02 Oct 2016
Limits to freedom of choice of applicable law in the context of cross-border labour relationships
The purpose of the Rome Convention of 19 June 1980 on the law applicable to contractual obligations is to help determine which law(s) should be applied where the contract involves cross-border relationships between the parties.
Article 3 of the Rome Convention sets the rule of freedom of choice as follows:
"A contract shall be governed by the law chosen by the parties. The choice must be expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case. By their choice the parties can select the law applicable to the whole or a part only of the contract."
This freedom of choice is nevertheless restricted in certain areas, such as consumer contracts or individual employment contracts.
Regarding employment contracts, the rules are as follows:
▪ The parties are free to choose the applicable law for the contract pursuant to Article 3 of the Convention;
▪ In the absence of any choice of applicable law by the parties, one should apply: primarily, the law of the country in which the employee usually performs his/her work, as provided for in the employment contract; alternatively, if the employee doesn't perform his/her work in a given country, the law of the country where the establishment which hired the employee is located.
▪ Freedom of choice is nevertheless restricted to the extent that the parties' choice may not result in the employee losing the benefit of protection provided by mandatory provisions of the law which would apply had the parties not chosen their applicable law.
In its decision dated 9 July 2015 (appeal Nr 14-13497), the Employment chamber of the French Supreme Court recently restated the above rules by quashing a decision by the Paris Court of appeal which ignored the provisions of the Rome Convention of 19 June 1980.
The Supreme Court recalled that pursuant to Articles 3 and 6 of the Convention, the parties are free to select the law applicable to the contract between them so long as this choice doesn’t result in the worker losing the benefit of protection provided by mandatory provisions of the law which would apply to the contract had the parties not chosen their applicable law and that, in the absence of choice of law by the parties, the contract shall be primarily governed by the law of the country where the employee usually performs his/her work.
Thus, the Supreme court quashed the appeal decision because the Court of appeal, which had been seized of claims put by an employee against its employer regarding i.a. termination of their employment contract and payment of overtime, and while aware that the employee usually performed their work in France, refused to apply French law without examining whether the relevant provisions of Belgian law and Spanish law – i.e. the laws chosen by the parties – offered a higher degree of protection to the employee than French law – i.e. the law which would have been applicable in the absence of choice of law.
For the most recent cases in which European law applies, the Rome Convention of 19 June 1980 has been superseded by Regulation (EC) No 593/2008 of 17 June 2008 on the law applicable to contractual obligations (also known as ″Rome I Regulation″).
This regulation came into force on 17 December 2009.
The provisions of Article 8 of said regulation regarding individual employment contracts are identical to those of Article 6 of the Rome Convention.
Article 3 of the Rome Convention sets the rule of freedom of choice as follows:
"A contract shall be governed by the law chosen by the parties. The choice must be expressed or demonstrated with reasonable certainty by the terms of the contract or the circumstances of the case. By their choice the parties can select the law applicable to the whole or a part only of the contract."
This freedom of choice is nevertheless restricted in certain areas, such as consumer contracts or individual employment contracts.
Regarding employment contracts, the rules are as follows:
▪ The parties are free to choose the applicable law for the contract pursuant to Article 3 of the Convention;
▪ In the absence of any choice of applicable law by the parties, one should apply: primarily, the law of the country in which the employee usually performs his/her work, as provided for in the employment contract; alternatively, if the employee doesn't perform his/her work in a given country, the law of the country where the establishment which hired the employee is located.
▪ Freedom of choice is nevertheless restricted to the extent that the parties' choice may not result in the employee losing the benefit of protection provided by mandatory provisions of the law which would apply had the parties not chosen their applicable law.
In its decision dated 9 July 2015 (appeal Nr 14-13497), the Employment chamber of the French Supreme Court recently restated the above rules by quashing a decision by the Paris Court of appeal which ignored the provisions of the Rome Convention of 19 June 1980.
The Supreme Court recalled that pursuant to Articles 3 and 6 of the Convention, the parties are free to select the law applicable to the contract between them so long as this choice doesn’t result in the worker losing the benefit of protection provided by mandatory provisions of the law which would apply to the contract had the parties not chosen their applicable law and that, in the absence of choice of law by the parties, the contract shall be primarily governed by the law of the country where the employee usually performs his/her work.
Thus, the Supreme court quashed the appeal decision because the Court of appeal, which had been seized of claims put by an employee against its employer regarding i.a. termination of their employment contract and payment of overtime, and while aware that the employee usually performed their work in France, refused to apply French law without examining whether the relevant provisions of Belgian law and Spanish law – i.e. the laws chosen by the parties – offered a higher degree of protection to the employee than French law – i.e. the law which would have been applicable in the absence of choice of law.
For the most recent cases in which European law applies, the Rome Convention of 19 June 1980 has been superseded by Regulation (EC) No 593/2008 of 17 June 2008 on the law applicable to contractual obligations (also known as ″Rome I Regulation″).
This regulation came into force on 17 December 2009.
The provisions of Article 8 of said regulation regarding individual employment contracts are identical to those of Article 6 of the Rome Convention.
Nasser MERABET
Attorney at law
avocat@nmerabet.fr
Attorney at law
avocat@nmerabet.fr