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Choice of applicable law and obligatory rules in case of lorry drivers

Erika Kovács (Vienna University of Economics and Business, Austria)

On the 15th of July 2021, the CJEU delivered an interesting judgment on the interpretation of the applicable labour law in the light of Articles 3 and 8 of the Rome I Regulation. In the joined cases DG, EH and Sindicatul Lucrătorilor din Transporturi, DT (C‑152/20 and C‑218/20) the main question was, where the boundaries of the freedom of the employer and worker are to choose the applicable law to their employment contract.

The disputes in both cases affected Romanian lorry drivers. In the first case, the workers were employed by a Romanian company and their employment contracts were drafted in Romanian and Italian. The workers argued that they actually carried out most of their transport activities in Italy. They brought an action against their employer claiming to pay the difference between the wages actually received and the minimum wage set by the collective agreement for the transport sector in Italy. In the light of the Koelzsch-judgment (C 29/10), the workers claimed that they are entitled to the minimum wage applicable in Italy, since the place they habitually performed their duties was in Italy. The employer objected that the workers’ activities have been organised in Romania and they have got all instructions from the Romanian company.

In the second case, the driver was employed by a Romanian company, as well, but carried out his activities exclusively in Germany. The lorries he used, were parked in Germany and the transport assignments that he carried out took place in Germany, as well. He required the wage difference between the wages he received and to which he would have been entitled under the German law on minimum wage. The employment contracts of all three lorry drivers contained a choice of law clause specifying the application of Romanian law to the contracts.

The referring national courts basically asked to which extent the choice of a specific law applicable to the individual employment contract can exclude the application of the law of the country in which the employees habitually carry out their work. The answer to this question needed the interpretation of Art 8 and 3 of the Rome I Regulation.

The CJEU first stated that it is the national court’s task to decide whether the lorry drivers were posted workers and so it made its statements in the assumption, that they were not posted workers. According to the CJEU, the correct application of Article 8 of the Rome I Regulation requires two steps. In a first step, the national court should identify the law that would have applied in the absence of choice and determine the rules that cannot be derogated from by agreement. In a second step, the court should compare the level of protection afforded to the employee under those rules with that provided for by the law chosen by the parties. If the level of protection provided for by the rules of the habitual workplace is greater, those rules must be applied. As in the contested cases the drivers habitually carried out their work in Italy and Germany, respectively, certain provisions of Italian and German law on the minimum wage should apply to them and should overrule the Romanian law on minimum wage, if they are more favourable to them.

The imperative rules, from which the parties cannot derogate by agreement, should be basically determined by the law of the habitual work place. Therefore, even if the parties choose the application of another law on the employment relationship, compulsory provisions of the law of the habitual workplace have to be applied to the employment. The minimum wage rules can, in principle, be classified as “provisions that cannot be derogated from by agreement under the law” within the meaning of Art 8 (1) of the Rome I Regulation.

This judgment is of great significance regarding the interpretation of Art 3 and Art 8 (1) of the Rome I Regulation. The CJEU has not specified further its case law, especially the Koelzsch-judgment, on the determination of applicable law in case of internationally mobile transport workers. It did not examine the facts of the two cases, but adopted the assumption that the usual (habitual) place of work has been in both cases in the states, where the drivers argued that they actually carried out most of their tasks, the transport of goods. In this regard, this decision is in line with the earlier case law of the CJEU. However, the statements on the implications of a choice of law are important. First, it lies in national law to decide, which rules fall under the scope of Art 3 of the Rome I Regulation by setting imperative rules and second, basically all obligatory provisions are included. The judgment even indicates that also the obligatory content of collective agreements, here the minimum wage regulation, falls under the rules, from which a derogation is not allowed. To sum it up, the choice of the parties allows very little room to derogate from the law of the state, where the work is predominantly carried out.

Additionally, the CJEU stated that the fact does not violate the freedom of choice of the applicable law, if the employer pre-formulates a clause on the choice of the applicable law and includes it in the employment contract as long as the worker agrees with this clause. The freedom of choice cannot be called into question solely because that choice was made on the basis of a clause drafted by the employer in the contract. This statement can be approved since usually the employment contracts are prepared by the employers. However, it should be asked, whether the workers had real consent in the sense that they knew the consequences of the choice of a certain law. All in all, the recent judgment reduces the risk of workers of accepting employment conditions unfavourable for them.