Which law applies to employees working in more than one European country?
Dutch law will apply to the employment if both the employer and employee are based in the Netherlands. But what if the employer is based in a different European country, and the Dutch employee works from the Netherlands but also cross-border?
Rome I Regulation
In these cross-border situations where different European laws could apply, the European Regulation 593/2008 on the law applicable to contractual obligations, also known as the Rome I Regulation, provides a framework for determining which law applies to the contract. Articles 3 and 8 of the Rome I Regulation lay out the rules. According to the general article 3, paragraph 1, the law chosen by the parties applies. Article 8, paragraph 1 reiterates this but adds that this choice cannot lead to the protection of a different law that would be applicable otherwise. The following paragraphs of article 8 set out the rules if no choice of law has been made.
The facts of the case
In the case before the District Court of Amsterdam, the employer was based in Denmark, and the Dutch employee worked in Denmark and the Netherlands. The employment contract applied Danish law, but the employee argued Dutch law was applicable because he lived and worked in the Netherlands. The main issue between the parties was the non-compete clause in the employment contract, which the employer enforced.
The court's assessment
According to the court, an assessment should be carried out to find the objectively applicable law based on articles 3 and 8 of Rome I Regulation.
The starting point is the choice of law in the employment contract, in this case, Danish law. The court emphasizes that parties can choose the applicable law for employment disputes, but it cannot lead to the employee losing protection from the law that would otherwise apply to the employment, for example, Dutch law.
To see which law would objectively apply without the choice of Danish law, it must be determined if the employee performed his work in a country different from Denmark. The court follows the employee that he performed his work in the Netherlands. The employment contract stipulated that he would work in Denmark at least 6 working days per month, but for the rest of the time, the employee worked almost entirely in the Netherlands. He lived and worked there most of the time and returned there after a (business) trip. He also organized his work from the Netherlands.
A closer connection
However, the court agrees with the employer that there is a closer connection with Denmark than with the Netherlands. The last paragraph of article 8 states that if there is a closer connection with a country other than the country the employee works from, that other country's law shall apply. The employee was covered by the Danish social security system and also paid taxes there. He received his salary in Danish Kroner in a Danish bank account, participated in the employer's Danish pension scheme and a Danish collective bargaining agreement concluded by Danish social partners applied to the employment.
These circumstances lead to the conclusion that Danish law objectively applies to the employment contract. According to Danish law, the non-compete clause is valid. The court does mitigate the fines imposed by the employer.