January 30, 2015

New Rules Extend EU Jurisdiction in Employment Contract Disputes

On 10 January 2015, new rules came into force under which an EU-based employee can now bring proceedings arising out of their employment contract against their non-EU employer, even if that employer has no presence in the EU.

Previously, where an employer was not domiciled in an EU member state, the employee could only bring proceedings arising out of their employment contract in the EU against a non-EU employer if the employer had a presence (e.g. a registered or branch office) in the EU.  Under the new rules, it is no longer necessary for the employer to have a presence in the EU; all that is required is that the employee habitually carries out their work in the EU. These rules are mandatory and will override any jurisdictional clause in the employment contract providing otherwise.  It is also important to note that the EU rules which govern which law will be applicable in a dispute provide that the competent EU court must apply the mandatory overriding rules of its own jurisdiction to such dispute.

Given that EU law is generally speaking more “employee friendly” than certain other non-EU jurisdictions (notably, the US), these new rules could have a significant impact on the exposure to employment litigation of non-EU employers employing EU-based employees.  Employers facing the threat of any such litigation should seek immediate legal advice.

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