labour inspectorates and immigration authorities. Collective enforcement refers to the monitoring and enforcement by trade unions, work councils or other workers’ representatives. As will be seen from the analysis of the relevant cases, collective enforcement is inextricably linked with collective standard setting. In theory, both the host and the home Member State public authorities and workers’ representatives could have a role to play. However, given that one of the objectives of the directive is to safeguard the host Member State labour law systems, it is logical that it is the host Member State actors that are interested in, and bear the burden of, setting, monitoring and enforcing the relevant standards. The home Member State actors do not have an interest in monitoring and enforcing the host Member State standards because they benefit from the free movement of services. Moreover, the home Member State public authorities will typically not have jurisdiction over actual or potential violations of employment standards that occur in another country. Private enforcement refers to the enforcement of the relevant standards through labour litigation. Litigation is ordinarily commenced by individual employees, but sometimes also by their representatives. The three ways of monitoring and enforcing the relevant standards perform complementary functions and should not be regarded as alternatives.74 Moreover, all three ways of monitoring and enforcing need to be effective 73

74

On the enforcement of EU labour law in general see J. Malmberg, ‘Effective Enforcement of EC Labour Law: A Comparative Analysis of Community Law Requirements for National Laws on Procedures and Sanctions’, available at www.ilo.org/public/english/ iira/documents/congresses/world_13/track_5_malmberg.pdf. Ibid.

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if the Posted Workers Directive is to achieve its objectives in the context in which different levels of regulation and different Member States put different emphasis on the roles played in this respect by public, collective and individual actors. It is in relation to private enforcement that the rules of private international law come primarily into play. In order to determine the role that the European private international law of employment has in the context of the posting of workers, it is, therefore, necessary to assess the relative importance of the private enforcement of the relevant standards. This, in turn, requires an examination of the current state of (in)effectiveness of both public and collective enforcement.

8.2.1

(In)effectiveness of public enforcement

Generally speaking, public enforcement of labour standards is an ineffective mechanism for achieving compliance. It has been reported, for example, that a typical UK employer will get inspected for compliance with the minimum wage regulation once every 330 years. And if the employer is caught not complying he or she simply pays back the arrears, with no other penalties being imposed.75 The following analysis of the CJEU case law shows that the public enforcement of the Posted Workers Directive is also largely ineffective. The CJEU has dealt on a number of occasions with the compliance with the TFEU and its predecessors of monitoring and enforcement measures undertaken by the host Member State public authorities.76 75

76

D. Metcalf, ‘Britain’s Minimum Wage: What Impact on Pay and Jobs?’ (Winter 2006–07) CentrePiece, available at http://cep.lse.ac.uk/pubs/download/CP217.pdf. Case 279/80 Criminal proceedings against Alfred John Webb [1981] ECR 3305; [1982] 1 CMLR 719; Joined Cases 62–63/81 Société anonyme de droit français Seco et Société anonyme de droit français Desquenne & Giral v. Etablissement d’assurance contre la vieillesse et l’invalidité [1982] ECR 223; Rush Portuguesa (n 5); Vander Elst (n 5); Case C-272/94 Criminal proceedings against Michel Guiot and Climatec SA, as employer liable at civil law [1996] ECR I-1905; Joined Cases C-369/96 and C-376/96 Criminal proceedings against Jean-Claude Arblade and Arblade & Fils SARL (C-369/96) and Bernard Leloup, Serge Leloup and Sofrage SARL (C-376/96) [1999] ECR I-8453; [2001] ICR 434; Case C165/98 Criminal proceedings against André Mazzoleni and Inter Surveillance Assistance SARL, as the party civilly liable, third parties: Eric Guillaume and Others [2001] ECR I2189; [2003] 2 CMLR 10; Finalarte (n 24); Portugaia Construções Lda (n 27); Case C-279/ 00 Commission v. Italy [2002] ECR I-1425; [2003] 2 CMLR 20; Case C-60/03 Wolff & Müller GmbH & Co. KG v. José Filipe Pereira Félix [2004] ECR I-9553; [2005] 1 CMLR 21; Case C-445/03 Commission v. Luxembourg [2004] ECR I-10191; [2005] 1 CMLR 22; Case C-168/04 Commission v. Austria [2006] ECR I-9041; Case C-244/04 Commission v. Germany [2006] ECR I-885; [2006] 2 CMLR 23; Case C-433/04 Commission v. Belgium

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Many host Member States used to or still require out-of-state service providers to do one or more of the following: to obtain work permits or visas for posted workers who are third country nationals; to submit a prior declaration concerning the posting to the host Member State authorities; to be represented in the host Member State; to keep labour and social documents concerning the posting in the host Member State and/or in accordance with the law of the host Member State. A measure of this kind represents a restriction of the free movement of services because it is ‘liable to prohibit, impede or render less attractive the provision of services to the extent that it involves expense and additional administrative and economic burdens’.77 In order to be lawful, such a measure must comply with the TFEU by satisfying several conditions.78 It must not discriminate against out-of-state service providers. It must be justified on the ground of overriding requirements of the public interest, such as the social protection of posted workers. That interest must not be accorded the same or essentially similar protection by the provisions to which the service provider is subject in the home Member State. The measure must also be proportionate to the objective pursued, that is, appropriate for securing it and not go beyond what is necessary in order to attain it. Some host Member States impose complementary duties on local recipient of services, which also have to comply with the TFEU in order to be lawful. The CJEU found that some measures adopted by individual Member States fail to meet the relevant conditions and are thus unlawful. The Posting of Workers Enforcement Directive seeks to codify and clarify the CJEU’s case law in Articles 9 and 10. Many host Member States used to require out-of-state service providers to obtain a prior authorisation for posting workers who are non-EU nationals. It will be remembered that in Rush Portuguesa79 a Portuguese company used its Portuguese workers, who were treated as third country nationals at the time, to perform services in France. The CJEU held that the treaty precluded France from imposing on out-of-state service providers conditions relating to the recruitment of workforce in situ or the obtaining of work permits. Similarly, in Vander Elst80 a Belgian service provider lawfully employed third country nationals in Belgium. It posted

77 80

[2006] ECR I-10653; Case C-490/04 Commission v. Germany [2007] ECR I-6095; Case C319/06 Commission v. Luxembourg (n 52); Case C-219/08 Commission v. Belgium [2009] ECR I-9213; Case C-515/08 Criminal proceedings against Vítor Manuel dos Santos Palhota and Others [2010] ECR I-9133; Vicoplus (n 24). Finalarte (n 24), [24]. 78 See e.g. ibid., [28]–[33], [41]–[42], [49]–[50]. 79 See n 5. Ibid.

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them to France. The CJEU found that French law could not require the service provider to obtain and pay for work permits for those workers.81 In several subsequent cases,82 it was held that the following measures would, in a less restrictive but as effective manner as a prior authorisation, give the host Member State authorities a guarantee that posted workers were lawfully employed in the home Member State: ‘an obligation imposed on a service-providing undertaking to report beforehand to the local authorities on the presence of one or more deployed workers, the anticipated duration of their presence and the provision or provisions of services justifying the deployment’83 and an obligation to provide the host Member State authorities ‘with information showing that the situation of the workers concerned is lawful as regards matters such as residence, work permit and social coverage’ in the home Member State.84 Indeed, one of the most common measures imposed on out-of-state service providers is a general requirement to submit a prior declaration concerning the posting to the host Member State authorities. Dos Santos Palhota85 indicates that such a requirement is lawful, provided it is not overly burdensome for out-of-state service providers. Here, the CJEU found that Belgian legislation that provided that the posting could not take place before the competent authorities had received a prior declaration and issued a registration number to the service provider was not in accordance with the TFEU. But had the posting not been so conditioned, the obligation to make a prior declaration would have been lawful.86 Many Member States impose such notice requirements on out-of-state service providers, often coupled with a criminal or administrative sanction for infringement. But the van Hoek-Houwerzijl study on the implementation and application of the Posted Workers Directive reports that such sanctions are rarely imposed in practice in many Member States and, furthermore, that there are problems with their cross-border enforcement.87 The Posting of Workers Enforcement Directive tries to address the latter problem by providing for cross-border enforcement of administrative fines and penalties in Articles 13–16. 81 82

83 85

86 87

Ibid., [19]. Case C-445/03 Commission v. Luxembourg (n 76); C-244/04 Commission v. Germany (n 76); Commission v. Austria (n 76); Case C-219/08 Commission v. Belgium (n 76). Case C-445/03 Commission v. Luxembourg, ibid., [31]. 84 Ibid., [46]. See n 76. See also Case C-319/06 Commission v. Luxembourg (n 52), where the CJEU dealt with the prior declaration procedure in Luxemburg law, which was found not to be sufficiently clear and unambiguous. See also Art. 9(1)(a) Posting of Workers Enforcement Directive. van Hoek and Houwerzijl, ‘Comparative Study’, Executive Summary, pp. 30, 32.

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With regard to the service provider’s representation in the host Member State, the CJEU has held that the requirement to maintain a registered office or a branch office in the host Member State is ‘the very negation of the fundamental freedom to provide services’.88 Similarly, host Member States cannot require out-of-state service providers to appoint a local representative to keep the relevant labour and social documents after the posting has come to an end.89 All host Member States can do is to require out-of-state service providers to appoint a posted worker to act as the link between them and the host Member State authorities for the duration of the posting.90 In Arblade and Leloup91 the CJEU addressed the issue of keeping and drawing up of labour and social documents. It was held that the host Member State could require the relevant documents to be kept on site or at least in an accessible and clearly identified place in that country, in order to be available to the local authorities if necessary for monitoring local employment standards, particularly where there was no organised system for cooperation or exchanges of information between the Member States as envisaged by Article 4 of the Posted Workers Directive.92 Furthermore, the CJEU found that an out-of-state service provider could not be required to draw up the relevant documents pursuant to the local record-keeping requirements where the documents kept in accordance with the home Member State law were adequate to enable the monitoring of local standards.93 If the respective rules of the home and host Member State differed to such an extent that the monitoring of local standards could not be carried out on the basis of the documents drawn up in accordance with the law of the home country, an out-of-state service provider could be required to comply with the local record-keeping requirements.94 Consequently, before obliging an out-of-state service provider to draw up the documents in accordance with the local requirements and to keep them locally, the host Member State authorities should verify that the protection of posted workers was not sufficiently safeguarded by the production, within a reasonable time, of originals or copies of the documents kept in the home Member State or by keeping the originals or copies of those documents available in the host Member State.95 Where the conditions for requiring 88 90

91 93

Commission v. Italy (n 76), [18]. 89 Arblade and Leloup (n 76). Case C-319/06 Commission v. Luxembourg (n 52), [91], [94]. See also Art. 9(1)(d) Posting of Workers Enforcement Directive. See n 76. See also dos Santos Palhota (n 76). 92 Ibid., [61]–[62]. Ibid., [64], [66]. 94 Ibid., [62]–[63]. 95 Ibid., [65].

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an out-of-state service provider to keep the originals or copies of the relevant documents in the host Member State were met, the host Member State could also require the translation of those documents into the local language.96 The case law also shows that foreign service providers cannot be required to retain the relevant documents in the host Member State after the termination of the posting,97 but can be required to send the copies of the relevant documents to the host Member State authorities at the end of, or after, the posting period.98 If the host Member State authorities find out that an out-of-state service provider has not complied with the relevant local employment standards, they may have to conduct an assessment of the effect that their actions will have on the service provider’s freedom to provide services. The Posted Workers Directive allows the imposition of certain local standards on foreign service providers, but it does not harmonise the content of those standards. In other words, the directive refers back to domestic law on the question of the substance of those standards. This domestic law is subject to a review under the TFEU, namely whether it is non-discriminatory, justified and proportionate.99 If the host Member State authorities want to make sure that their actions are compliant with EU law, they may have to communicate with the corresponding home Member States authorities,100 examine employment legislation of foreign countries, whose up-to-date version may only be available in a foreign language, and compare it to their own legislation. Some host Member States impose complementary duties on local recipient of services who hire out-of-state subcontractors or temporary work agencies, in particular the duty to check whether out-of-state service providers have followed prior declaration procedures and joint and several liability for the payment of wages of posted workers and accompanying social security contributions and taxes. The case law of the

96 97 98

99

100

Case C-490/04 Commission v. Germany (n 76). Arblade and Leloup (n 76), [76]–[79]. Ibid., [78]; dos Santos Palhota (n 76). See also Art. 9(1)(b) and (c) Posting of Workers Enforcement Directive. Case C-490/04 Commission v. Germany (n 76), [16]–[21]; Laval (n 2), [60]–[61]; Tevfik Isbir v. DB Services GmbH (n 42), [33], [37]; see also Re Posting of Workers Act: Surveillance Authority v. Iceland (n 42), [45]; STX Norway Offshore AS v. Norway (n 41), [31], [34]–[35], [70], [74]. See also C. Barnard, ‘More Posting’ (2014) 43 Industrial Law Journal 194, pp. 197–05. See Art. 4 Posted Workers Directive.

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CJEU is ambiguous on this issue.101 The Posting of Workers Enforcement Directive lays down, in Article 12, provisions concerning contractors’ obligations and joint and several liability with respect to compliance with the applicable host Member State employment standards by subcontractors. The focus is on preventive measures, combined with the possibility for the Member States to maintain or implement more far-reaching systems of joint and several or chain liability, in accordance with EU law. The provisions apply by default and mandatorily in the building sector, although the Member States are free to extend them to other sectors. But it should be noted in this respect that the Jorens-Peters-Houwerzijl study on the protection of workers’ rights in subcontracting processes in the EU has questioned the effectiveness of liability rules in cross-border situations of subcontracting.102 To sum up, the restrictions that the TFEU, as interpreted by the CJEU, imposes on the host Member State authorities when monitoring and enforcing the relevant local employment standards render the public enforcement of those standards largely ineffective. The authorities cannot act until they have established that an out-of-state service provider has failed to comply with the relevant standards. Prior declarations that out-of-state service providers may be required to submit to the host Member State authorities are the main source of information. However, criminal or administrative sanctions for breaching the obligation to submit a prior declaration are rare and hard to enforce. It should, therefore, come as no surprise that, as the van Hoek-Houwerzijl study finds, service providers often ‘“forget” to notify’.103 Labour and social documents that out-of-state service providers may be required to keep in host Member States for the duration of the posting are another source of information. But if an out-of-state service provider fails to submit a prior declaration to the host Member State authorities, those authorities may be ignorant of the fact that the posting is taking place and thus unable to inspect in situ the relevant documents for the purpose of monitoring the relevant standards. After the posting has come to an end, the relevant documents can be obtained only from abroad following the cooperation 101

102

103

Compare Wolff (n 76) (a German chain liability scheme for minimum wage payments was lawful) and Case C-433/04 Commission v. Belgium (n 76) (a Belgian joint and several liability scheme for tax debts was unlawful). Y. Jorens, S. Peters and M. Houwerzijl, ‘Study on the Protection of Workers’ Rights in Subcontracting Processes in the European Union’ (June 2012), available at http://ec. europa.eu/social/BlobServlet?docId=7923&langId=en, Executive Summary, pp. 6–7. van Hoek and Houwerzijl, ‘Comparative Study’, Executive Summary, p. 31.

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and exchange of information mechanism between the Member States. Even if the host Member State authorities manage to find out that an outof-state service provider has breached a relevant local standard, they should not act before they have ensured that their actions are nondiscriminative, justified and proportionate. In order to fulfil this obligation, it may be necessary to communicate with the corresponding home Member States authorities, determine the content of foreign employment legislation, often available only in a foreign language, and compare it with local legislation. The shortcomings of the cooperation and exchange of information mechanism under the Posted Workers Directive are well documented.104 The Posting of Workers Enforcement Directive attempts to remedy the situation by regulating in detail administrative cooperation in Articles 6 to 8. Finally, some Member States impose complementary duties on local recipients of services who hire out-of-state subcontractors or temporary work agencies.

8.2.2

(In)effectiveness of collective enforcement

The CJEU has dealt with issues concerning collective setting and enforcement of the host Member State employment standards in two important cases.105 In Laval,106 two Swedish unions attempted to force a Latvian service provider and its local subsidiary, by means of primary and secondary industrial action, to accept the Swedish collective agreement for the building sector and to negotiate the rates of pay of posted Latvian workers. Laval brought proceedings against the unions in 104

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European Commission, ‘Communication from the Commission to the Council, the European Parliament, the European Economic and Social Committee and the Committee of the Regions – Posting of Workers in the Framework of the Provision of Services: Maximising Its Benefits and Potential while Guaranteeing the Protection of Workers’, COM(2007) 304 final, p. 9: ‘the very small number of contacts made through liaison offices, established in Article 4 of the Directive, indicates that Member States either ignore this form of cooperation or have sought other forms’. See also the Commission Recommendation of 31 March 2008 on enhanced administrative cooperation in the context of the posting of workers in the framework of the provision of services [2008] OJ C85/1. See also Case C-83/13 Fonnship A/S v. Svenska Transportarbetareförbundet and Facket för Service och Kommunikation (SEKO) and Svenska Transportarbetareförbundet v. Fonnship A/S, 8 July 2014, nyr (concerning the applicability of the freedom to provide services to a service provider established in a European Economic Area (EEA) Member State, which uses vessels flying the flag of a third country and employing third country nationals – these facts have no bearing on the applicability of EU law). See n 2.

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Sweden claiming that they had violated its freedom to provide services. Although the CJEU recognised that the right to take collective action is a fundamental right forming an integral part of the general principles of EU law,107 it, nevertheless, subordinated this right to the fundamental economic freedom. The CJEU held that the provisions on the free movement of services of the TFEU have horizontal direct effect against unions.108 Since industrial action aimed at forcing an out-of-state service provider to negotiate a new or comply with an existing collective agreement in the host Member State is liable to make the provision of services ‘less attractive or more difficult’,109 it represents a restriction of the fundamental treaty freedom. In order to be lawful, the industrial action has to be non-discriminatory, justified and proportionate. Otherwise, the union is liable for damage caused to the service provider. Since the imposition of the Swedish collective agreement and the Swedish running wage in Laval was found not to be in accordance with the Posted Workers Directive and not transparent, the industrial action aimed at imposing those standards could not be justified.110 Following the CJEU decision, the Swedish courts ordered the unions to pay damages and litigation costs.111 The other case is Viking.112 Viking, a Finish company, owned a ferry registered in Finland, manned with a predominantly Finish crew, plying the route between Finland and Estonia. Viking decided to re-register the vessel in Estonia in order to benefit from lower labour costs in that country. The International Transport Workers’ Federation has a policy of combating the use of flags of convenience. It issued a call to its members to boycott the Finish company. Viking then commenced proceedings in England against the ITF and its affiliate, the Finnish Seamen’s Union, seeking an injunction to stop the boycott. The claim was based on the violation of the freedom of establishment, today guaranteed by Article 49 of the TFEU. English courts had jurisdiction over ITF, an English domiciliary, under Article 2 (general jurisdiction) and over the Finnish union, as a co-defendant, under Article 6(1) (jurisdiction over co-defendants) of Brussels I, the predecessors of Articles 4(1) and 8(1) of the Brussels I Recast, respectively. The Court of Appeal referred a question to the CJEU whether the actions of the ITF and the Finnish union violated Viking’s fundamental freedom. The CJEU held firstly that the 107 111

112

Ibid., [91]. 108 Ibid., [98]. 109 Ibid., [99]. 110 Ibid., [107]–[111]. M. Rönnmar, ‘Laval Returns to Sweden: The Final Judgment of the Swedish Labour Court and Swedish Legislative Reform’ (2010) 39 Industrial Law Journal 280. Case C-438/05 International Transport Workers’ Federation and Finnish Seamen’s Union v. Viking Line ABP and OÜ Viking Line Eesti [2007] ECR I-10779; [2008] 1 CMLR 51.

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provisions on the freedom of establishment of the TFEU have horizontal direct effect against unions.113 The CJEU then turned to the questions of justification and proportionality. It noted that the right to take collective action for the protection of workers is a legitimate interest which, in principle, justified a restriction of the fundamental economic freedoms,114 but then added that collective action could be justified only where the jobs or conditions of employment of the union members were jeopardised or under serious threat.115 The CJEU further clarified that collective action will not be proportionate unless the unions have exhausted other means at their disposal less restrictive of the freedom of establishment.116 It did not mitigate the proportionality test by any references to ‘margin of appreciation’. Since Viking was eventually settled,117 the English courts did not have to decide on the lawfulness of the industrial action and the potential liability of the unions. English courts have dealt with one more case after Viking concerning the relationship between the right to strike and fundamental economic freedoms guaranteed by the TFEU: British Airways plc v. Sindicato Espanol de Pilotos de Lineas Aeras.118 The High Court, however, managed to avoid dealing with the substance of the case altogether. By concluding that the issues raised by the case pertained to public law, the court was able to take it outside the scope of Brussels I, thus precluding the claimants from establishing the jurisdiction of the English courts over the Spanish defendant union. Field J advanced two reasons for this conclusion.119 First, the enforcement of the prohibitions on restrictions of the freedoms of establishment and to provide services within the EU involved the application of public law, since it concerned treaty obligations laid upon Member States. Second, unions were deemed to be emanations of the state for this purpose. 113 114

115 117

118

119

Ibid., [55], [66]. Ibid., [77]. See also [44] for recognition that the right to take collective action is a fundamental right forming an integral part of the general principles of EU law. Ibid., [81]. 116 Ibid., [87]. ‘Finnish Shipping Group Settles Case over Cheap Labour’, The Financial Times, 4 March 2008. [2013] EWHC 1657 (Comm); [2013] ILPr 45. The claimants were granted permission to appeal but subsequently discontinued their claim: http://1chancerylane.com/latestnews/british-airways-plc-and-international-consolidated-airlines-group-sa-v-sindicato-espanol-de-pilotos-de-lineas-areas-and-another/. Another case brought in England concerning this relationship was British Airlines Pilots’ Association v. British Airways, claim no HQ08X00932. This case was settled before a judgment was rendered: R. O’Donoghue and B. Carr, ‘Viking and Laval: From Theory into Practice’ (2008– 2009) 11 Cambridge Yearbook of European Legal Studies 123, p. 125. Ibid., [65].

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I have dealt with this case extensively elsewhere.120 It suffices to note here that there is a good argument that the High Court’s interpretation of the basis and the nature of the obligations imposed upon unions under the doctrine of horizontal direct effect of EU law was erroneous and that it should have classified the issues as pertaining to ‘civil and commercial matters’. In other words, the court was not justified in hiding behind the ‘public law taboo’ in private international law and should have heard and decided the substance of the case regardless of how inappropriate it thought it was for an English court to pronounce on the lawfulness of an industrial action which had taken place in Spain. Furthermore, the court should have determined the applicable law pursuant to Article 9 of Rome II. This article provides that the law applicable to a non-contractual obligation in respect of the liability of a worker or an employer or the organisations representing their professional interests for damage caused by an industrial action, pending or carried out, is the law of the country where the action is to be, or has been, taken. But if the parties have their habitual residence in the same country, the law of that country applies. The parties may also, under the conditions laid down in Article 14, derogate from Article 9 and agree on the applicable law. Laval and Viking illustrate the main shortcomings of the collective setting and enforcement of the host Member State employment standards. Although in both cases the CJEU recognised that the right to take collective action was a fundamental right that formed an integral part of the general principles of Community law,121 it, nevertheless, subordinated this right to the fundamental freedoms guaranteed by the TFEU. In Laval, the unions were unable to impose the Swedish collective agreement for the building sector and the Swedish running wage. In Viking, the unions ran into problems with their attempt to safeguard Finish employment standards. Laval, therefore, shows that unions cannot resort to industrial action to impose local standards on out-of-state service providers unless the strict conditions of the Posted Workers Directive and the TFEU are satisfied. Viking suggests that the options available to unions to safeguard already applicable standards are limited – the more an industrial action is effective at forcing a service provider to comply with the relevant local standards, the more it restricts the fundamental 120

121

U. Grušić, ‘The Right to Strike versus Fundamental Economic Freedoms in the High Court, Again: Hiding Behind the “Public Law Taboo” in Private International Law’ (2013) 9 Journal of Private International Law 413. Viking (n 112), [44]; Laval (n 2), [91].

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economic treaty freedoms and the less likely it meets the requirement of proportionality.122 Given the trend of declining union strength across the EU, it comes as no surprise that unions in many Member States refrain from engaging in industrial action that potentially violates the TFEU. In the UK, for example, it has been noted that ‘Anecdotal evidence following Viking and Laval suggests that employee representatives interpret the judgments as having a chilling effect on industrial action.’123 Even the International Labour Organisation’s Committee of Experts on the Application of Conventions and Recommendations expressed, in its 2010 Report, ‘serious concern’ about the practical limitations imposed by the CJEU decisions on the effective exercise of the rights guaranteed by the International Labour Organisation’s Convention No 87 of 9 July 1948 concerning freedom of association and protection of the right to organise.124 In some Member States unions engage in forms of collective action other than strike to enforce the Posted Workers Directive, for example, by actively reaching out to posted workers, putting pressure on service receivers by exposing the poor working and living conditions of posted workers in the media, mobilising posted workers to claim their rights and assisting them in pursuing legal proceedings.125 But empirical research shows that host Member State unions typically fail to arrive at a sustainable way to organise and represent posted workers. This is due to several reasons such as a relatively large number of posted workers in comparison to the limited resources of unions, the temporary and insecure nature of employment of posted workers, their lack of awareness of their rights, language barriers, disinterest, fear, dependency on their employers, distrust in unions and high costs of union membership, resulting in a low rate of unionisation of posted workers and their 122

123

124 125

A. C. L. Davies, ‘One Step Forward, Two Steps Back?’, pp. 141–5; Kilpatrick, ‘British Jobs for British Workers?’, pp. 18–19. O’Donoghue and Carr, ‘Viking and Laval’, p. 162. Also K. Apps, ‘Damages Claims against Trade Unions after Viking and Laval’ (2009) 34 European Law Review 141; T. Novitz, ‘UK Implementation of the Posted Workers Directive 96/71’, Formula Working Paper 22/2010, available at www.jus.uio.no/ifp/english/research/projects/freemov/publications/papers/2010/september/WP22-Novitz-2010.pdf, pp. 19–21. According to Rönnmar, ‘Free Movement of Services versus National Labour Law and Industrial Relations Systems’, p. 519: ‘There have been few instances of industrial action against foreign service providers since the Laval dispute started at the end of 2004. Anxiousness and legal uncertainty have prevailed.’ (footnote omitted) The Report is available at www.ilo.org/public/libdoc/ilo/P/09661/. See e.g. L. Berntsen and N. Lillie, ‘Hyper-mobile Migrant Workers and Dutch Trade Union Representation Strategies at the Eemshaven Construction Sites’, Economic and Industrial Democracy, published online before print on 18 June 2014.

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unwillingness to cooperate with unions.126 All of this suggests that the collective enforcement of the Posted Workers Directive is largely ineffective.

8.2.3

Conclusion

Because of the restrictions imposed by the TFEU, the Posted Workers Directive and the CJEU case law on the host Member State authorities and unions, both public and collective enforcement of the host Member State employment standards that can be imposed on out-of-state service providers are largely ineffective. This further supports the conclusion that, in the context of the posting of workers, the interests of the internal market prevail over those of host Member States. The European Commission had proposed two instruments aimed at remedying the current situation: the regulation on the exercise of the right to take collective action within the context of the freedom of establishment and the freedom to provide services127 and the Posting of Workers Enforcement Directive. While the proposed regulation has been withdrawn, the proposed directive is very likely to be adopted in the near future, although its effects remain to be seen. Academics have put forward their own proposals. Barnard, for example, is of the opinion that a modified principle of proportionality, which would protect the essence of the relevant social rights, is the appropriate tool to balance the economic with the social in the context of collective action.128 Collins argues that the solution lies in remedying the incompleteness of the European economic constitution, for example, through a concretisation

126

127

Berntsen and Lillie, ‘Hyper-mobile Migrant Workers and Dutch Trade Union Representation Strategies at the Eemshaven Construction Sites’; M. Kahmann, ‘The Posting of Workers in the German Construction Industry: Responses and Problems of Trade Union Action’ (2006) 12 Transfer 183; I. Wagner, ‘Rule Enactment in a PanEuropean Labour Market: Transnational Posted Work in the German Construction Sector’, British Journal of Employment Relations, published online before print on 7 January 2014, pp. 9–11; I. Wagner and N. Lillie, ‘European Integration and the Disembedding of Labour Market Regulation: Transnational Labour Relations at the European Central Bank Construction Site’ (2014) 52 Journal of Common Market Studies 403. Compare the situation in Finland: N. Lillie, ‘Subcontracting, Posted Migrants and Labour Market Segmentation in Finland’ (2012) 50 British Journal of Industrial Relations 148 and Sähköalojen ammattiliitto ry v. Elektrobudowa Spółka Akcyjna (n 42) (Polish workers posted to Finland assigned pay claims arising from Finnish universally applicable collective agreements to a Finnish trade union, which then brought proceedings against the employer to enforce those rights). See n 14. 128 Barnard, ‘A Proportionate Response to Proportionality’.

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of legal statements of social and economic rights in the Charter of Fundamental Rights of the EU or in a European civil code.129 Given the current state of effectiveness of public and collective enforcement, the private enforcement of the relevant standards, and thereby private international law, could play a crucial role in the context of the posting of workers. But even if the situation with regard to public and collective enforcement improves, the importance of the private enforcement of the relevant standards will remain. It should be remembered that the three ways of monitoring and enforcing the relevant standards perform complementary functions and should not be regarded as alternatives. The following section examines whether the European private international law of employment is able to adequately perform its role through the example of England as both a home and a host Member State.

8.3 Private enforcement of the Posted Workers Directive in England The UK is a net receiver of posted workers.130 This section, therefore, firstly deals with issues concerning the posting of workers to this country, more specifically to England. English workers are also being posted abroad in the framework of the transnational provision of services. A question then arises if an English posted worker can commence proceedings in England for breach of the relevant host Member State employment standards.

8.3.1

A receiving perspective

The UK did not pass specific legislation to implement the Posted Workers Directive. Instead, it has sought to comply with the directive by amending its existing employment legislation to ensure that posted workers fall within its territorial reach. Section 196 of the Employment Rights Act 1996 used to contain express territorial limitations. Most rights conferred by the act did not apply to employees who, under their employment contracts, ordinarily worked outside Britain.131 Since posted workers by definition ordinarily work outside Britain, they fell 129 130 131

H. Collins, ‘The European Economic Constitution’. See Cremers, ‘Free Provision of Services and Cross-border Labour Recruitment’, p. 220. Sections 196(2) and 196(3).

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outside the scope of those rights. Section 196 was repealed in 1999.132 The void left by the repeal was filled by the House of Lords in Lawson v. Serco.133 According to Lord Hoffmann, employees working in Britain are one of the categories covered by ERA 1996. Since posted workers work in Britain, albeit temporarily, ERA 1996 applies to them. The position in relation to anti-discrimination legislation is similar. Express territorial limitations used to exclude those who worked ‘wholly or mainly outside Great Britain’. This was altered by the Equal Opportunities (Employment Legislation) (Territorial Limits) Regulations SI 1999/3163 to allow those who worked partly in Britain to rely on anti-discrimination legislation.134 The Equality Act 2010 is silent with regard to its territorial reach. The government’s explanatory notice to the bill for the act states as follows: ‘As far as territorial application is concerned . . . the Bill leaves it to tribunals to determine whether the law applies, depending on for example the connection between the employment relationship and Great Britain.’ In Van Winkelhof135 the Court of Appeal regarded Lawson v. Serco as a leading authority for determining the territorial scope of EqA 2010. Similarly, the National Minimum Wage Act 1998 applies to a worker who ‘is working . . . in the United Kingdom’.136 With regard to the EU-law-derived statutory rights (e.g. rights granted by the Working Time Regulations SI 1998/1833), they apply to employees falling within the territorial scope of the relevant EU law instrument whose employment has a sufficient degree of connection with England, which seems to include employees posted from another Member State to England.137 Several issues remain open. First, it is not entirely clear what ‘working in Britain’ means. Of what duration and nature should a worker’s work in Britain be before they can be regarded as falling within the scope of ERA 1996 and other pieces of English employment legislation? One view is that there is a difference between workers posted to Britain who fall within the scope of the Posted Workers Directive and other

132 133

134

135

136 137

Section 32(3) Employment Relations Act 1999. Serco Ltd. v. Lawson; Botham (FC) v. Ministry of Defence; Crofts v. Veta Ltd. [2006] UKHL 3; [2006] 1 All ER 823. Compare e.g. section 10 of the the pre- and post-1999 versions of the Sex Discrimination Act 1975. Clyde & Co. LLP v. Bates Van Winkelhof [2012] EWCA Civ 1207; [2013] 1 All ER 844, [98], reversed on a different point in [2014] UKSC 32; [2014] 1 WLR 2047. Section 1(2)(b). For a detailed discussion of the territorial scope of British employment legislation see Chapter 4, Section 4.1.

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workers posted to Britain.138 According to this view, the repeal of section 196 of ERA 1996 did not change the law in relation to posted workers falling outside the scope of the directive, namely workers posted by nonEU employers. Such posted workers come within the territorial reach of ERA 1996 only if they ordinarily work in Britain. With regard to posted workers falling within the scope of the directive, they can invoke the rights granted by ERA 1996 even if they ordinarily work outside Britain. But such an interpretation of Lord Hoffmann’s ‘employees working in Britain’ category is not supported by the wording of the directive. According to Article 1(4) of the directive, undertakings established outside the EU must not be given a more favourable treatment than undertakings established in a Member State. If non-EU employers posting workers to Britain did not have to comply with ERA 1996 when their workers ordinarily worked outside Britain, they would be put in a more favourable position in comparison to Member State employers that have to comply with ERA 1996 in comparable situations. Since such a result would contravene Article 1(4) of the directive, it must be avoided. One of the most contentious issues in drafting the Posted Workers Directive was whether postings of short duration should be excluded from its scope. The initial proposal for the directive exempted all postings not exceeding three months.139 The 1993 proposal reduced the period to one month.140 Since these provisions did not find their way into the final version of the directive, this instrument applies, in principle, to all covered postings from day one. There is one compulsory exception from this rule: in the case of initial assembly and/or first installation of goods where this is an integral part of a contract for the supply of goods and necessary for taking the goods supplied into use, the host country standards concerning minimum paid annual holidays and the minimum rates of pay do not apply, if the period of posting does not exceed eight days and if the case does not concern the building sector.141 The directive also allows host Member States to partly exempt certain other categories of posting from its scope, namely postings not exceeding one month142 and postings 138

139

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141

A. Scott, ‘The Territorial Scope of British Employment Legislation’ [2010] Lloyd’s Maritime and Commercial Law Quarterly 640, pp. 654–5. European Commission, ‘Proposal for the Posted Workers Directive: Explanatory Memorandum’, Art. 3(2). European Commission, ‘Amended Proposal for a Council Directive Concerning the Posting of Workers in the Framework of the Provision of Services’, COM(93) 225 finalSYN 346, Art. 3(2). Art. 3(2) Posted Workers Directive. 142 Arts. 3(3) and 3(4).

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concerning ‘non-significant’ amount of work.143 But the optional exceptions are seldom implemented,144 since it is in the interest of host Member States to impose their employment standards whenever possible. The UK, for example, has not made use of this possibility. Consequently, the employment standards set out in ERA 1996 and other pieces of English employment legislation that, pursuant to the directive, must be imposed on out-of-state service providers apply from day one. Of course, an employee must satisfy the qualifying period of employment in order to be able to rely on the employment legislation. But both work in and outside the UK should be taken into account for this purpose.145 The application of British employment legislation, in its entirety and from day one, to posted workers brings into question the compliance with the Posted Workers Directive and the TFEU of the UK’s method of implementation of this instrument. The total repeal of section 196 of ERA 1996 was justified as being necessary for a proper implementation the directive.146 But the directive obliges host Member States only to impose on out-of-state service providers employment standards concerning matters listed in Article 3(1). Indeed, in relation to those standards, the existence of section 196 of ERA 1996 would have prevented a proper implementation of the directive. However, many provisions of ERA 1996, including those concerning unfair dismissal and redundancy, do not concern a listed matter. The UK was, therefore, not obliged to repeal section 196 in its entirety. Since the first indent of Article 3(10) of the directive allows host Member States to impose standards concerning non-listed matters ‘in the case of public policy provisions’, the total repeal of section 196 effectively gave all provisions of ERA 1996 concerning non-listed matters such public policy status. Similarly, the existence in other pieces of British employment legislation of provisions that do not 143 145

146

Art. 3(5). 144 van Hoek and Houwerzijl, ‘Comparative Study’, pp. 34–5. This issue does not seem to have been raised before English courts. Some support for this proposition can be found in Cox v. ELG Metals Ltd. [1985] ICR 310, where the Court of Appeal held that for the purposes of section 64A(1) of the Employment Protection (Consolidation) Act 1978 employees of an associated employer, although ordinarily working abroad, could be added to the number employed by the employer concerned so as to arrive at the total number of employees for the purposes of section 64A(1)(b). Contra: van Hoek and Houwerzijl, ‘“Posting” and “Posted Workers”’, p. 425, referring to Novitz, ‘UK Implementation of the Posted Workers Directive’, p. 17, which, in turn, refers to C. Barnard, ‘The UK and Posted Workers: The Effect of Commission v. Luxembourg on the Territorial Application of British Labour Law’ (2009) 38 Industrial Law Journal 122, p. 137. HC Debates, vol. 336, col 32, 26 July 1999.

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concern a listed matter, but that extend their application to workers posted from other Member States, implies recourse to Article 3(10) of the directive. But in the light of Commission v. Luxembourg,147 such an extensive territorial reach of the employment legislation must be seen as being contrary to both the directive and the provisions on the free movement of services of the TFEU.148 Furthermore, as discussed in Section 6.2.2. of Chapter 6, it is possible, although far from certain, that giving a public policy status to provisions concerning non-listed matters might also contravene Article 9(1) (‘mandatory overriding provisions’) of Rome I. If so, both the Posted Workers Directive and Rome I would require provisions contained in British employment legislation concerning non-listed matters to be applied only in situations where English (or Scottish) law governs the employment contract. But if Article 9(1) of Rome I does not prevent the overriding application of provisions concerning non-listed matters, an interesting situation would arise. The Posted Workers Directive and the TFEU would preclude the imposition of such provisions on service providers established in other Member States, whereas Article 9 of Rome I would allow the imposition of such provisions on non-EU service providers. In that case, a difference in treatment between workers posted from other Member States and those posted from non-EU countries would arise to the detriment of the former. This outcome would fit in well with the logic of the Posted Workers Directive, whose main aim is to improve the operation of the internal market and not to protect posted workers. Another issue is whether employment standards set by English collective agreements can be imposed on out-of-state service providers. Since the UK does not have a system for declaring collective agreements to be of universal application, only standards set by collective agreements that meet the requirements of general applicability or of the representative status of the collective partners could be imposed. Laval149 shows that a country can make use of the possibility provided for in the second subparagraph of Article 3(8) of the Posted Workers Directive only if it expressly so decides. Since the UK has not referred in its legislation or elsewhere to any collective agreement meeting the necessary 147 148

149

Case C-319/06 (n 52). Barnard, ‘The UK and Posted Workers’; L. Merrett, Employment Contracts in Private International Law (Oxford University Press, 2011), [8.24]–[8.30]; Novitz, ‘UK Implementation of the Posted Workers Directive’, pp. 15–17. See n 2.

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requirements, English collectively set standards should not be imposed on out-of-state service providers.150 Finally, there is a question of whether workers posted to England can effectively enforce the relevant employment standards before English courts. Do English courts have international jurisdiction to hear and decide such cases? Defendants in employment disputes who are domiciled in the EU and those domiciled outside the EU fall under different jurisdictional regimes. English courts can assume jurisdiction over an employer domiciled in a Member State pursuant to the rules of the Brussels I Recast.151 But this regulation does not prejudice the application of the jurisdictional rules contained in other EU law instruments, such as the Posted Workers Directive, and in domestic legislation harmonised pursuant to such instruments.152 Jurisdiction over employers domiciled outside the EU is governed, with a few exceptions, by traditional jurisdictional rules of individual Member States. The rules of jurisdiction in employment matters of the Brussels I Recast have been examined in Chapter 4. Member State employers usually fall under the jurisdiction of the courts of their domicile or the courts for the habitual place of work. Other jurisdictional bases (the engaging place of business; branches, agencies and other establishments; consent) seldom apply and would in any event rarely give jurisdiction to the courts of the host Member State. In cases of the posting of workers to England, the competent courts are, therefore, by definition foreign courts. However, Article 5(2) of the Posted Workers Directive states that the Member States must ensure that adequate procedures are available to workers and/or their representatives for the enforcement of obligations under this directive. Furthermore, Article 6 of the directive provides that, in order to enforce the right to the terms and conditions of employment guaranteed by Article 3, judicial proceedings may be instituted in the host Member State. Article 6 has not been specifically implemented into UK law. Nevertheless, there are jurisdictional rules in England that posted workers can invoke. Employment standards that, pursuant to Article 3 of the directive, must be accorded workers posted to England are contained in legislation. Statutory claims based on the breach of English employment legislation can only be brought before 150

151

See Barnard, ‘“British Jobs for British Workers”’, pp. 255–7 (although certain national sectoral collective agreements in the UK purport to apply to all covered workers who work on sites throughout the UK, including posted workers, this is not in accordance with EU law). Arts. 4–6. 152 Art. 67.

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employment tribunals.153 Jurisdiction of employment tribunals in England is set out in the Employment Tribunals (Constitution and Rules of Procedure) Regulations SI 2013/1237. Under regulation 8(2) of Schedule 1 of the 2013 Regulations, employment tribunals in England and Wales have jurisdiction to deal with proceedings where (1) the employer resides or carries on business in England and Wales, (2) one or more of the acts or omissions complained of took place in England and Wales, (3) the claim relates to a contract under which the work is or has been performed partly in England and Wales or (4) there is a connection with Great Britain and the connection in question is at least partly a connection with England and Wales. Pervez v. Macquarie Bank Ltd.,154 a case decided under the predecessor of the 2013 Regulations, shows that whenever an employee falls within the scope of English employment legislation, the requirements of the regulations are satisfied.155 In cases of posting of workers falling within the scope of the Posted Workers Directive, the 2013 Regulations should be regarded as effectively implementing Article 6 of the Posted Workers Directive. The 2013 Regulations also set out the jurisdiction of employment tribunals over non-EU employers for breach of statutory rights conferred by English employment legislation. As mentioned, there is a possibility that workers posted to England by such employers, which do not fall within the scope of the Posted Workers Directive, are in a somewhat different legal position than workers posted to England by Member State employers. It is possible, although far from certain, that the definition of overriding mandatory provisions under Article 9(1) of Rome I is not as narrow as the definition of ‘public policy provisions’ under Article 3(10) of the Posted Workers Directive. If so, the provisions contained in British employment legislation which do not concern a listed matter and, therefore, do not satisfy the test of Article 3(10) of the directive might, nevertheless, satisfy the requirements of Article 9(1) of Rome I and as such be applied against non-EU employers. If so, employment tribunals would have jurisdiction over statutory claims for breach of some or all employment standards concerning non-listed matters brought by workers posted by non-EU employers, but not over the same types of claim brought by workers posted by Member State employers. The possibility 153

154

See e.g. section 205(1) ERA 1996 that provides that a collection of complaints under the act may be made to an employment tribunal and that a remedy may not be sought otherwise than by such a complaint. See also section 120 EqA 2010. [2011] ICR 266. 155 Ibid., [21].

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of this outcome is additional evidence that the Posted Workers Directive is primarily concerned with advancing the interests of the internal market, not the interests of posted workers. In any event, the van Hoek-Houwerzijl study concludes that posted workers rarely commence proceedings in host Member States: ‘In all the receiving Member States it seems that the right to take legal action has at present hardly been or has never been used by posted workers.’156 There are several possible explanations for this finding. First, posted workers are often unaware of their rights. The Posting of Workers Enforcement Directive addresses this problem by prescribing, in Article 5, a number of measures to help ensure easily accessible and generally available information on the applicable host Member State employment standards. Unions can also help in this respect. Second, postings usually do not last long enough for posted workers to become sufficiently integrated in the host Member State. Host Member State courts usually remain remote and unfamiliar venues for posted workers. Few posted workers are members of trade unions in host Member States and are, therefore, unlikely to receive much support from those unions. Third, many posted workers work in the construction, transport, agency work and other relatively low-wage sectors. Such workers experience particular difficulties accessing the host Member State courts due to financial, linguistic, cultural and similar barriers. Fourth, the judgment of the host Member State courts would usually have to be recognised and enforced in the home Member State, which is a major disincentive for posted workers, arguably even under the liberal regime for the recognition and enforcement of foreign judgments of the Brussels I Recast. This problem, however, does not arise where the host Member State imposes joint and several liability on service receivers for the payment of wages of posted workers and accompanying social security contributions and taxes. Fifth, the terms and conditions of employment of senior posted workers (managers, consultants, professionals etc.), who are more likely to have financial means to pursue labour litigation in the host Member State, normally exceed minimum host Member State employment standards, in particular concerning wages. In order to overcome some of these difficulties, several Member States allow representative workers’ and employers’

156

van Hoek and Houwerzijl, ‘Comparative Study’, Executive Summary, p. 35. See also van Hoek and Houwerzijl, ‘Complementary Study’, Executive Summary, p. 22 (‘hardly any court cases related to posting of workers were reported’).

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organisations to commence legal proceedings, independent of posted workers.157 But the van Hoek-Houwerzijl study shows that, with the exception of Germany, this measure is also largely ineffective.158 Although the number of claims in host Member States will increase as a consequence of posted workers becoming aware of their rights and gaining a sense of entitlement and the engagement of the host Member State collective actors, litigation in host Member States will arguably remain a relatively underused way of enforcement. In order for the private enforcement of the relevant host Member State employment standards to be a true complement to public and collective enforcement, it is imperative that posted workers are also able to commence and pursue effective proceedings in home Member States.159 Before proceeding further, it should be mentioned that the Posting of Workers Enforcement Directive obliges host Member States, in Article 11, to put in place effective mechanisms for posted workers to lodge complaints against their employers, either directly or through their representatives. This is an additional means for individual posted workers to effect the enforcement of the Posted Workers Directive, whose effects in practice remain to be seen.

8.3.2

A sending perspective

English posted workers can commence proceedings for breach of the relevant host Member State employment standards in the host Member State. The following text examines whether they can also effectively enforce those standards before English courts. In a typical posting scenario, the courts of the posted worker’s country of origin have jurisdiction over disputes concerning his or her employment contract. English posted workers, therefore, do not have a problem commencing proceedings in England. But can they pursue effective proceedings in England? Typically, a posted worker’s employment contract is governed by the law of his or her country of origin. The effectiveness of proceedings before English courts, therefore, primarily depends on their ability to apply the relevant host Member State employment standards where the law of the host Member State is not applicable. According to Davies, ‘The consequence [of the Posted Workers 157 158 159

van Hoek and Houwerzijl, ‘Comparative Study’, Executive Summary, p. 34. Ibid., pp. 34–5. See also M. Fornasier and M. Torga, ‘The Posting of Workers: The Perspective of the Sending State’ (2013)(6) Europäische Zeitschrift für Arbeitsrecht 356.

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Directive] for the home State government is that the Directive will require it to ensure its labour courts do apply the law of the host State in appropriate circumstances.’160 However, this conclusion does not seem to be supported by the wording of the directive. The only two provisions of the directive relevant in this respect are contained in Articles 5(2) and 6, mentioned above. But neither of these provisions requires home Member States to lend their courts for the enforcement of the relevant host Member State standards. Article 6 expressly obliges only host Member States to enable the institution before their courts of proceedings for the enforcement of the terms and conditions of employment guaranteed by Article 3. Similarly, Article 3(1) seems to require only host Member States to ensure that the relevant employment standards are imposed on out-of-state service providers: ‘Member States shall ensure that . . . [foreign service providers] guarantee workers posted to their territory the terms and conditions of employment covering the [listed matters].’ Therefore, as long as host Member States enable posted workers to enforce the relevant local standards before their courts, as required by Article 6, it seems that the Member States will have fulfilled their Article 5(2) duty. Does Rome I provide English courts with a basis for applying the relevant host Member State employment standards? It should be noted in this respect that Davies primarily based his conclusion quoted above on Article 7(1) of the Rome Convention.161 This article provided the following: ‘When applying under this Convention the law of a country, effect may be given to the mandatory rules of the law of another country with which the situation has a close connection, if and in so far as, under the law of the latter country, those rules must be applied whatever the law applicable to the contract.’ Although the UK, at the time of acceding to the Rome Convention, reserved the right not to apply Article 7(1),162 it was considered that the Posted Workers Directive overrode such reservations in the case of employment contracts by ‘[identifying] the relevant mandatory rules in the context of employment contracts and [requiring] the home State courts to apply them’.163 But this argument is not relevant 160

161 162

163

P. Davies, ‘Posted Workers’, p. 578; also B. Hepple, Labour Laws and Global Trade (Oxford: Hart, 2005), p. 169; but see R. Kidner, ‘Jurisdiction in European Contracts of Employment’ (1998) 27 Industrial Law Journal 103, pp. 115–16. Ibid., pp. 578–9. As allowed by Art. 22(1)(a) Rome Convention; see section 2(2) Contracts (Applicable Law) Act 1990. P. Davies, ‘Posted Workers’, p. 579.

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any more since Article 7(1) of the Rome Convention as such has not found its way into Rome I. Admittedly, Article 9(3) of Rome I allows the application of the overriding mandatory provisions of the law which is neither the law of the forum nor the law governing the merits. But the wording of this article is restrictive: ‘Effect may be given to the overriding mandatory provisions of the law of the country where the obligations arising out of the contract have to be or have been performed, in so far as those overriding mandatory provisions render the performance of the contract unlawful.’ The host Member State is clearly a country of performance of the obligations arising out of the posted worker’s employment contract. As demonstrated in Section 6.2.2. of Chapter 6, the provisions concerning the matters listed in Article 3(1) or satisfying the test of Article 3(10) of the Posted Workers Directive represent ‘overriding mandatory provisions’ for the purposes of Rome I. Therefore, home Member State courts ‘may give effect’ to the relevant host Member State standards, provided that their violation renders the performance of the contract ‘unlawful’. It is not entirely clear what ‘unlawful’ means in this context. If it is read as ‘illegal’, as seems to be the prevailing academic opinion in England,164 there will not be many situations in which the home Member State courts will be able to apply the relevant host Member State standards. If the work carried out in the host Member State contravenes local provisions concerning maximum work periods and minimum rest periods, minimum rates of pay and so on, the performance of the contract will ordinarily not be illegal, at least not in the Member States that do not impose criminal law sanctions for such breaches. In many Member States, a breach of the relevant employment standards will usually entitle the employee to appropriate remedies (compensation, the right to refuse

164

J. Harris, ‘Mandatory Rules and Public Policy under the Rome I Regulation’ in F. Ferrari and S. Leible (eds.), Rome I Regulation: The Law Applicable to Contractual Obligations in Europe (Munich: Sellier, 2009) 269, pp 305–8; T. Hartley, International Commercial Litigation: Text, Cases and Materials on Private International Law (Cambridge University Press, 2009), p. 607; cf. A. Bonomi, ‘Overriding Mandatory Provisions in the Rome I Regulation on the Law Applicable to Contracts’ (2008) 10 Yearbook of Private International Law 285, pp. 296–9 (effect should also be given to foreign overriding mandatory provisions which impose a specific positive behaviour or guarantee a specific remedy to one of the parties); M. Hellner, ‘Third Country Overriding Mandatory Rules in the Rome I Regulation: Old Wine in New Bottles?’ (2009) 5 Journal of Private International Law 447, pp. 461–2 (the concept of unlawfulness must be understood in the wider sense).

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to carry out work until the relevant standards are complied with etc.), without rendering the performance of the contract illegal. Finally, it will be remembered that British legislation that is derived from EU law has a different territorial scope than purely domestic legislation.165 Given that the Posted Workers Directive is an EU law instrument, the question arises of whether English courts can rely on the Bleuse166 line of cases to apply the relevant host Member State employment standards. Since the Posted Workers Directive does not oblige home Member States to enforce the host Member State standards, the answer is negative, as confirmed in Bullen v. Club Cantabrica Coach & Air Holidays Ltd.167 The arguable inability of posted workers to commence effective proceedings for the enforcement of the relevant host Member State employment standards in their country of origin168 further supports the conclusion that the European regime of the posting of workers is primarily concerned with advancing the interests of the internal market, not of posted workers or host Member States. If the European private international law of employment is to contribute to the fulfilment of the social goals of the EU, posted workers must be able to commence and pursue effective proceedings in home Member States. To achieve this, a provision like the one in Article 7(1) of the Rome Convention could be reintroduced in Rome I. Since this is highly unlikely,169 a more realistic solution is to either interpret Article 9(3) of Rome I and its concept of ‘unlawfulness’ widely or to amend the Posted Workers Directive by introducing a provision that would oblige home Member States to lend their courts for the enforcement of the relevant host Member State standards. Indeed, some Member States have unilaterally adopted legislation in which they guarantee workers

165 167 168

169

See Chapter 6, Section 1.3. 166 Bleuse v. MBT Transport Ltd. [2008] ICR 488. Employment Tribunal, case number 3303362/2009, 21 April 2010, unreported. The only reported case that I was able to find where the courts of the posted worker’s country of origin enforced the host Member State employment standards is the judgment of the Estonian Supreme Court of 16 January 2013, No. 3–2-1–179-12, reported in Fornasier and Torga, ‘The Posting of Workers’. But here the Estonian Supreme Court found that the employment contract was governed by the law of the host country, which either means that the case concerned a sham posting or that the Estonian Supreme Court misapplied Art. 8(2) Rome I. See A. Dickinson, ‘Third-country Mandatory Rules in the Law Applicable to Contractual Obligations: so long, farewell, Aufwiedersehen, adieu?’ (2007) 3 Journal of Private International Law 53.

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posted from their territories the protection of the relevant host Member State employment standards.170

8.4 Conclusions Since its inception, EU law has had to balance the competing interests of the internal market and the host Member States’ interests in the social sphere. It is in the area of the posting of workers in Europe that these considerations have clashed with particular force. The analysis of the various aspects of the regulation of the posting of workers in Europe shows a clear pattern of favouring the interests of the internal market over those of host Member States and posted workers. First, while guaranteeing the freedom to provide services, EU law has always allowed host Member States to impose some of their employment standards on out-of-state service providers. Recently, however, the CJEU has significantly curtailed the range and type of local standards that can be imposed, thereby endangering the existing models of industrial relations of certain Member States such as Sweden. Second, while consistently holding that ‘Community law [does not] prohibit [host] Member States from enforcing [the relevant local standards] by appropriate means’,171 the CJEU has imposed restrictions on the host Member State authorities and unions that undermine the effectiveness of both public and collective enforcement of those standards. This state of affairs gives the private enforcement of those standards, and thereby the rules of private international law, a potentially crucial role. But even if the situation with regard to public and collective enforcement improves, for example, after the adoption of the proposed Posting of Workers Enforcement Directive or the rebalancing of the economic and the social in the European economic constitution, the importance of the private enforcement of the relevant standards will remain. Posted workers have the option of commencing proceedings in host Member States for breach of the relevant local employment standards. But posted workers rarely do so because of their often precarious socioeconomic position, ignorance of the posting of workers regime and the temporary nature of posting. In order to remedy this situation, host Member States should work on increasing the posted workers’ awareness 170

171

Fornasier and Torga mention, in ‘The Posting of Workers ‘, p. 362, fn. 19, Latvia, Lithuania, Slovakia and Sweden as examples of countries that have adopted such legislation. Rush Portuguesa (n 5), [19].

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of their rights, raising their sense of entitlement and encouraging the engagement of the host Member State collective actors. But litigation in host Member States will arguably continue to be a relatively underused way of enforcement. In order for the private enforcement of the relevant host Member State employment standards to be a true complement to public and collective enforcement, posted workers must also be able to commence and pursue effective proceedings in home Member States. Although the home Member State courts have jurisdiction over disputes concerning the posting of workers abroad, neither the Posted Workers Directive nor Article 9(3) of Rome I seems to oblige or arguably even allow these courts to apply the relevant host Member State standards. An amendment of the Posted Workers Directive which would oblige home Member State courts to do this is desirable. Until these changes are made, the conclusion that the Posted Workers Directive puts into place ‘appropriate conflict rules’ in order to ‘correct distortions’ ‘[i]n areas where an unlevel playing-field is perceived to distort competition between firms . . . while leaving each national system free to pursue its own economic or social policies through diverse substantive rules’172 seems unwarranted. 172

H. Muir Watt, ‘European Integration, Legal Diversity and the Conflict of Laws’ (2005) 9 Edinburgh Law Review 6, pp. 17–18. See also H. Muir Watt, ‘Integration and Diversity: The Conflict of Laws as a Regulatory Tool’ in F. Cafaggi (ed.), The Institutional Framework of European Private Law (Oxford University Press, 2006) 107, pp. 138–44.

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9 Conclusion

The development of European private international law has revolutionised the understanding of private international law in Europe.1 The features of this process are said to be the ‘federalisation’ of private international law rules in EU regulations, ‘(quasi-)constitutionalisation’ of European private international law and methodological pluralisation, which leads to the bifurcation of intra-EU and external conflicts and to a conflict of two choice-of-law methods: one grounded in traditional thinking, the other based on specific EU-law reasoning. The findings of this book support, and can be explained in terms of, those observations. The federalisation of private international law is more than just a codification of private international law rules in EU regulations. It implies a shift in the traditional perceptions and rules in individual Member States and in the objectives pursued by this field of law. The English conflict of laws of employment provides a good example of the significant changes brought about in one Member State by the ‘Europeanisation’ of private international law. As Section 6.1 of Chapter 6 shows, statutory employment claims in England do not traditionally trigger the application of choice-of-law rules. The question of whether an employment statute applies is considered to be one of statutory construction. When interpreting the territorial scope of a statute, English courts are exclusively concerned with protecting their own regulatory objectives and employment standards. If an employee falls outside the territorial reach of employment legislation, in other words, if the English regulatory objectives and employment standards are not concerned, the employee cannot bring a claim under that legislation. The fact that the employment contract is solely governed by English law and that, consequently, the employee cannot rely on employment legislation of other countries, or that the employee finds himself or herself in a legal 1

R. Michaels, ‘New European Choice-of-Law Revolution’ (2008) 82 Tulane Law Review 1607.

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vacuum by simultaneously falling outside the scope of employment legislation of foreign countries that are closely connected with the employment contract, is traditionally regarded as irrelevant. But Section 6.2 of Chapter 6 demonstrates that Rome I and, to a certain extent, the Rome Convention have radically changed the law in this field by largely merging contractual and statutory claims into one claim for choice-of-law purposes. Similarly, Chapter 7 shows that Rome I and Rome II do not allow English courts to adhere to the traditional approach to tortious employment claims, which allowed concurrence of contractual and tortious causes of action and, consequently, the application of two laws to the defendant’s breach of essentially one duty. The relatively wide subject matter scope of Rome I and the operation of the choice-oflaw rules for tort of Rome II lead to the unity of applicable law in the majority of situations giving rise to concurrent liability in substantive law. The result is that claims traditionally perceived as tortious have largely been merged with contractual and statutory claims for choiceof-law purposes. Consequently, concurrent causes of action are effectively also almost completely abolished in choice of law. By effectively largely merging the three types of employment claim into one claim and subjecting them to the same governing law, the European choice-of-law instruments determine the situations in which the whole of English law applies (or does not apply) in a transnational employment dispute. Furthermore, the Brussels regime, with its special jurisdictional rules concerning employment that have been explored in detail in Chapter 4 and its rules on the recognition and enforcement of judgments, has supplanted, in cases falling within its scope, the traditional rules of jurisdiction and recognition and enforcement, which are based on widely different notions. Another radical change is the application of the principles of mutual recognition and the country of origin in cases falling within the scope of the fundamental economic freedoms of EU law. The arguments advanced with regard to the English conflict of laws of employment can be transposed to other fields of English law. For example, the problems of the territorial scope of statutes and concurrence of contractual and other causes of action also arise in consumer law. English courts still approach the question of whether a consumer can claim under consumer protection statutes (e.g. Consumer Credit Act 1974) as an issue of statutory construction.2 But, following the line of arguments put forward in Chapter 6, one would come to the conclusion that the 2

Office of Fair Trading v. Lloyd’s Bank TSB [2007] UKHL 48; [2007] 3 WLR 733.

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territorial scope of much of consumer protection legislation is also primarily a matter for Rome I.3 Similarly, the Brussels regime and the principles of mutual recognition and the country of origin have deeply affected other fields of English conflict of laws. These various effects of the ‘Europeanisation’ of private international law are further examples of what Hartley labelled ‘systematic dismantling’ of the common law of conflict of laws.4 The reason for the changes brought about by the European private international law of employment is that the role of this field of law is different from that of domestic private international law regimes. The European private international law of employment is concerned with supranational interests. It performs a regulatory function, one of allocating and safeguarding the adjudicatory and legislative authority of states in the field of labour law, primarily in the EU context. It is a mechanism for coordinating and maintaining the diversity of the Member States’ labour law systems, while safeguarding the objectives and values of EU law. The objectives of the European private international law of employment can, therefore, be aptly summarised as pursuing ‘unity in diversity’. This is a facet of the constitutionalisation of European private international law. As the analysis of the objective of protection of employees in Chapter 2 shows, the distribution of adjudicatory authority should be performed through jurisdictional rules that guarantee employees the right to pursue their claims in favourable forums and not to defend their cases in unfamiliar and inaccessible forums. Jurisdictional preference accorded to employees, however, should be proportionate and take into account the states’ legitimate interests. In particular, the courts of the country that is sufficiently closely connected with, and legitimately interested in adjudicating disputes arising out of, the employment contract and whose jurisdiction the parties can reasonably expect must be available.5 The distribution of legislative authority should be performed through choiceof-law rules that safeguard the application of the law of the state that is sufficiently closely connected with the employment contract in question and legitimately interested in regulating it, with which law the parties to the contract are sufficiently closely connected and presumably familiar and whose application they reasonably expect. In addition, party 3

4

5

See C. Bisping, ‘Avoid the Statutist Trap: The International Scope of the Consumer Credit Act’ (2012) 8 Journal of Private International Law 35. T. Hartley, ‘The European Union and the Systematic Dismantling of the Common Law of Conflict of Laws’ (2005) 54 International and Comparative Law Quarterly 813. Chapter 2, Section 2.4.

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autonomy should be allowed as long as it benefits the employee by building upon the mandatory minimum standard of protection set by the objectively applicable law.6 Moreover, the rules of the European private international law of employment should safeguard the objectives and values of EU law from non-EU elements. Chapters 4 and 5 demonstrate that the rules concerning employment of the Brussels I Recast and Rome I largely accord with the mentioned considerations. Nevertheless, it is suggested that the Brussels I Recast would be improved if the rule of the engaging place of business were abolished and two new jurisdictional rules were introduced, one in favour of claimant employees (the ‘seeking out’ rule), the other in favour of claimant employers (the rule of the habitual place of work). Furthermore, it is suggested that Rome I would be improved by the abolition of the rule of the engaging place of business. The effective amalgamation of the three types of employment claim in English law into one category for choice-of-law purposes is a manifestation of the regulatory function of the European choice-of-law rules, which endeavour to pinpoint one country to which a transnational employment relation objectively ‘belongs’, which, therefore, has the legislative authority with regard to that relation that should be safeguarded. But, as suggested in Chapter 7, the escape clause of Rome II needs to be amended if it is to adequately channel legislative authority over a transnational employment relation to one country and cater for the situations where the employment contract is governed by two laws (the chosen law and the objectively applicable law). Finally, Chapter 3 shows that the respect for diversity of national labour law systems is achieved through wide and inclusive personal scope of the special jurisdictional and choice-of-law rules of the Brussels I Recast and Rome I. This can be seen as an attempt to allocate and safeguard the regulatory authority of states that have intermediate legal categories of dependent self-employed workers or ascribe employer responsibilities to multiple employing entities. But the effective amalgamation of the three types of employment claim and the channelling of regulatory, in particular legislative, authority over a transnational employment relation to one country only creates significant problems in cases of interaction between the instruments of the European private international law of employment and the fundamental economic freedoms guaranteed by the TFEU. According to Rome I and the Brussels I Recast, the law of the country of the employee’s ‘origin’ 6

Chapter 2, Section 2.3.

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remains applicable and the courts of that country retain competence, when the employee is temporarily posted abroad. This complements the provisions of the TFEU and the Posted Workers Directive, which give service providers from the EU the freedom to provide services within the EU and allow host Member States to impose only a limited range and type of local employment standards on out-of-state service providers. The practical outcome of these rules is that service providers from Member States with relatively low employment standards that post workers to Member States with relatively high employment standards for the purpose of providing services there are able to undercut local competitors. Such intra-EU movement of services is often perceived as ‘unfair competition’ and ‘social dumping’ in affluent host Member States. Furthermore, as Chapter 8 demonstrates, all ways of enforcing the relevant host country standards that can be imposed on out-of-state service providers, namely public, collective and private enforcement, suffer from significant shortcomings. Calls have been made, from various quarters (including most of the academia, trade unions, politicians, many national governments and EU bodies), to reform the regime of the posting of workers in Europe by rebalancing the economic and the social sphere of the EU and increasing the effectiveness of public and collective enforcement of the relevant standards. Another measure, suggested in this book, is to increase the effectiveness of private enforcement, thus making European private international law a part of the solution to the posting of workers in Europe. This could be achieved if posted workers are enabled to commence and pursue effective proceedings in home Member States for the enforcement of the relevant host Member State standards. The methodological pluralisation of the European private international law of employment is reflected in the different treatment of intra-EU and external conflicts. Intra-EU conflicts of jurisdictions and laws are regulated not only by the rules of the Brussels I Recast, Rome I and Rome II but also by the TFEU and the Posted Workers Directive. Another instance of the specific treatment of intra-EU conflicts can be found in the special way of determining the territorial scope of EU-law-derived employment rights. Although it is argued in Chapter 6 that the territorial scope of British employment legislation is primarily a matter for Rome I, EU-law-derived employment rights are an exception, since the unilateralist approach to determining the territorial reach of those rights seems to be mandated by EU law and governed by specific EU law consideration.7 In cases of 7

Chapter 6, Section 6.1.3.

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conclusion

305

external conflicts (i.e. situations involving connections with one or more EU and non-EU countries), Member State courts must safeguard the objectives and values of EU law from non-EU elements in appropriate cases, regardless of the law applicable pursuant to the choice-of-law rules of Rome I. It remains yet to be clarified what the appropriate cases are.8 By coordinating and maintaining the diversity of the Member States’ labour law systems, while safeguarding the objectives and values of EU law, the European private international law makes an indispensable contribution to the fixing of fairly permanent structures for a particular kind of economic and social system that promotes European values of fairness and social justice. This is another facet of the constitutionalisation of European private international law. Intriguingly, the importance of this discipline is not reflected in the work of many of those who are interested in the role of European private law in general in achieving social justice.9 By disclosing and highlighting the systemic role of European private international law, this book invites further research and dialogue on whether and how this legal discipline can promote social justice in transnational contexts. It should not be forgotten that labour law is but one aspect of the legal regulation of employment relations. Other aspects include social security and taxation. In domestic context, these various aspects of the legal regulation of employment relations complement each other in achieving domestic regulatory objectives. The European private international law of employment is traditionally considered in isolation of fields of law such as European and international law of collective bargaining, social security and taxation. A further step in determining whether the European private international law of employment adequately performs its regulatory function is to consider its interaction with the other elements of the system of regulation of transnational employment relations and how the system as a whole contributes to the achievement of supranational regulatory objectives. In exploring the objective of protection of employees in European private international law, this book has shown that this field of law is not only concerned with resolving individual private disputes and achieving private justice and fairness in individual cases, but that it also has an important systemic role. This book has also demonstrated, 8 9

Ibid. See Study Group on Social Justice in European Private Law, ‘Social Justice in European Contract Law: A Manifesto’ (2004) 10 European Law Journal 653.

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through the example of the English conflict of laws of employment, that European private international law has brought about significant changes in the traditional perceptions and rules in individual Member States in this field of law. These conclusions, in turn, reveal something about private international law as a whole. The fact that European private international law has such a systemic role is a strong piece of evidence for the proposition that the concept of ‘private’, expressed in its very name, is obscuring the true nature of the discipline and the functions it performs.

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INDEX

absence of choice applicable law in, 44–49, 155–177 contractual claims in choice-of-law framework and, 137–138 engaging place of business rule and, 120–124 escape clause and, 174–177 habitual place of work rules and, 156–157 accessory choice-of-law, 241–247 agency workers. See triangular employment relationships aircraft place of registration international transport workers’ protections and, 48, 121–123 transnational occupations and, 162–167 air-crew members. See international transport workers Allonby case, 78–82, 87 ancillary establishments branches, agencies, and other establishments, 124–126 employer’s domicile vs. general defendants’ domicile jurisdictional rules and, 106–109 improvements for existing rules for, 129–132 anti-discrimination legislation applicable law in absence of choice, 47 chosen law vs. objectively applicable law, 150–152 Equality Act 2010 (United Kingdom) and, 73–76, 189–190 EU law-derived rights and, 196 n. 75, 201 n. 100 overriding mandatory provisions and, 212–213 posted worker protections and, 286–294

anti-suit injunctions, 25–26, 29–33, 87–88, 101–104 applicable law. See objectively applicable law Arblade and Leloup case, 210–211, 274–280 Athanasios Kalfelis v. Bankhaus Schröder, Münchmeyer, Hengst and Co. case, 205 atypical workers classification of, 64 employment contracts and, 56–58 autonomous interpretation, autonomous worker concepts and, 78–82 autonomous interpretations choice-of-law rules and, 202–206 comparative analysis of employee definitions and, 70–78 concurrent causes of action and, 237–241 definitions of employee and, 69–83 individual employment contracts, 58–69, 82–83, 89–90 place of provision of services jurisdictional rule and, 115–118 statutory claims and, 78–82 substantive EU law, definitions of employee and, 78–82 Base Metal Trading Ltd. v. Shamurin, 223–224, 225, 234–241, base of operations for work performed ancillary establishments and, 124–126 international transport workers’ protections and, 48 Belgium overriding mandatory provisions vs. choice-of-law rules and, 211–212

327

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328

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Belgium (cont.) public enforcement of employment standards in, 274–280 Bleuse v. MBT Transport Ltd. case, 181–189, 195–201, 202–206 Bolkestein directive, 254–260 bonus agreements, in employment contracts, 87–88 Boukhalfa case, 200–201 Briggs, A., 192–195, 222–223, 229, 248–250 British Airways plc v. Sindicato Espanol de Pilotos de Lineas Aeras case, 280–285 British nationals, Employment Rights Act 1996 (United Kingdom) and, 186–189 Brodie, Lord, 186–189 Brodin v. A/R Seljan case, 248–250 Brussels Convention, 5–6 employer responsibilities and, 108 n. 78 employment contracts provisions in, 58–62 engaging place of business rule in, 120 n. 130 habitual place of work rule and, 109–110 n. 83, 132–136 jurisdictional rules in, 58–62, 95–100 Brussels I Recast, 5–6 ancillary establishments and jurisdictional rules in, 124–126 Article 6(1), 280–285 Article 7(1), 115–119, 205, 229–241 Article 7(2), 205, 229–241 Article 7(5), 106–109, 120–121, 124–126, 132–136, 167–174 Article 8, 94, 100–101, 126, 129–132, 141–143, Article 20, 18–19, 94 Article 21, 18–19 Article 22, 18–19 Article 23, 18–19 Article 25, 100–101, 115–119, 126–128 Article 26, 100–101, 126, 144–154 Article 31, 126–128

autonomous interpretation of individual employment contracts in, 62–69, 82–83 claimant employees and jurisdictional rules of, 126, 128–129 co-defendants and jurisdictional rules in, 91–94, 98–100, 126, 280–285 concurrent causes of action and, 229–241 defendant employees and jurisdictional rules of, 100–101 employee protection in, 106 employee’s domicile in, 47, 49–54, 106–109 employer responsibilities in, 83–88 employer’s domicile vs. general defendants’ domicile and, 106–109 employment contracts provisions in, 58–62 engaging place of business rule and, 120–124 evolution of jurisdictional rules in, 91–94 future issues concerning jurisdictional rules and, 136 habitual place of work rule and, 109–115, 118–119 improvements for existing jurisdictional rules, 129–132 individual employment contracts in, 37–38, 78–82, 89–90 jurisdiction agreements and, 126–128 jurisdictional rules in, 15–16, 53–54, 118–119 lis pendens principle and, 25–26, 101–104 new jurisdictional rules proposed for, 132–136 place of provision of services rule and, 115–119 posted workers and, 254–260, 286–294 private international law of employment and, 12–15

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index Recital 4 of, 64 Recital 18 of, 7–9, 91–94 scope of, 15–16 systemic approach to employee protections and, 9–12 tacit choice-of-law, 142–143 Brussels I Regulation, 5–6, 53–54 applicable law in absence of choice, 155–177 collective enforcement of employment standards and, 280–285 employer defined in employment contract provisions of, 83–88 employment contracts provisions in, 58–62 engaging place of business rule in, 120 n. 130 habitual place of work rule and, 156 individual employment contracts in, 56–58 jurisdictional rules in, 91–94, 98–99 recognition and enforcement of judgments in, 104–105 Bullen v. Club Cantabrica Coach & Air Holidays Ltd., 294–298 Burke v. Uvex Sports GmbH, 234 n. 56–235 n. 56 Cameron v. Navy, Army and Air Force Institutes (NAAFI) case, 185 n. 30 Cheshire, North and Fawcett: Private International Law, 7–9, 62–63, 214–219 China. See People’s Republic of China choice of court economic efficiency and, 23–25 employee protection laws and, 35–38 European jurisdictional rules and, 101–104 freedom of contract and, 21–23 jurisdictional rules in Member States and, 49–54, 126–128 legal certainty and party autonomy issues and, 25–26 choice-of-law absence of choice and applicable law and, 155–177

329 accessory choice-of-law rule and, 241–247 applicable law selection and, 68–69, 140 autonomous interpretation of individual employment contracts and, 64 in British labour law, 184–186, 192–195, 214–219 choosing applicable law, 68–69, 241–247 chosen law vs. objectively applicable law, 150–152 common law and, 223–224 concurrent causes of action in, 222–247 contracts without foreign or non-EU elements, 144 contractual claims and, 137–178 economic efficiency and party autonomy shortcomings and, 23–25 employee protection and, 38–49 employment contracts and, 15–16, 66–67, 68–69, 139–140 engaging place of business rule and, 129–132 escape clause in, 174–177 ‘European’ choice-of-law rules, 206–214 Europeanisation of private international law and, 300–306 exemption clauses and, 248–250 express choice and, 141–142 flexibility in, 49 freedom of contract and, 21–23, 70–78 German labour law and, 35–38 intra-group transfers and, 161–162 Ivenel doctrine and, 96–97 jurisdictional rules and, 49–54, 95–100 Lawson v. Serco case and, 202–206 legal certainty and, 25–26 lex causae classification of employment contracts and, 65–66, 67–68 lex fori classification of employment contracts and, 137–138, 241–247

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330

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choice-of-law (cont.) mandatory EU law and, 144–146, 149 mandatory provisions and, 144–146, 149, 206–214 non-standard employment relationships and, 58–62 objectively applicable law and, 150–152 party autonomy limitations and, 144–154 place of provision of services jurisdictional rule and, 115–118 posted workers and, 254–260 private international employment law and, 12–15, 19–21, 229–241 procedural forms of action and, 225–228 role of courts in, 152–154 Rome I regulation and, 15–16, 106, 179–180, 202–206 Rome II regulations, 179–180, 202–206, 241–243 Rome Convention and, 202–206 severance (dépeçage) and, 142–143 sources of mandatory provisions and, 147–149 statutory claims and, 179–220 tacit choice and, 142–143 territorial scope of British employment legislation and, 201–219 tortious claims and, 58–62, 179–180, 205, 221–253 transnational occupations and, 162–167 civil procedure rules, jurisdictional rules and, 223 n. 11–224 n. 11 claimants, employees as, 91–94 employer’s domicile vs. general defendants’ domicile jurisdictional rules and, 106–109 vs. general claimants, jurisdictional protection issues, 106–129 improvements for existing jurisdictional rules for, 129–132

jurisdictional agreements and, 126–128 jurisdictional rules and, 49–54, 100–105, 126, 128–129 new jurisdictional rules for, 132–136 co-defendant employees, jurisdictional rules for, 126 collective agreements mandatory provisions in, 147–149 posted workers and, 261–272 receiving perspective on posted worker protections and, 286–294 Collective Agreements Act (Germany), 77 collective bargaining, systemic perspective in private international law and, 26–29 collective enforcement of employment standards, 267–272, 273–274 limitations of, 280–285 Collins, H., 9–12, 29–33, 285–286 Collins, L., 192–195 Color Drack GmbH v. Lexx International Vertriebs GmbH, 120–124 Commercial Agents (Council Directive) Regulations SI 1993/3053 (United Kingdom), 199–200 Commission v. Luxembourg case, 208–213, 267–272, 286–294 common employment defence, British contractual rights law and, 192–195 common law conflict of laws British contractual rights law and, 192–195 choice-of-law and, 202–206 concurrent causes of action and, 223–224, 229–241 European jurisdictional rules and, 102 exemption clauses and, 248–250 Lawson v. Serco case and, 219–220 procedural forms of action and, 225–228 statutory claims and, 219–220

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index common nationality of parties jurisdictional rules in Member States and, 49–54 transnational employment relationships and, 46 compliance with standards Posted Workers Directive enforcement of, 273–274 public enforcement, limitations of, 274–280 receiving perspective on posted worker protections and, 286–294 concurrent causes of action accessory choice-of-law and, 241–247 Brussels I Recast and, 229–241 in choice-of-law rules, 222–247 common law conflict of laws and, 223–224 current and future issues in, 252–253 employer responsibilities and, 237–241 European private international law and, 229–241 procedural rules and, 225–228 in Rome I and Rome II, 241–247 conflict of laws. See choice-of-law; jurisdiction rules ‘conflicts justice,’ private internal law and, 19–21 conspiracy to harm employer’s business concurrent causes of action and, 234–237 jurisdictional rules concerning, 91–94 constitutionalisation process, private international law and, 29–33 Constitutional Treaty (draft), private international law and labour law principles of, 4–16 consumer laws habitual residence principle, 47 jurisdictional rules and, 98–99 Contracts (Applicable Law) Act 1990 (United Kingdom), 139–140 Contracts of Employment Act (United Kingdom), 202–206

331

contractual claims breach claims, 221–222 British contractual rights law and, 192–195 characteristics of, 137–138 choice-of-law and, 137–178, 179–180 territorial scope of British employment legislation and, 181–201 control test, U.K. employment and services contracts, 70–71 Convention on the Accession of Spain and Portugal into the Brussels Convention, jurisdictional rules in, 61, 97–98 conversion agreement, objectively applicable law and, 150–152 corporate groups. See also triangular employment relationships Posted Workers Directive and, 261–272 tacit choice and, 142–143 triangular employment relationships and, 83–88 corporate seat, jurisdictional rules and, 49–54 country of origin principle private international law of employment and, 12–15 sending perspective on posted worker protections and, 294–298 Coupland v. Arabian Gulf Oil Co., 223–224 Court of Justice of the EU (CJEU) ancillary establishments and rulings by, 124–126 autonomous interpretation of individual employment contracts and, 64, 78–82 Brussels Convention and Brussels I Regulation and case law of, 101–104 choice-of-law rules and case law of, 202–206, 229–241 claimant employees, jurisdictional rules for, 91–94

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Court of Justice of the EU (cont.) collective enforcement of employment standards and, 280–285 employee protection in case law of, 7–9, 18–19, 35–38 employer responsibilities in rulings by, 83–88 employment contract rulings by, 58–62, 78–82 engaging place of business rule in rulings by, 120–124 EU law-derived rights and case law of, 195–201 habitual place of work rule and proceedings of, 109–115, 129–132, 156–157, 160–161 jurisdictional rules in case law of, 95–100 mandatory provisions in rulings by, 147 n. 47 Member State employment standards and, 267–272 overriding mandatory provisions vs. choice-of-law rules, 208–213 place of provision of services jurisdictional rule and, 117–118 posted workers and rulings by, 254–260, 262–264, 270–272, 298–299 public enforcement of Posted Workers Directive and, 274–280 reduction of Member State autonomy by, 29–33 tortious claims and case law of, 229–241 transnational employment relationships and, 1–2 transnational occupations and, 162–167 courts, objectively applicable law and role of, 152–154 Cox v. ELG Metals Ltd., 289 n. 145 Darmon, AG, 225 Davies, P., 294–298 defendants, employees as

employer’s domicile vs. general defendants’ domicile jurisdicational rules and, 106–109 jurisdictional rules for, 49–54, 91–94, 100–101, 104–105, 126 Denmark ‘Brussels I Recast’ and, 5–6 Rome Convention and, 6 Denning MR (Lord), 17–18, 192–195, 248–250 dépeçage. See severance (dépeçage) dependent self-employed workers, 15–16, 56–58, 62–83, 89–90, 300–306 Dicey, Morris and Collins on the Conflict of Laws, 7–9, 62–63, 214–219 Diplock, Lord, 141 n. 23 Directive 96/71/EC. See Posted Workers Directive dismissal legislation applicable law in absence of choice, 44–49, 155–177 choice-of-law and, 150–152, 205 employer’s domicile vs. general defendant’s domicile jurisdictional rules and, 106–109 Employment Rights Act 1996 (United Kingdom), 182–184 habitual place of work rules and, 109–115 judicial rescission of employment contracts, 132–136 jurisdictional rules and, 91–94, 101–104 objectively applicable law and, 149 overriding mandatory provisions and, 212–213 party autonomy limitations and, 23–25 transnational occupations and, 162–167 domestic labour laws. See also state interests choice-of-law rules and, 19–21 cross-state comparisons of employee protections and, 44–45

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index economic efficiency and party autonomy shortcomings and, 23–25 employer responsibilities in, 89–90 employment contracts and, 56–58, 61–62, 89–90 EU law-derived rights and, 195–201 ‘European’ choice-of-law rules and, 206–214 expanded diversity of, 29–33 individual employment contracts and, 58–69, jurisdictional agreements and, 126–128 jurisdictional rules and, 95–96 legal certainty and party autonomy issues and, 25–26 legitimate state interests and, 26–29 lex fori employment contracts and, 64–65 party autonomy and employee protections and, 39–44 public enforcement of employment standards and, 274–280 systemic approach to employee protection and, 9–12 transnational employment and, 3–4 triangular employment relationships and, 83–88 Domicrest Ltd v. Swiss Bank Corp., 234 n. 56–235 n. 56 Dos Santos Palhota case, 274–280 Duarte v. Black & Decker Corp., 144–146, 147–149 Duncombe (No 2) case, 188–189, 206–207, 214–219 Duncombe v. Secretary of State for Children, Schools and Families case, 184–186, 192–202, 206–207, 214–219, duty of care concurrent causes of action and claims involving, 223–224, 225, 234–237 tortious claims based on breach of, 223–224

333

economic efficiency, party autonomy and, 23–25 economic freedoms competing interests of Member States and, 261–272 European private international law of employment and, 15–16, 29–33 party autonomy and employee protections and, 39–44 economic reality test, U.K. employment and services contracts, 70–71 effective centre of working activities, habitual place of work rule and, 112 effectiveness principle, EU law-derived rights and, 195–201 employee, definitions of in France, 70–78 in Germany, 77 in substantive EU law, 78–82 in United Kingdom, 73–76 employee protections applicable law in absence of choice, 44–49 choice-of-law and, 38–49 economic efficiency and party autonomy shortcomings and, 23–25 jurisdictional rules and, 49–54, 91–94, 129–136 party autonomy and, 39–44 posted workers and threat to, 254–299 in private international law, 7–9, 15–16, 17–55 statutory rights in UK, 181–192 systemic approach to, 9–12, 29–33 territorial scope of British employment legislation, 26–29, 181–201 employee’s domicile jurisdictional rules and, 49–54 transnational employment relationships and, 47 employer responsibilities concurrent causes of action and, 237–241

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employer responsibilities (cont.) in domestic labour laws, 89–90 in employment contracts, 83–88 jurisdictional rules for employee claims and, 91–94 public enforcement of posted worker standards and, 274–280 tortious claims in British law and, 221–222 employer’s principal place of business, 46 international transport workers’ protections and, 48 employment agencies engaging place of business rule and, 120–124 triangular employment relationships and, 83–88 employment contracts. See also individual employment contracts in ancillary establishments, 124–126 applicable law in absence of choice, 44–49 applicable law selection and, 140 autonomous vs. domestic interpretations of, 56–69, 82–83, 89–90 choice-of-law rules and, 58–62, 139–140, 152–154, 202–214 concurrent causes of action and, 222–247 conspiracy to harm employer’s business as breach of, 91–94 contracts without foreign or non-EU elements, 144 defined, 56–58 employee, definitions of, 69–83 employee protection laws and, 35–38 employer, definitions of, 83–88 exemption clauses and, 247–251 express choice and, 141–142 French laws on, 70–71 genealogy of individual employment contracts, 58–62 German laws on, 72–73 habitual place of work rule and, 114, 156–157 intra-group transfers and, 161–162

Member State concepts of, 49–54, 70–78 party autonomy and employee protections, 39–44, 54–55, 144–154 place of provision of services jurisdictional rule and, 115–118 posted workers, 157–161 in private international law, 12–15, 56–90, 300–306 severance (dépeçage) and, 142–143 sources of mandatory provisions, 147–149 state classifications for, 37–38 substantive EU law definitions of, 78–82, 144–146, 195–201 tacit choice and, 142–143 territorial limitations and, 214–219 transnational employment and, 3–4 U.K. laws on, 70–71, 192–195, 221–222 Employment Relations Act 1999 (United Kingdom), 73–76 choice-of-law framework and, 202–206 statutory rights in, 181–189 territorial limitations in, 214–219 Employment Rights Act 1996 (United Kingdom), 73–76, 147–149, 181–189 enforcement of posted worker protections in, 286–294 ‘European’ choice-of-law rules and, 206–214 engaging place of business rule ancillary establishments and, 124–126 in Brussels I Recast, 99–100, 118–119 employer’s domicile vs. general defendants’ domicile jurisdictional rules and, 106–109 EU jurisdictional rules concerning, 120–124 habitual place of work rule and, 109–115 improvements to jurisdictional rules concerning, 129–132

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index in Lugano Convention, 97–98 in Rome I, 120–123, 231–234 tortious claims and concurrent causes of action and, 231–234 English law. See United Kingdom, labour laws in EqA. See Equality Act 2010 (United Kingdom) Equality Act 2010 (United Kingdom), 181, 189–190 posted worker protections and, 286–294 Equal Opportunities (Employment Legislation) (Territorial Limits) Regulations SI 1999/3163 (United Kingdom), 286–294 ERA. See Employment Rights Act 1996 (United Kingdom) European Civil Code, 9–12 European Commission choice-of-law rules drafted by, 58–62, 139–140 GlaxoSmithKline case and, 91–94 Member State employment standards and, 267–272 recognition and enforcement of judgments and, 104–105 European Communities Act 1972 (United Kingdom), 214–219 European Convention on Human Rights, transnational employment relationships and, 2 European Court of Human Rights, transnational employment relationships and, 2 European Economic Community, European choice-of-law rules and, 139–140 European Free Trade Area Court, 272 European Free Trade Association states, 5–6 jurisdictional rules concerning employment and, 97–98 European Parliament, Brussels I Recast amendments considered by, 132–136 European Union (EU) employee rights under law of, 195–201

335

employees as claimants, jurisdictional rules for, 91–94 employer’s domicile vs. general defendants’ domicile jurisdictional rules in, 106–109 individual employment contract concepts in, 89–90 private international law and labour principles of, 4–16 substantive EU law definitions of employee and, 78–82 systemic approach to employee protection in, 9–12, 29–33 transnational employment relationships and role of, 2–3 exemption clauses common law conflict of laws and, 248–250 current and future issues in, 252–253 Rome I and Rome II provisions and, 250–251 tortious employment claims and, 247–251 expatriate employees. See also posted workers Lawson v. Serco case and, 182–184, 186–189, 287 express choice, choice-of-law and, 141–142 Field J, 147–149, 280–285 Finalarte case, 262–264 Financial Times Ltd. v. Bishop, 181–189, 184 n. 24, 202–206, 214–219 Finland, employment standards enforcement in, 280–285 Fixed-Term Contracts Directive, 195–201 Fixed-Term Employees (Prevention of Less Favourable Treatment) Regulations SI 2002/2034 (United Kingdom), 192–201, flags of convenience. See also law of the flag international transport workers’ protections and, 48

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‘flexicurity’ concept, transnational employment and, 2–3 foreign courts jurisidictional rules for employee disputes and, 100–101 objectively applicable law and role of, 152–154 foreign law EU law-derived rights and role of, 199 n. 89 jurisdictional rules and, 49–54 relevant mandatory EU provisions and, 144–146 statutory claims and, 179–180 foreign service providers, public enforcement of employment standards and, 274–280 forum, law of. See lex fori forum shopping, concurrent causes of action and, 227–228 France employee definitions in, 70–78 employer’s domicile vs. general defendants’ domicile jurisdictional rules and, 106–109 mandatory provisions in laws of, 148–149 non cumul des responsabilités rule in, 225–228 objectively applicable law vs. chosen law in, 150–152 party autonomy and employee protections in, 39–44 public enforcement of employment standards in, 274–280 role of courts in choice-of-law, 152–154 scope of labour laws in, 70–78 tacit choice in courts of, 142–143 territorial scope of labour law in, 26–29 Freedland, M., 89–90 freedom of contract common law of employment and, 70–78 party autonomy and, 21–23 freedom of establishment, 124–126 free movement of services, 109–119

free movement of workers, 12–15, 29–33 fundamental rights, transnational employment and EU protections for, 2–3 Germany accessory choice-of-law in, 241–247 concurrent causes of action in, 225–228 definitions of employee in, 77 dismissal statutes in, 205 employee protection in, 35–38 employment contracts in, 72–73 mandatory provisions in laws of, 147 n. 47 overriding mandatory provisions in, 212–213 party autonomy and employee protections in, 39–44 role of courts in choice-of-law and, 152–154 territorial scope of labour laws in, 26–29, 70–78 tortious claims and concurrent causes of action in, 229–241 transnational occupations and labour laws of, 162–167 Giuliano-Lagarde Report, 7–9, 35–38 individual employment contracts and, 58–62 relevant mandatory provisions and, 144–146 GlaxoSmithKline case, 98–99 jurisdictional rules and, 91–94 globalisation, transnational employment relationships and, 1–16 Goff LJ, 221, 223–224 governing law, employee protections and, 17–18 Haase v. Superfast Ferries case, 121–123 habitual place of work rules absence of choice and applicable law, 156–157 in Brussels I Recast, 99–100, 118–119

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index employee protection and, 45–46 engaging place of business rule and, 121–123, 167–174 escape clause and, 174–177 in EU jurisdictional rules, 109–115 international transport workers and, 121–123 intra-group transfers and, 161–162 jurisdictional rules in Member States and, 49–54, 126–128 peripatetic workers and, 48 place of provision of services jurisdictional rule vs., 109–119 posted workers and, 157–161 principal place of employment and, 111–112, 114–115 proposed amendments to, 129–132 tortious claims and concurrent causes of action and, 231–234 transnational occupations and, 162–167 habitual residence accessory choice-of-law rule and, 241–247 jurisdictional rules and, 49–54 new jurisdictional rules for Brussels I Recast and, 132–136 Rome II choice-of-law rules and, 241–243 transnational employment relationships and, 47 Hague Convention on jurisdiction and foreign judgments choice-of-court agreements and, 35–38 judicial rescission of employment contracts and, 132–136 Hale, Lady, 184–186, 188–189, 195–201, 206–207 Hassan Shenavai v. Klaus Kreischer, 58–62, 78–82 health and safety legislation applicable law in absence of choice, 47 Health and Safety at Work Act 1974 (United Kingdom), 147–149 overriding mandatory provisions and, 212–213

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posted worker protections and, 286–294 Heidelberg Report, 94 Heiko Koelzsch v. Luxembourg, 162–167, 205 ‘hired-out’ workers habitual place of work rules and, 112–113, 157–161 triangular employment relationships and, 83–88 Hoffmann, Lord, 137, 179, 182–184, 186–189, 202–207, 214–219, 286–294 Hope, Lord, 186–189, 206–207 ‘horizontal’ conflicts multi-level governance and, 4 private international law and, 26–29 human rights, transnational employment relationships and, 29–33 individual employment contracts. See employment contracts individualistic perspective on employment relationships limitations of, 54–55 private international law focus on, 7–9 transnational employment and, 34 Ingmar case, 199–200, 211–212 insurance law, jurisdictional rules and, 98–99 integration test, U.K. employment and services contracts, 70–71 Inter-American Convention, party autonomy and employee protections and, 39–44 internal market posted worker protections and, 285–286 receiving perspective on posted worker protections and, 286–294 International Labour Organisation, 28–29, 280–285 international transport workers. See also peripatetic workers

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international transport workers (cont.) collective enforcement of employment standards and, 280–285 engaging place of business rule and, 121–123 European choice-of-law rules and, 139–140 habitual place of work rules and, 162–167 protections for, 48 intra-group transfers, habitual place of work rule and, 161–162 Ireland, employment contracts in, 62 Ivenel rule employment contracts and, 58–62 jurisdictional rules for employment disputes and, 96–97 Lugano Convention adoption of, 97–98 Jacobs AG, 111–112 Jakob Handte & Co. GmbH v. Traitements Mécano-chimiques des Surfaces SA, 205 Jan Voogsgeerd v. Navimer SA, 64, 78–82, 83–88, 120–121, 147 n. 47, 164, 231–234 Jenard-Möller Report, 58–62, 78–82 Jenard Report, 58–62, 78–82, 100–101 Jivraj v. Hashwani case, 73–76 John Pfeiffer Pty. v. Rogerson case, 227–228 Johnson v. Coventry Churchill International Ltd., 223–224 Jorens-Peters-Houwerzijl study, 279–280 jurisdiction agreements. See also choice of court in Brussels I Recast, 126–128 claimant employees and, 126–128 tacit choice and, 142–143 jurisdiction rules. See also Brussels I Recast autonomous interpretation of individual employment contracts and, 64

branches, agencies, and other establishments and, 124–126 choice-of-law and, 49–54, 95–100 civil procedure rules and, 223 n. 11–224 n. 11 claimant employees’ and, 100–105, 126 concurrent causes of action and, 234–237 employee protection and, 49–54, 91–94, 129–136 employment contracts and, 58–62 engaging place of business rule and, 120–124 European rules, 95–100 future issues concerning, 136 general claimants vs. claimant employees and, 106–129 habitual place of work rule and, 109–119 improvements for existing rules, 129–132 introduction of new rules, 132–136 in Member States, 49–54, 91–94, 101–104 place of provision of services rule and, 109–119 receiving perspective on posted worker protections and, 286–294 recognition and enforcement of judgments, 104–105 sending perspective on posted worker protections and, 294–298 Kahn Freund, O., 21–23, 49 Kissen Lord, 248–250 labour laws cross-state comparisons of, 44–45 EU legislation, 2–3 freedom of contract and party autonomy in, 21–23 sources of mandatory provisions in, 147–149 transnational employment relationships and, 2

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index Laval un Partneri Ltd. v. Svenska Byggnadsarbetareförbundet, Svenska Byggnadsarbetareförbundets avdelning 1, Byggettan and Svenska Elektrikerförbundet, 29–33, 270–272, 280–285, 286–294 law of the flag international transport workers’ protections and, 48, 121–123 transnational occupations and, 162–167 Law Reform (Personal Injuries) Act 1948 (United Kingdom), 192–195 exemption clauses and, 248–250 Lawrie-Blum case, 78–82 Lawson v. Serco case, 193 choice-of-law and, 202–206 common law conflict of laws and, 219–220 contractual rights conferred by employment legislation and, 195 expatriate employees and, 182–184, 186–189 job-sharing arrangements and, 186–189 limitations of approach in, 214–219 objectively applicable law and, 206–207 peripatetic workers and, 182–184, 186–189 receiving perspective on posted workers’ protection and, 286–294 statutory claims and, 179–180 Leclerc, F., 44–45 Leflar, R., 44–45 legal certainty principle absence of choice, applicable law in, 155–156 concurrent causes of action and, 227–228, 237–241 employee protection laws and, 35–38 employer responsibilities in employment contracts and, 83–88

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individual employment contracts and, 89–90 party autonomy shortcomings and, 25–26 sources of mandatory provisions and, 147–149 territorial limitations and, 218 legal diversity EU systemic perspective on employee protection and, 29–33 transnational employment and, 3–4 legal subordination principle French concept of employment contracts and, 71–72, 73–76 German concept of employee and, 72–73 legislation, table of xxiii–xxix legitimate state interests escape clause in employment contracts and, 174–177 jurisdictional rules and, 49–54, 132–136 party autonomy and, 54–55 Posted Workers Directive and conflict of, 261–272 systemic perspective in private international law and, 26–29 Lex Britannia, 270–272 lex causae accessory choice-of-law rule and, 241–247 domestic interpretation of individual employment contracts and, 65–66, 67–68 lex contractus accessory choice-of-law and, 241–247 concurrent causes of action and, 223–224, 239 n. 71 exemption clauses and, 248–250 flexibility in choice-of-law rules and, 49 Rome I and Rome II provisions, 241–247, 250–251 tortious claims and, 222–223 lex delicti accessory choice-of-law rule and, 241–247

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340 lex delicti (cont.) concurrent causses of action and, 223–224, 239 n. 71 exemption clauses and, 248–250 Rome I and Rome II applications and, 250–251 in Rome I and Rome II concurrent causes of action and, 241–247 Rome II choice-of-law rules and, 241–247 tortious claims and, 222–223 lex fori absence of choice and, 155–156 accessory choice-of-law rule and, 241–247 choice-of-law framework and, 137–138 employee protection and, 17–18 exemption clauses and, 248–250 individual employment contracts and, 64–65 Ivenel principle and, 96–97 jurisdictional rules and, 49–54, 91–94, 129–136, legitimate interests of states and, 26 lex causae and, 64–65 party autonomy and employee protections and, 39–44 party autonomy limitations and, 25–26, 39–44 procedural forms of action and, 227–228 lis pendens European jurisdictional rules and, 101–104 legal certainty and party autonomy issues and, 25–26 Lloyd’s Register of Shipping v. Société Campenon Bernard, 124–126 local employment rules intra-group transfers and, 161–162 posted workers and, 261–272 lorry drivers, 1, 48, 162–167 Louisiana Civil Code, 35–38 Lugano Convention 1988, 5–6 engaging place of business rule in, 120 n. 130

index habitual place of work rule and, 109 n. 82, 132–136 jurisdictional rules concerning employment in, 58–62, 97–98 Lugano Convention 2007, 5–6 employment contracts provisions in, 58–62 engaging place of business rule in, 120 n. 130 habitual place of work rule and, 109 n. 82, 132–136 Luxembourg overriding mandatory provisions vs. choice-of-law rules and, 208–213 transnational occupations and labour laws of, 162–167 Mahamdia case, 124–128, managerial employees habitual place of work rule and, 160–161 private international law protections for, 35–38 mandatory EU rules. See also overriding mandatory provisions application for employee protection, 149 choice-of-law rules and, 206–214 comparison of chosen law with objectively applicable law, 150–152 contracts without foreign or non-EU elements and, 144 limitations of party autonomy and, 144–154 Member State employment standards and, 267–272 posted workers and, 261–272 receiving perspective on posted worker protections and, 286–294 relevant provisions of objectively applicable law, 144–146 role of courts and, 152–154 Rome I and, 144–146 sources of, 147–149 ‘material justice,’ private international law and, 19–21

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index Matthews v. Kuwait Bechtel Corp., 223–224 meaningless choice, choice-of-law rules and, 141–142 Megaw LJ, 183 n. 20 Melzer case, 229–241 Member States (EU) ancillary establishments in, 124–126 atypical workers’ independent contracts and, 64 autonomous interpretation of individual employment contracts and, 64–65, 82–83 choice-of-law rules and labour laws of, 58–62 collective enforcement of employment standards in, 280–285 comparative analysis of employee definitions in, 70–78 employer’s domicile vs. general defendants’ domicile and jurisdictional rules of, 106–109 employment contract/services contract division in, 61–62 engaging place of business rule in, 120–124 EU law-derived rights and, 198 gap in wages and labour standards among, 9–12 habitual place of work rule in, 109–115 intra-EU movement of workers in, 12–15 jurisdiction agreements and, 126–128 jurisdictional rules in courts of, 49–54, 91–94, 101–104 mandatory provisions in, 147–149 overriding mandatory provisions vs. choice-of-law rules and, 208–213 place of provision of services jurisdictional rule and, 115–118 posted workers and laws of, 254–299 Posted Workers Directive and competing interests of, 261–272

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public enforcement of standards in, 274–280 receiving perspective on posted worker protections in, 286–294 relevant mandatory EU provisions for, 144–146 role of courts in choice-of-law rules and, 152–154 sending perspective on posted worker protections in, 294–298 systemic approach to employee protection in, 29–33 transnational employment relationships and, 1–16 Michaels, R., 9–12 Mills, A., 9–12 minimum contacts doctrine, jurisdictional rules provisions and, 132–136 minimum period of notice rights, British contractual rights law and, 195 minimum standards party autonomy and employee protections and, 39–44 posted workers and, 261–272 Posted Workers Directive enforcement of, 273–274 transnational employment and, 2–3 minimum wage applicable law in absence of choice, 47 National Minimum Wage Act 1998 (U.K.), 73–76, 181, 190–192, 286–294 overriding mandatory provisions and, 212–213 posted worker protections and, 267–272, 286–294 public enforcement of, 274–280 Ministry of Defence v. Wallis case, 185 n. 30, 195–201 Mme Briand v. Institut culturel autrichien, 150–152 mobility clauses, habitual place of work rules and, 157–161 monitoring of standards, Posted Workers Directive and, 273–274

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Morse, C. G. J., 62–63, 64–65, 149 M/S Bremen and Unterweser Reederei GmbH v. Zapata Off-Shore Co., 21–23, 35–38 Muir Watt, H., 9–12 Mulox case, 156–157, 162–167 habitual place of work rule and, 110–111 multi-level governance ‘horizontal’ and ‘vertical’ conflicts in, 4 private international law and, 4–16 Mummery LJ, 192–195 mutuality of obligations U.K. employment and services contracts, 70–71 U.K. labour legislation and, 73–76 mutual recognition principle, private international law of employment and, 12–15 nationality of legal persons, jurisdictional rules and, 49–54 National Minimum Wage Act 1998 (United Kingdom), 73–76, 181, 190–192, 286–294 negative choice, choice-of-law and, 141–142 negative externalities, economic efficiency and party autonomy shortcomings and, 23–25 Netherlands, judicial rescission of employment contracts in, 132–136 neutrality, in private international law, 19–21 Nigerian law, employee protections and, 17–18, 26–29 1972 draft convention employment relationships in, 58–62 European choice-of-law rules and, 139–140 relevant mandatory provisions and, 144–146 1976 draft regulation employment relationships in, 58–62 European choice-of-law rules and, 139–140

party autonomy and employee protections, 39–44 private international law employee protections and, 35–38 non-contractual labour obligations. See also Rome II Regulation choice-of-law rules and, 58–62, 202–206 concurrent causes of action in choice-of-law and, 229–241 Rome II choice-of-law rules and, 241–243 non-EU employers EU law-derived rights and, 195–201 improvements of existing jurisdictional rules concerning, 129–132 jurisdictional agreements and, 126–128 posted worker protections and, 286–294 non-payment claims, improvements to jurisdictional rules concerning, 129–132 nonstandard work relations. See also atypical workers employment contracts and, 56–58 non-state rules, choice-of-law rules and, 141–142 Nordic countries party autonomy and employee protections in, 39–44 territorial scope of labour law in, 26–29 Nygh, P. E., 241–247 objectively applicable law absence of choice-of-law and, 44–49, 155–177 application of mandatory provisions and, 149 British employment law and ‘European’ choice-of-law rules, 206–214 in British labour law, 214–219 choice-of-law and, 68–69, 241–247 contracts without foreign or non-EU elements, 144

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index contractual claims, 137–138 employer responsibilities in employment contracts and, 83–88 EU law-derived rights and, 199–200 express choice and, 141–142 habitual place of work rules and, 156–157 Lawson v. Serco and, 206–207 overriding mandatory provisions and, 208–213 party autonomy and, 140 relevant mandatory EU provisions of, 144–146 role of courts and, 152–154 Rome I and, 154–155 Rome II escape clause and, 241–247 ‘objects of mutual exclusivity,’ concurrent causes of action and, 231–234, 237–241 obligation in question, place of provision of services rule and, 115–118 ‘office factor,’ habitual place of work rule and, 111–112 offshore workers British employment legislation and, 190–192 engaging place of business rule and, 121–123 habitual place of work rule and, 110 n. 83, 162–167 peripatetic workers and, 48 transnational occupations and, 1, 162–167 organisation test, U.K. employment and services contracts, 70–71 Osborne, Lord, 186–189 out-of-state service providers Member States posted workers’ standards and, 267–272 public enforcement of standards on, 274–280 receiving perspective on posted worker protections and, 286–294 outsourcing of labour, employment contracts and, 56–58

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over-regulation, legitimate state interests and, 26–29 overriding mandatory provisions. See also mandatory EU rules ‘European’ choice-of-law rules and, 208–213 posted workers and, 254–260 public policy and, 208, 267–272, 286–294 receiving perspective on posted worker protections and, 286–294 restrictive covenants and, 144–146 Rome I and Rome II and, 250–251 party autonomy. See also choice-ofcourt; choice-of-law applicable law selection and, 140 contracts without foreign or non-EU elements, 144 economic efficiency and, 23–25 employee protections and, 39–44 European choice-of-law rules and, 139–140 European jurisdictional rules and, 95–100 express choice and, 141–142 freedom of contract and, 21–23 habitual place of work rule and, 112–113 legal certainty and shortcomings of, 25–26 limitations of, 54–55, 144–154 overriding mandatory provisions and, 211–212 severance (dépeçage) and, 142–143 tacit choice and, 142–143 territorial limitations and, 214–219 transnational employment relationships and, 19–21 party intentions, posted workers and, 157–161 Patents Act 1977 (United Kingdom), 181, 190–192 People’s Republic of China, exclusion of party autonomy in, 39–44 peripatetic workers. See also international transport workers; posted workers

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peripatetic workers (cont.) habitual place of work rule and, 48 Lawson v. Serco and, 182–184, 186–189 Pervez v. Macquarie Bank Ltd case, 292–294 place of business that engaged the employee. See engaging place of business rule place of contracting rule, jurisdictional rules in Member States and, 49–54 place of provision of services rule in Brussels I Recast, 118–119 habitual place of work rule vs., 115 improvements to, 129–132 Plender, R., 66–68, 199 n. 89, 207–208 Pocar, F., 44–45 Poland, party autonomy and employee protections in, 39–44 Portec (UK) v. Mogensen, engaging place of business rule and, 121–123 posted workers. See also expatriate employees British protections for, 184–186, 286 Brussels I Recast and, 254–260, 286–294 choice-of-law and, 208–213, 254–260 collective agreements and, 261–272 employer’s principal place of business and, 47 in EU Member States, 254–299 future challenges concerning protection of, 298–299 habitual place of work rules and, 47, 157–161 ineffective protections for, 285–286 intra-group transfers, 161–162 mandatory EU rules and, 261–272 overriding mandatory provisions and, 208–213 public policy and, 286–294 receiving perspective on protection of, 286–294 Rome I and, 157–161, 254–260 sending perspective on protection of, 294–298

Posted Workers Directive, 6–7 choice-of-law rules and, 208–213 collective enforcement of employment standards and, 280–285 competing national interests and, 47, 261–272 economic freedoms and, 12–15 enforcement of, 273–285 EU approach to employee protections and, 29–33 evolution of, 254–260 flexibility in choice-of-law rules and, 49 habitual place of work rules and, 157–161 Member State employment standards and, 39–44 private enforcement of, 286 public enforcement of, 274–280 receiving perspective on enforcement of, 286–294 sending perspective on posted worker protections and, 294–298 systemic approach to employee protections and, 9–12 UK labour law and, 182, 286 Posting of Workers Act (Germany), 262–264 Posting of Workers Enforcement Directive, 274–280, 285–286, 292–294 pre-contractual liability, jurisdictional rules concerning, 91–94 predictability principle concurrent causes of action and, 227–228, 237–241 employer responsibilities in employment contracts and, 83–88 escape clause and, 174–177 individual employment contracts and, 89–90 sources of mandatory provisions and, 147–149 previously performed work, habitual place of work rule and, 160–161

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index primary EU law, party autonomy and, 39–44 principal place of employment engaging place of business rule and, 121–123 habitual place of work rule and, 111–112, 114–115 prior declaration requirement, posted workers in Member States and, 274–280 private enforcement of employment standards, 273–274 enforcement of British Posted Workers Directive, 286 private international law analysis of employee protections in, 17–55 applicable law in absence of choice, 44–49 choice-of-law rules for employee protection and, 38–49, 139–140 concurrent causes of action in choice-of-law and, 229–241 constitutionalisation of, 29–33 economic efficiency and party autonomy shortcomings in, 23–25 economic freedoms vs. employee protections and, 12–15 employee protections in, 35–38 employer responsibilities in, 83–88 express choice and, 141 n. 23 freedom of contract and party autonomy shortcomings in, 21–23 grounds for employee protections in, 19 individual employment contracts in, 56–90 legal certainty and party autonomy issues and, 25–26 legitimate state interests and systemic perspective in, 26–29 non-standard work relations in, 58–62 posted workers and, 254–260, 261–272 Rome II escape clause and, 241–247

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systemic approach to employee protections and, 9–12, 54–55 transnational employment and, 4–16 Private International Law Act (Austria), 39–44 procedural forms of action, concurrent causes of action and, 225–228 production systems, vertical disintegration of, 56–58 professional services, concurrent causes of action and claims involving, 229–241 proportionality principle jurisdictional rules and, 49–54, 132–136 posted worker protections and, 285–286 transnational employment relationships, 29–33 public enforcement of employment standards, 273–274 limitations of, 274–280 public law sanctions, systemic perspective in private international law and, 26–29 public policy choice-of-law rules and, 208–213 Member State employment legislation and, 267–272 overriding mandatory provisions and, 208, 267–272, 286–294 posted workers and, 286–294 receiving perspective on posted worker protections and, 286–294 restrictive covenants and, 144–146 Pugliese case, 161–162 habitual place of work rule and, 114 purposeful availment test, jurisdictional rules and, 49–54, 132–136 Rabel, E., 19–21 ‘race to the bottom’ intra-EU movement of workers in Member States and, 12–15, 29–33 in labour regulations, 19–21 legitimate state interests and, 26–29

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Raiffeisen Zentralbank Osterreich Aktiengesellschaft v. National Bank of Greece SA, 234 n. 56–235 n. 56 Ravat case, 186–189, 206–207, 214–219 Rayner v. Davies case, 234 n. 56–235 n. 56 Regulation (EC) No 593/2008. See ‘Rome I’ Regulation Regulation (EC) No 864/2007. See ‘Rome II’ Regulation Regulation (EU) No 1215/2012. See Brussels I Recast regulatory authority individual employment contracts and, 89–90 legitimate state interests and, 26–29 overriding mandatory provisions and, 212–213 private international law and allocation of, 9–12, 19–21 transnational employment relationships and, 4 Rehder case, place of provision of services rule and, 117–118 renvoi, choice-of-law rules and, 214–219 restrictive covenants in employment contracts, 144–146 Rome Convention (1980), 6 British contractual rights law and, 192–195 choice-of-law rules in, 202–206 domestic interpretation of individual employment contracts in, 62–63 employer responsibilities in, 83–88 engaging place of business rule and, 120–123, 231–234 escape clause and, 174–177 European choice-of-law rules and, 139–140 Europeanisation of private international law and, 300–306 individual employment contracts in, 58–62

overriding mandatory provisions and, 208–213 party autonomy and employee protections in, 39–44, 214–219 posted workers and, 157–161 relevant mandatory provisions and, 144–146 renvoi principle excluded in, 214–219 statutory claims and, 219–220 transnational occupations and, 162–167 Rome I Regulation, 6 applicable law in absence of choice, 155–177 Article 8(1) of, 42–43, 94, 126, 140, 141–142, 143, 144–154 Article 8 of, 18–19, 177–178, 206–207 Article 9, 207 autonomous interpretation of individual employment contracts in, 62–69, 82–83 British contractual rights law and, 192–195 choice-of-law rules in, 15–16, 49, 106, 179–180, 202–206 choosing applicable law, 154–155 comparison of chosen law with objectively applicable law, 68–69, 222–247 concurrent causes of action in choice-of-law and, 229–247 contracts without foreign or non-EU elements, 144 contractual claims, 137–138 employment contracts provisions in, 37–38, 56, 58–62, 78–82, 83–88, 89–90 engaging place of business rule and, 120–123, 231–234 escape clause, 174–177 EU law-derived rights and, 199–200 exemption clauses and, 250–251 express choice, 141–142 habitual place of work rule and, 45–46, 129–132, 156–161

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index international transport workers and, 48 n. 112 intra-group transfers and, 161–162 mandatory provisions and, 144–146, 147–149 objectively applicable law in, 206–214 overriding mandatory provisions and, 250–251 party autonomy and, 39–44, 214–219 posted workers and, 157–161, 254–260 private international law of employment and, 12–15, 300–306 receiving perspective on posted worker protections and, 286–294 Recital 1 of, 64 Recital 23, 7–9 Recital 36 of, 144–146, 157–162, 254–260 Recital 37 of, 144–146, 210–211 role of courts in, 152–154 scope of, 15–16 sending perspective on posted worker protections and, 294–298 severance (dépeçage) and, 143 statutory claims and, 15–16, 219–220 systemic approach to employee protections and, 9–12 tacit choice and, 142–143 territorial scope of British employment legislation and, 201–219 tortious claims and, 15–16, 221 transnational occupations and, 162–167 Rome II Regulation, 6 accessory choice-of-law rule and, 241–247 British contractual rights law and, 192–195 choice-of-law rules in, 179–180, 202–206, 241–243 concurrent causes of action in choice-of-law and, 229–247

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escape clause in, 241–247 Europeanisation of private international law and, 300–306 exemption clauses in, 250–251 Explanatory Memorandum, 225 overriding mandatory rules, 250–251 private international law of employment and, 12–15 procedural forms of action and, 225–228 scope of, 15–16 systemic approach to employee protections and, 9–12 tortious claims and, 15–16, 58–62, 221 Rüffert case, 267–272 Rush Portuguesa case, 262–264, 272, 274–280 Rushworth, A., 237–241 Rutten case, 111, 156–157, 162–167 Ryanair, transnational occupations and, 162–167 Salmon LJ, 141–142, 248–250 Samengo-Turner case, 87–88, 101–105 Sanicentral case, 95–96 Sayers v. International Drilling Co. NV, 17–18, 26–29, 39–44, 141–142, 218 n. 166, 248–250 Schlecker case, 26, 157–161, 174–177 seamen, 139–140 Second Restatement of the Conflict of Laws, 39–44 flexibility in choice-of-law rules and, 49 ‘seeking out’ rule, proposal for, 132–136 Self-Employed Commercial Agents Directive, 199–200 overriding mandatory provisions vs. choice-of-law rules and, 211–212 self-employed workers employment contracts and, 56–58, 89–90 EU concepts of, 78–82 EU law-derived rights and, 199–200 German definition of, 72–73 U.K. law concerning, 73–76

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Sellers LJ, 223–224 Senior Courts Act (U.K.), anti-suit injunctions and, 101–104 service providers representation, public enforcement of employment standards and, 274–280 services contracts in Brussels I Recast, 118–119 concurrent causes of action and, 229–241 Member State concepts of, 70–78 place of provision of services rule and, 115–118 posted workers and, 254–260 Posted Workers Directive and, 261–272 severance (dépeçage), 142–143 Sex Discrimination Act (United Kingdom), 189–190 Shekar v. Satyam Computer Services Ltd. case, 141–142, 188–189 ship’s flag, 48 Six Constructions case, 106–109 social dimensions of EU policies, systemic approach to employment protections and, 29–33 social dumping, threat of intra-EU movement of workers in Member States and, 12–15, 29–33 legitimate state interests and, 26–29 private international law and, 19–21 social justice, private international law and principles of, 4–16 Source Ltd. v. TUV Rheinland Holding AG case, 234–237 specialist staff habitual place of work rule and, 160–161 private international law protections for, 35–38 Stamp LJ, 248–250 state interests cross-state comparisons of labour law and, 44–45 relevant mandatory EU provisions and, 144–146

systemic perspective in private international law and legitimate interests of states, 26–29 statement of employment particulars, British contractual rights law and, 195 statutory claims autonomous interpretations and, 78–82 choice-of-law framework and, 179–220 choice-of-law rules and, 202–206 in Employment Rights Act 1996 (United Kingdom), 181–189 European private international law and, 12–15 foreign law and, 179–180 statutory rights (United Kingdom), 181–192 choice-of-law rules and, 202–206 contractual rights and, 192–195 overriding mandatory provisions vs. choice-of-law rules and, 208–213 STX Norway Offshore AS v. Norway, 272 subsidiarity principles, transnational employment relationships, 29–33 Supiot, J., 89–90 Sweden collective enforcement of employment standards in, 280–285 employment standards and, 267–272 posted worker protests in, 254–260 Swiss Federal Private International Law Code accessory choice-of-law in, 241–247 jurisdictional rules and, 49–54 party autonomy and employee protections in, 39–44 systemic approach to employee protection EU context for, 29–33 European jurisdictional rules and, 101–104

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index legitimate state interests and, 26–29 private international law and, 9–12 transnational employment and, 34 table of cases, xii–xxii tacit choice, choice-of-law rules and, 142–143 territorial scope of British employment legislation choice-of-law and, 201–219 contractual claims and, 192–195 employee protections and, 17–18 Employment Rights Act 1996 (United Kingdom) and, 181–189 Equality Act 2010 (United Kingdom) and, 189–190 EU law-derived rights and, 195–201 habitual place of work rule and, 162–167 legitimate state interests and, 26–29 overriding mandatory provisions and, 208–213 peripatetic workers and, 48 private international employment law and, 13 n. 33–14 n. 33 receiving perspective on posted worker protection and, 286–294 Rome I and, 201–219 statutory claims and, 179–180 Tolofson v. Jensen case, 227–228 tortious claims accessory choice-of-law and, 241–247 choice-of-law and, 58–62, 179–180, 205, 221–253 common law and, 223–224 current and future issues in, 252–253 exemption clauses and, 247–251 jurisdiction and, 92 n. 13 private international law and, 229–241 procedural forms of action and, 225–228 Rome II and, 15–16, 241–243 Toulson LJ, 78–82 Trade Union and Labour Relations (Consolidation) Act 1992 (United

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Kingdom), 73–76, 121–123, 181, 190–192 trade unions collective enforcement of employment standards and, 280–285 Member State employment standards and, 267–272 party autonomy and, 39–44 posted workers and, 254–260 transnational occupations economic efficiency and party autonomy shortcomings in, 23–25 employer responsibilities, 83–88 employment contracts and, 56–58 Employment Rights Act (U.K.) and unfair dismissal claims, 184–186 habitual place of work rules and, 45–46, 162–167 Member State court rulings and, 29–33 overview of, 1–16 party autonomy and, 19–21 peripatetic workers and, 48 Posted Workers Directive and, 261–272 principal place of business principle and, 46 treaties, table of xxiii–xxix Treaty of Rome systemic approach to employee protection and, 29–33 transnational employment and, 2–3 Treaty on European Union (TEU), transnational employment and, 2–3 Treaty on the Functioning of the EU (TFEU) collective enforcement of employment standards and, 280–285 competing interests of Member States and, 261–272 definitions of employee and worker in, 78–82 economic freedoms provisions in, 7

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index

Treaty on the Functioning (cont.) employer responsibilities in employment contracts and, 83–88 EU law-derived rights and, 201 n. 100 habitual (normal, usual, ordinary) place of work principle in, 45–46 party autonomy provisions in, 39–44 posted workers and, 254–260 transnational employment relationships and, 1–2 triangular employment relationships choice-of-law and, 142–143 employer responsibilities in, 83–88 escape clause and, 174–177 jurisdiction and, 124–126 tacit choice and, 142–143 Trstenjak AG, 78–82, 83–88 Tuckey LJ, 87–88, 102, 234–237 Unamar case, 211–212 under-regulation, legitimate state interests and, 26–29 unfair competition concurrent causes of action and claims of, 234–237 intra-EU movement of workers in Member States and, 12–15 unfair dismissal. See also dismissal legislation choice-of-law rules and, 202–206 domestic regulation of transnational employment and, 3–4 Employment Rights Act (U.K.) and, 184–189 EU law-derived rights concerning, 195–201 overriding mandatory provisions and, 212–213 uniformity of result concurrent causes of action and, 227–228, 237–241 escape clause and, 174–177 sources of mandatory provisions and, 147–149

unilateralist approach, party autonomy and employee protections and, 39–44 United Kingdom, labour laws in. See also specific laws choice-of-law rules and, 201–219 concurrent causes of action and, 229–241 conflict of laws and employee protections, 12–15, 17–18 contractual rights conferred by employment legislation, 192–195 court systems and, 70–78, 280–285, 286–294 definitions of employee in, 73–76 economic efficiency and party autonomy shortcomings in, 23–25 employer responsibilities in employment contracts and, 83–88 employment contracts in, 62, 70–71, 73–76 EU individual contract law and case law of, 78–82 EU law-derived rights conferred by employment legislation, 195–201 European choice-of-law rules and, 139–140, 206–214, 229–241 foreign law and, 152–154 party autonomy and employee protections in, 39–44 posted worker protests and, 254–260 Posted Workers Directive enforcement in, 286 private international law and, 15–16 receiving perspective on posted worker protections, 286–294 restrictive covenants in employment contracts and, 144–146 Rome Convention and, 6 n. 14 scope of labour laws in, 70–78 sources of mandatory provisions in, 147–149 statutory claims in, 179–180 statutory rights, 181–192

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index territorial scope of employment legislation in, 26–29, 181–201, 214–219 tortious claims and, 221–222 transnational employment relationships and courts of, 1–2 United States economic efficiency and party autonomy shortcomings in, 23–25 jurisdictional rules for employment disputes in, 100–105, 132–136 ‘purposeful availment’ test and jurisdictional rules in, 49–54 territorial scope of labour law in, 26–29 Vander Elst case, 274–280 van HoekHouwerzijl study, 274–280, 292–294 Van Winkelof case, 188–189, 213 n. 151, 286–294 ‘vertical’ conflicts, multi-level governance systems and, 4 Viking case, collective enforcement of employment standards in, 280–285 von Mehren, A. T., 49–54, 56 von Savigny, F. K., 19–21 wage standards. See also minimum wage posted workers in Member States and, 267–272

351

public enforcement of, 274–280 Wahl AG, 26, 157–161, 174–177, 211–212 Wai, R., 9–12 Walrave v. Koch case, 199–200 Warbecq case, engaging place of business rule and, 121–123 ‘weak presumption’ approach, escape clause in employment contracts and, 174–177 Weber case, 156–157, 162–167 habitual place of work rule and, 112–113 Weir, T., 225 Wilderspin, M., 66–68, 207–208, 199 n. 89 Wilson v. Maynard Shipbuilding Consultants AB, 183 n. 20, 190–192 Wood Floor case, place of provision of services rule and, 117–118 workers definition in French law, 70–78 definition in German law, 77 definition in U.K. law, 73–76 Working Time Regulations SI 1998/ 1833 (United Kingdom), 73–76, 195 EU law-derived rights and, 195–201 WPP Holding Italy SRL v. Benatti, 78–82, 87 wrongful dismissal, contractual claims, 137–138

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