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With Judgment C-485/24, the CJEU clarifies the issue of determining the law applicable to an employment contract. The decision sets out criteria for identifying the governing law when the habitual place of work changes.
Case C-485/24
The matter began in 2002, when the Luxembourg transport company Locatrans hired a French citizen under a contract governed by Luxembourg law.
It was initially established that the employee would work as a driver in several European Countries. Over time, however, the employee’s activity increasingly shifted to France. This shift triggered the obligation to register with the French social security system.
After termination of the employment relationship, the driver brought an action before the Labour Court of Dijon. The Labour Court of Dijon dismissed his claims. The reason was that, after applying Luxembourg law, it found no legal basis. The Dijon Court of Appeal later intervened. It rejected the first decision, stating that French law governed the employment contract considering the application of the Rome Convention.
Through a request for a preliminary ruling, the French Court sought guidance from the Court of Justice. It asked for an interpretation of the Rome Convention on the law applicable to contractual obligations.
Specifically, the French Court asked which law applies when a worker, after operating for some time in one State, transfers the habitual place of work to another State.
The European Court’s response
The European Court first notes that the Rome Convention envisages three scenarios:
- The applicable law may be chosen by the parties;
- In the absence of such choice, the law of the Country where the employee habitually works governs the contract;
- If this criterion cannot be applied, the contract is governed by the law of the Country where the company that hired the worker is located.
In this case, the Court finds that the habitual place of work criterion cannot apply, since the place of work shifted from one country to another.
Thus, the applicable criterion for the Locatrans case would be the law of the country where the company is located, namely Luxembourg.
However, the Court recalls that both above-mentioned criteria are subject to a limitation. They do not apply where the circumstances show that the employment contract is more closely connected with another country. In that situation, the law of that country applies.
In conclusion, in the Locatrans case, the Court invites the French court to determine whether the circumstances show a closer connection with France. All elements characterising the employment relationship must be considered. Meaning that the employee’s last habitual place of work and the obligation to register with French social security matter.
