Applicable Law

September 26th, 2013 by James Goudie KC

In Case C-64/12, Schlecker v Boedeker, the CJEU considered the Rome Convention and the law applicable in an individual employment contract.  Ms Boedeker was employed by Schlecker, a German undertaking with branches in a number of Member States.  After working in Germany from 1 December 1979 until 1 January 1994, she entered into a new employment contract, under which she was appointed as Schlecker’s manager in the Netherlands.  By letter of 19 June 2006, Schlecker informed Ms Boedeker that her position as manager for the Netherlands was to be abolished, and invited her to take up, under the same contractual conditions, a post in Germany. 

Ms Boedeker lodged a complaint against her employer’s unilateral decision to change her place of work.  In that context, she brought various actions before the Courts in the Netherlands.  In one such action she claimed that Netherlands law should be declared applicable to her employment contract.  The Netherlands Court made a reference to the CJEU for a preliminary ruling. 

Article 3 of the Rome Convention provides that a contract shell be governed by the law chosen by the parties.  No choice had been made in this case. 

           Article 6 applies to individual employment contracts.  It provides (emphasis added):-

 “1.  Notwithstanding the provisions of Article 3, in a contract of employment a choice of law made by the parties shall not have the result of depriving the employee of the protection afforded to him by the mandatory rules of the law which would be applicable under paragraph 2 in the absence of choice. 

 2.  Notwithstanding the provisions of Article 4, a contract of employment shall, in the absence of choice in accordance with Article 3, be governed:

by the law of 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; or

if the employee does not habitually carry out his work in any one country, by the law of the country in which the place of business through which he was engaged is situated, unless it appears from the circumstances as a whole that the contract is more closely connected with another country, in which case the contract shall be governed by the law of that country.”

Therefore the applicable law will not always be the law of the country in which the employee habitually carries out his or her work.  It will indeed not be that law if the contract is more closely connected with another Member State.  Regard must be had to all the Article 6 factors, first and foremost of which is the country in which the employee habitually carries out his or her work, in Ms Boedeker’s case the Netherlands without interruption for more than 11 years. 

The CJEU did not rule out that nonetheless German law could apply.  She worked for a German company.  The financial elements were German based.  There were other German factors.  It would be open to the national Court to find that the contract was more closely associated with Germany than with the Netherlands, notwithstanding that the law of the Netherlands might be more favourable to Ms Boedeker than the law of Germany. 

The CJEU stated that the national Court must take into account all the circumstances of the case, and that among the significant factors suggestive of a connection with a particular country, account should be taken in particular of the country in which the employee pays taxes on the income from his activity and the country in which he is covered by a social security scheme and pension, sickness insurance and invalidity schemes.