EELC Academic Board Review 2021: Private international law

Zef Even (Professor at Erasmus School of Law, Rotterdam, the Netherlands, and partner at SteensmaEven, Rotterdam, the Netherlands)

There have been a number of interesting employment cases in the field of private international law over 2021, in particular when we juggle a little and add December 2020 to this period. Three cases concern the (Revised) Posting of Workers Directive: ECJ 8 December 2020, C-620/18 (Hungary – v – Parliament and Council), ECJ 8 December 2020, C-626/18 (Republic of Poland – v – Parliament and Council) and ECJ 8 July 2021, C-428/19 (Rapidsped). Under the heading ‘Competency’ I will discuss ECJ 25 February 2021, C-804/19 (Markt24) and EELC 2021/34 ‘End of the Ryanair saga: a trade union victory with a bitter taste for the employees involved’ (BE). Finally, under the heading ‘Applicable law’, I will turn to ECJ 15 July 2021, Joined Cases C-152/50 and C-218/20 (SC Gruber Logistics).

Posting of employees

It is no secret that it wasn’t easy to reach an agreement on the Revised Posting of Workers Directive (EU) 2018/957 (‘RPWD’). The Commission’s proposal on the amendment led to reasoned opinions of national parliaments arguing that the proposal was not compatible with the principle of subsidiarity. The Commission, however, rejected these opinions and continued. The RPWD was approved on 28 June 2018. Poland and Hungary voted against its adoption, while a number of other Member States abstained. Poland and Hungary initiated proceedings to annul the RPWD, arguing, among other things, that the RPWD (i) was based on a wrong legal basis, (ii) infringed the principle of subsidiarity, (iii) violated the principles of the freedom to provide services and (iv) was at odds with Regulation (EC) No. 593/2008 (Rome I).

The ECJ (Grand Chamber) rejected the claims of Hungary and Poland. The RPWD was, according to the ECJ, (i) rightfully based on Articles 53(1) and 62 TFEU (freedom of services). The RPWD has as its objective that of making it easier to exercise the freedom to provide services, while also ensuring, where necessary, the protection of other fundamental interests that may be affected by that freedom, such as a level playing field for the businesses and respect for the rights of workers. This objective made the aforementioned legal bases appropriate. The alternative legal basis put forward, Article 153 TFEU (social policy) did not, according to the ECJ, constitute a more specific legal basis. Furthermore, the principle of subsidiarity was according to the ECJ (ii) not infringed: the amendments made by the RPWD to the original Posting of Workers Directive (‘PWD’) did not go beyond what is necessary to achieve the objectives of this Directive, namely that of ensuring the freedom to provide services on a fair basis and that of offering greater protection to posted workers. The principles of the freedom to provide services were (iii) also not violated. In a nutshell, the ECJ held that mutual recognition of the labour laws of all Member States insufficiently protects the interests of the posted workers in order to maintain the provision of services on a fair basis as between undertakings established in the host Member State and undertakings that post workers to that State (level playing field). The fact that the position of long-term posted workers (posted for over 12 or 18 months) more closely resembles that of the employment rights and obligations of workers employed by undertakings established in the host Member State is according to the ECJ necessary, appropriate and proportionate. Finally, there is (iv) no conflict with the Rome I Regulation, as the RPWD constitutes, with respect to workers who are posted, a special conflict of law rule, within the meaning of Article 23 of the Rome I Regulation. The Rome I Regulation and the RPWD are therefore aligned.

The case Rapidsped concerned drivers who were brought to France by their Hungarian employer in a minibus in order to work there as international truck drivers. The employment agreements provided that the drivers may also work abroad, without that work carried out abroad being permanent. The drivers were eligible to a daily allowance (per diem) for work carried out abroad, the amount of which was higher the longer the period during which the worker was posted abroad. The rules on these per diems explained that they were intended to cover the costs incurred abroad. The drivers received a statement that they were eligible to an hourly wage of EUR 10.40, the relevant French minimum wage being EUR 9.76 per hour. The drivers, however, in fact received wages amounting to EUR 3.24 per hour. The employer argued that the difference between that amount and the French minimum wage was covered by the per diems (and a fuel saving bonus, which I will not discuss further).

The drivers started litigation against their employer in Hungary. The referring Hungarian court wanted to ensure that the PWD also applied to international road transport, which was easily confirmed by the ECJ referring to the answer already given in that respect in the case FNV – v – Van den Bosch (C-815/18). The referring Hungarian court also wanted to know whether it was competent and whether it should apply French law on minimum wages. The ECJ explained that Article 6 PWD provides for alternative jurisdiction in litigation on the minimum employment conditions applicable on the basis of Article 3(1) PWD, by also allowing litigation before the courts in the Member State in whose territory they are or were posted. That Article, however, does not prevent the drivers from suing their employer before the court in a jurisdiction that is also competent, such as the court of the country in which the employer is domiciled, in this case Hungary. The Hungarian court should in such a situation apply French law to determine the minimum wage applicable to the employees during their posting.

Another question related to the per diem payments: do they constitute a wage which should be taken into account when determining whether the employees received sufficient pay? As follows from the second subparagraph of Article 3(7) PWD, allowances specific to the posting are considered part of the minimum wage, unless they are paid in reimbursement of expenditure actually incurred on account of the posting, such as expenditure on travel, board and lodging. In this case, even though the daily allowance was described as being intended to cover the costs incurred abroad by the posted workers, this seems not to be true: the amount of that daily allowance differed according to whether that posting lasted three, four or five weeks, or even more. The specific aspects of the per diems – the lump sum and progressive nature of that allowance – seemed to indicate that the purpose of that daily allowance was not so much to cover the costs incurred abroad by the workers, but rather to provide compensation for the disadvantages entailed by the posting, as a result of the workers being removed from their usual environment. Would that be the case, the per diem would be part of the minimum wage of the drivers. That would, finally, only be different if the payments corresponded to an allowance which altered the relationship between the service provided by the worker, on the one hand, and the consideration which he or she received in return, on the other (such as compensation for working at night or on public holidays).

Competency

In the Market24 case the employee was domiciled in Austria, the employer Market24 in Germany. The employee was asked to enter into an employment agreement with Market24, which agreement the parties signed in Austria. On the basis of that agreement the employee was supposed to perform cleaning work in Germany. The employee, however, was never allocated any work nor did they receive any pay. The employee sued Market24 before the courts in Austria. These courts were competent on the basis of Austrian domestic law. The question was whether that was in compliance with EU law, more specifically Regulation (EU) No. 1215/2012 (Brussels II). The ECJ held that Section 5 of Chapter II of Brussels II, that concerns ‘Jurisdiction over individual contracts of employment’, also applied in this situation, in which no work was performed for a reason attributable to the employer. The ECJ continued that Section 5 precludes the application of national rules of jurisdiction in respect of an action such as that at stake, irrespective of whether those rules are more beneficial to the employee. In other words, Brussels II applies exclusively. On that basis, Market24 should be brought before the courts in Germany (where it is situated), unless Section 5 provides for jurisdiction in Austria. That could be the case should the employee have been habitually carrying out their work in Austria. That, however, was not so. It should be determined where, or from which place, the employee in fact performs the essential part of his or her duties vis-à-vis his or her employer. In the case where the contract of employment has not been performed, the intention expressed by the parties to the contract as to the place of that performance is, in principle, the only element which makes it possible to establish a habitual place of work for these purposes. This also pointed to Germany.

In another dispute regarding the competence of the court, the Labour Court of Appeal of Mons concluded the ongoing litigation between air cabin crew and their employer Crewlink. Crewlink is an Irish company based in Dublin. It recruits, trains and employs airline cabin crew for, among others, Ryanair. Ryanair is also Dublin based. The Belgian case follows up on the ruling of the ECJ in Cases C-168/16 and C-169/16 (Nogueira and Others). In brief, the Labour Court of Appeal held that the Belgian Court was competent and that Belgian mandatory law applied to the employment agreements of the cabin crew. This due to the fact that the cabin crew habitually worked from Belgium, based on the legal rules formulated by the ECJ. In consequence, the crew was among others things entitled to payment of flight allowances for the entire duration of the employment contract, holiday pay, pay for work performed on Belgian public holidays and salary in the event a crew member was ill and could not therefore work. The crew members, however, were not eligible to pay for the days they were on-call at the airport on top of the daily allowance of EUR 30 they already received. The Labour Court of Appeal held that neither Directive 2003/88/EU nor Belgian law provides for payment of salary of employees for on-call time.

Applicable law

In the case SC Gruber Logistics drivers claimed that they habitually worked in Germany and Italy, respectively. Their employment agreements were governed by Romanian law, though, as the chosen law. The ECJ explained how to apply Article 8 Rome I. Paragraph 1 provides that an individual employment contract is governed by the law chosen by the parties. Such a choice of law may not, however, deprive the employee of the protection afforded to him or her by provisions under the law that cannot be derogated from by agreement (mandatory provisions) and that would be applicable to the contract in the absence of such a choice, pursuant to paragraphs 2, 3 and 4. If those provisions offer the employee greater protection than those of the law chosen, the former provisions will override the latter, while the law chosen will continue to apply to the rest of the contractual relationship. The correct application of Article 8 Rome I therefore requires, first, that the national court identifies the law that would have applied in the absence of choice and determines, in accordance with that law, the rules that cannot be derogated from by agreement. Second, that court must 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 those rules is greater, those same rules must be applied. With regard to the minimum wage rules of the country where the employee has habitually carried out his or her activities, these can, in principle, be classified as mandatory provisions within the meaning of Article 8(1) Rome I. With regard to the choice of law clause, the ECJ continued that such a choice should be free. That the clause derives from a pre-formulated employment contract makes, however, no difference: the regulation does not prohibit the use of standard clauses pre-formulated by the employer. Freedom of choice can be exercised by consenting to such a clause and is not called into question solely because that choice is made on the basis of a clause drafted and included by the employer in the contract.

Final remarks

There is a constant flow of cases in the field of private international law, focussing primarily on international transport. The ECJ has given guidance on such cases. I hope that further clarity for the road transport sector will also be brought by Directive (EU) 2020/1057, laying down specific rules with respect to the posting of drivers in that sector. Let’s see what the future holds in store for us.