Case law Developments in PIL EU Legislation

Court of Justice of the EU on the Concept of Habitual Place of Work

On 24 February 2021 the Court of Justice of the EU issued a judgement in the case BU v Markt24 GmbH (C-804/19) following a request for a preliminary ruling from the Landesgericht Salzburg (Austria). The case concerns jurisdictional rules for employment contracts in Brussels I bis Regulation, in particular its Article 21. The opinion in this case was prepared by AG Øe.

Background

BU whose place of residence is in Salzburg (Austria) signed the employment contract for carrying out cleaning work in Munich (Germany) for Markt24 GmbH, whose registered office is also located in Munich. BU signed the contract with an employee acting as intermediary of Markt24. The contract was signed in a bakery in Salzburg, even though Markt24 had an office in this city at that time. It was agreed that BU would start working on 6 September 2017, but she was never allocated any work, even though she could be contacted by telephone and was prepared to work. BU has not received remuneration, but she was registered with the Austrian social security institution as an employee. On 15 December 2017, the defendant terminated the employment contract. On 27 April 2018, BU filed a claim to the Landesgericht Salzburg (Austria) asking for outstanding wage and other payments for the period of her employment.

Since the documents initiating the action could not be served on the defendant, a procedural representative in absentia was appointed. The representative contested jurisdiction of the Austrian court. It seems that, in accordance with domestic law in place in Austria, namely § 4(1)(a) Arbeits- und Sozialgerichtsgesetz (“ASGG” – Law on the labour and social courts), Landesgericht Salzburg would have jurisdiction, based on the place of residence of the employee and also the place where the remuneration was to be paid. At the same time there were doubts whether jurisdiction exists under Brussels I bis Regulation, in particular its Article 21(1)(b)(i), which grants jurisdiction to courts for “the place where or from where the employee habitually carries out his work”. Landesgericht Salzburg decided to refer a preliminary ruling to the CJEU asking few alternative questions.

Is Section 5 of Chapter II Brussels I bis Applicable at All, If No Work Was Actually Performed?

The Court reminded that the concept of an “individual contract of employment” referred to in Brussels I bis Regulation must be given an autonomous interpretation (point 24). As flows from its previous jurisprudence, this concept “presupposes a relationship of subordination of the employee to the employer; the essential feature of an employment relationship is that for a certain period of time one person performs services for and under the direction of another in return for which he or she receives remuneration” (point 25). If the above conditions are met, parties are bound by a “contract of employment” within the meaning of the Regulation, “irrespective of whether the work which is the subject of that contract has been performed or not” (point 26).

Hence, the CJEU stated that Section 5 of Chapter II Brussels I bis (namely, its special jurisdictional rules for employment contracts) “must be interpreted as applying to a legal action brought by an employee domiciled in a Member State against an employer domiciled in another Member State in the case where the contract of employment was negotiated and entered into in the Member State in which the employee is domiciled and provided that the place of performance of the work was located in the Member State of the employer, even though that work was not performed for a reason attributable to that employer.”

Does Brussels I bis Allow for the Application of Domestic Rules on Jurisdiction If More Beneficial to the Employee?

As rightly underlined in the opinion, the fact that the rules of the ASGG are more favorable to the employee is irrelevant, as section 5 of Chapter II Brussels I bis does not provide for certain minimum standards of the protection of employees, which might be further developed by the national legislation (points 43-44 of the opinion). Instead, this Regulation provides for a unified system of jurisdictional rules. If a dispute falls within the scope of application of Brussels I bis, its rules of jurisdiction must take precedence over national ones (points 30-32 of the judgement). Hence, the CJEU ruled that the provisions set out in Section 5 of Chapter II Brussels I bis preclude the application of national rules of jurisdiction, irrespective of whether those rules are more beneficial to the employee.

How to Understand Article 21(1)(b)(i) Brussels I bis, If the Work Was Never Actually Performed?

As underlined in the opinion, the Court has never before had a chance to explain how to understand the concept of the “place where the employee habitually carries out his work”, in case no work was actually performed (point 23 of the opinion). The Court noted that this concept refers to “the place where, or from which, the employee in fact performs the essential part of his or her duties vis-à-vis his or her employer” (point 40). The Court shared also the view presented in the opinion that:

in the case where the contract of employment has not been performed, the intention expressed by the parties to the contract as to the place of that performance is, in principle, the only element which makes it possible to establish a habitual place of work (…) That interpretation best allows a high degree of predictability of rules of jurisdiction to be ensured, since the place of work envisaged by the parties in the contract of employment is, in principle, easy to identify (point 41).

The Court had no doubt that in the case at hand that place is Munich (Germany).

At the same time, the Court underlined that in accordance with Article 20 Brussels I bis Regulation, section 5 of its Chapter II applies without prejudice to, inter alia, Article 6 point 5, which provides that a person domiciled in a Member State may be sued in another Member State, “as regards a dispute arising out of the operations of a branch, agency or other establishment, in the courts for the place where the branch, agency or other establishment is situated”. The Court noted that Landesgericht Salzburg should determine whether that provision may also be applicable in the case given that Markt24 had an office in Salzburg at the beginning of the employment relationship.

CJEU stated that Article 21(1)(b)(i) of Brussels I bis must be interpreted as meaning that an action may be brought before the court of the place where or from where the employee was required, pursuant to the contract of employment, to discharge the essential part of his or her obligations towards the employer. This is however without prejudice to Article 7(5) of the Regulation.

Is Article 7(1) Brussels I bis Applicable to an Employment Relationship, If No Work Was Actually Performed?

One of the questions was not answered either in the opinion or in the judgement, as there was no doubt that Section 5 of the Chapter II Brussels I bis does apply to the case at hand. By this question Landesgericht Salzburg wanted to clarify whether Article 7(1) Brussels I bis might apply to the employment relationship, in such specific circumstances, when no work was actually performed and whether § 4(1)(a) or (d) of the ASGG could be applied. It is not clear whether the ASGG was supposed to be applied instead of Article 7 Brussels I bis or somehow indirectly by the intermediation of it.

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