Which legal system do you apply when an employee who operates mainly across borders has a dispute with his or her employer? It’s a question with no easy answers for employment law practitioners. Even if the parties have agreed in advance which law governs the employment contract, it doesn’t automatically mean that the legal system of choice applies to the dispute as well. This is certainly true in the case of a Ryanair employee who refused to be transferred from Eindhoven to Dublin. The Appeal Court in Den Bosch gave its ruling on 5 July 2018 (ECLI: NL:GHSHE: 2018: 2826 ).
The choice of law versus the objectively applicable law
Regardless of the law that may have been agreed on by the parties (the choice of law), the mandatory and more protective law of another country (known as the objectively applicable law) can apply to a contract of employment. According to the Rome I Regulation, an employee can never be denied the protection of more favourable mandatory provisions of the objectively applicable law. So, what considerations does the Rome I Regulation set out to determine if the objectively applicable law applies?
- A normative and important test for determining the objectively applicable law is the country where, or in some cases, the country from which the employee habitually carries out his or her work.
- If it cannot be determined where the employee carries out his or her activities (only in the case of mobile employees who travel so much that no one country can be determined), the country from which the employee carries out his or her work is the determining factor. That determination is subject to a strict factual test.
- If the factual test fails to help in making the determination, the location where the employee was hired must be considered. This last test is seldom used in practice.
- Even if the law of the country was determined by using the above test, the law of the country with which the employee has a closer connection can still prevail. This test is also seldom used in practice.
- Regardless of which law applies (the law of choice or the objectively applicable law), overriding mandatory provisions can nevertheless take precedence. Overriding mandatory provisions are provisions that a country considers so crucial for maintaining the general public interest, whether political, social or economic, that they must be applied to each case that is subject to the scope of application.
Habitual country of work
In July 2018, the Appeal Court of Den Bosch ruled on the case of a Ryanair employee of Polish nationality who refused to accept a unilaterally imposed transfer from her previously agreed location of Eindhoven to Dublin, where Ryanair is headquartered. Ryanair based its decision on a changes clause that had been included in the employment contract with the employee (a unilaterally imposed change can be accepted on the basis of Dutch employment law, subject to certain conditions).
After the employee refused several times to accept the change to her work location and then refused to engage in any more discussions about it, she was summarily dismissed by Ryanair. The employee accepted the dismissal but asked the court for, among other things, fair compensation based on the unfair instant dismissal. Ryanair argued that the employment contract was covered by Irish law since the parties had chosen Irish law as the law applicable to the contract.
The employee’s role was that of Customer Service Supervisor and in that capacity carried out her work on board Ryanair’s planes, she must be qualified as a mobile employee. As a result, it was argued that she should be assessed on the basis of the country from which she performed her work.
The court’s reply was that not only was the Ryanair employee’s location in Eindhoven but also her services always commenced at Eindhoven Airport and she always returned to Eindhoven Airport at the end of her shift. Moreover, she carried out preparatory activities at Eindhoven and the planes that she boarded to work were mostly stationed in Eindhoven. Finally, the employment contract shows that the employee had to live in the vicinity of Eindhoven Airport, which is what she did.
Conclusion: the habitual country of work is the Netherlands and therefore Dutch mandatory law applies.
According to the Court of Appeal, the preceding facts lead to the conclusion that Dutch mandatory provisions apply to the employment contract, subject to Article 8 of the Rome I Regulation. Additionally, no closer connection existed with Ireland than with the Netherlands regarding the implementation of the employment contract. Referring to Dutch employment law (which in this case offers more protection for the employee than Irish law does), the Court decided that the employee could legally refuse the change of her work location and that the employee’s interests—including her personal interests—outweighed Ryanair’s interests in this regard. Consequently, the Court ruled that the instant dismissal was unfair and awarded the employee EUR 25,000 in compensation.
This ruling illustrates that, in the case of cross-border employees, careful attention must be paid to the actual execution of the employment contract and not only to the governing law that the parties include in the employment contract. As in the case of the Ryanair employee, an employee’s actual performance can lead to other applicable laws, resulting in significant unforeseeable expenses.