Background
Hortis GRC SA, a Swiss IT services company, employed JA (a French resident) as a manager beginning in September 2007. Though JA habitually performed his work in France, the employment contract expressly chose Swiss law as the governing law. In January 2012, Hortis dismissed JA following Swiss procedures, which do not require a pre-dismissal interview or written statement of reasons.
JA challenged the dismissal in French labor courts, arguing that French law should apply because he worked in France. French labor law provides mandatory protections including a mandatory pre-dismissal interview and requirement that dismissal letters state the grounds. The Court of Appeal held French law applied and ordered Hortis to pay damages. Hortis appealed to the Cour de cassation (French Supreme Court), which referred preliminary questions to the CJEU concerning interpretation of the Rome Convention’s rules on employment contracts.
The Court’s Holding
The CJEU held that Article 6(2) of the Rome Convention permits a national court to apply the law chosen by the parties to an employment contract—even if that law differs from the law of the country where the employee habitually works—when the contract is “more closely connected” as a whole to the country whose law was chosen. The wording “another country” in the Rome Convention’s “closer connection” clause encompasses the country whose law the parties selected.
However, in determining whether a contract is more closely connected to one country or another, courts must consider all objective elements defining the employment relationship, including those resulting from the parties’ choice of law. Critically, the choice of law itself is not automatically determinative; courts must weigh each element according to its significance and examine whether connecting factors resulted from mutual agreement or were imposed by the employer. The court emphasized that this approach must prevent employers from misusing connecting factors to circumvent employee protections.
The CJEU clarified that Article 6 aims to guarantee adequate protection for employees by ensuring the applicable law reflects the reality of the contractual relationship, not necessarily by applying the law most favorable to the employee. This interpretation aligns with the Rome I Regulation’s restructured conflict rules, which the Court noted were intended to clarify the multi-step reasoning national courts should follow.
Key Takeaways
- Party choice of law in an employment contract can prevail over the employee’s habitual place of work if the contract is more closely connected to the chosen country, even if that law provides less protection.
- The “closer connection” test requires a holistic, fact-intensive assessment of all objective elements—not a mechanical rule favoring the place of work.
- Choice of law itself cannot be the sole or primary basis for finding a closer connection; it must be evaluated alongside salary, social insurance, tax treatment, and other elements.
- Courts must scrutinize whether connecting factors (e.g., Swiss bank account, Swiss insurance) resulted from genuine mutual agreement or employer imposition.
Why It Matters
This decision materially shifts the balance in cross-border employment disputes. While the Rome Convention nominally protects employees through mandatory rules, the CJEU has confirmed that sophisticated structuring—using Swiss bank accounts, Swiss social insurance, favorable tax regimes, and express choice of Swiss law—can overcome the presumption that French law applies to work performed in France. Employers with multinational operations now have a clearer pathway to enforce chosen law even when employees work abroad, provided the overall circumstances support a closer connection to the chosen jurisdiction.
For employees and their counsel, this underscores the critical importance of challenging the “objective” nature of connecting factors, particularly whether salary structures, insurance schemes, or other arrangements were genuinely negotiated or unilaterally imposed. National courts must now conduct searching factual inquiries into the reality of the relationship, examining each element’s weight individually rather than deferring to formal contractual structures. The decision thus creates both opportunity and risk: employers can no longer rely solely on a contract clause, but employees cannot assume that place of work automatically determines applicable law.