Koelzsch judgment: European Court of Justice clarifies applicable employment law for employment in more than one country

On 15 March 2011, the European Court of Justice (ECJ) delivered a judgment on the question how to determine which legislation applies to an employment contract in case of employment in more than one  country. The case at hand concerned a truck driver involved in international transport who was domiciled in Germany and who had a Luxemburg employer.  

According to the Rome Convention, the parties are free to determine the applicable law when concluding an employment agreement. However, this choice of law may not have as a consequence that the employee would lose the protection of the mandatory rules that would apply in the absence of such choice of law. In such case, the law of the country in which the employee habitually works applies. In the event the employee does not habitually work in any one country, the law of the country where the place of business that hired the employee is situated applies.

Certain legal authors believed that as soon as an employee works in more than one country, there cannot be a country of habitual employment which means that, according to these authors, the second criterion (country of the place of business that hired the employee) should apply.

However, in the Koelzsch judgment, the ECJ firmly rejects this opinion. Also if the employee works in more than one country, the first criterion (place of habitual employment) should in principle apply. Only if it is impossible for the judge to determine the country with which the work has a significant connection, does the second criterion apply.

The Court defines the place of habitual employment as the place in which or from which the employee performs the greater part of his obligations towards his employer. This is the place where or from where the employee actually carries out his work and, in the absence of a center of activities, the place where he executes the greater part of his professional activities. Amongst other things, the judge should check where and from where the employee mainly fulfills his transport tasks, where he receives his instructions for his tasks and where he organizes his work, where the work instruments are situated and to which place he returns after fulfilling of his tasks.

This case-law is in line with the ECJ’s previous case-law in the field of judicial competence and with the Rome I Regulation, which now expressly mentions that in the absence of a choice of law, the law of the country where or from where the employee habitually works applies. The Rome I Regulation applies to employment agreements concluded on or after 17 December 2009.

ECJ, 15 March 2011 (Heiko Koelzsch/Luxemburg (C-29/10))