Schlecker v Boedeker C-64/12 concerned a dispute over the correct law applicable to an employment contract in the absence of an express governing law clause; the dispute provided the European Court of Justice with a timely opportunity to reiterate the correct application of the Rome Convention to employment contracts.
The Convention allows parties to a contract to choose the country whose laws will apply to that agreement. Article 6(2) states that where such an express choice has not been made in relation to an employment contract the contract will be governed “a) 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; b) 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”.
Ms Boedeker was a German national employed by Schlecker, a German cosmetics and healthcare retailer. She worked in Germany from 1979 to 1994, she then commenced working for Schlecker in the Netherlands, staying until 2006 when her role there was abolished. Schlecker then offered her a different position back in Germany under the same contractual terms. Boedeker lodged a complaint against her employer’s unilateral change to her place of work and made claims against Schlecker in the Netherlands courts. Her employment contract did not have a choice of law clause indicating which country’s laws should govern a dispute arising in relation to the agreement, but she claimed that the law of the Netherlands should apply because she had performed her employment duties in that country for some years prior to the point when the dispute arose. In addition, the Netherlands offered her better employee rights than those available to her under German law.
The Netherlands Supreme Court referred the case to the ECJ to ascertain which law should apply to the contract. It queried in particular, whether a national court could disregard the law of the country where the work had habitually been performed, if all the other circumstances relating to the contract signalled that the law of a different jurisdiction should apply. In his Opinion, the ECJ’s Advocate-General Wahl emphasised that Article 6 of the Convention has to satisfy two requirements: the need for adequate employee protection, and the need for legal certainty. Although Article 6 aims to protect employees it is not mandatory, he said, for courts to apply the law that is most favourable to the worker when there is a governing law dispute. Article 6(2) of the Convention had to be interpreted as meaning that, even where an employee works for a lengthy period and without interruption in one EU country, the national court may still disregard the law of that country if it appears from the circumstances as a whole that the contract is more closely associated with another country. As a result, it was indeed open to the national courts to decide that German law displaced Netherlands law as the applicable jurisdiction. It was decided as a result that German law could be applied to Boedeker’s contract by virtue of the close connection her contract had with that country. Key pointers to this connection included Boedeker’s German pension arrangements, her residency in Germany, her German social security payments, the fact that her wages (prior to the introduction of the Euro) had been paid in Marks, the inclusion of mandatory provisions of German law in her contract, and Schlecker’s registration as a German company.
The case illustrates that the inclusion of an express governing law clause in employment contracts is of paramount importance for certainty purposes, especially in respect of employees performing international roles. Clearly employee location plays a key role in determining the applicable law in the absence of a specific contractual provision; however the ECJ has fallen on the side of practicality by allowing priority to be given to a different jurisdiction if the contract overall has a closer connection with it.