The ECJ has ruled on 14 September 2017, in a case relating to six Belgium-based Ryanair employees, that a jurisdiction clause which sought to prevent the employees from bringing proceedings in the courts of the countries in which they habitually work, was not enforceable against those employees. This will not be a surprise to employment lawyers, however it is noteworthy that a majority of media reports have confused the concept of jurisdiction, which was the subject of this case, with that of governing law, which was not (see "Analysis" below).
The judgment follows a legal action taken by a group of six airline cabin crew employees who had employment contracts with Ryanair and Crewlink, a company which recruits cabin crew for the airline. All of the relevant employment contracts were in English, subject to Irish law, and included a jurisdiction clause providing that the Irish courts had jurisdiction as regards any disputes.
It was stipulated in the employment contracts that the work of the employees concerned, as cabin crew, was regarded as being carried out in Ireland, given that their duties were performed on board aircraft registered in that Member State. However, those contracts nevertheless designated Charleroi Airport in Belgium as the employees' "home base". The employees started and ended their working day at that airport, and they were contractually obliged to reside within an hour of that "home base".
The six employees concerned brought actions in respect of their employment rights before the Belgian courts in 2011. The Cour du travail de Mons in Belgium was uncertain as to whether it had jurisdiction to hear the dispute considering the contents of the employment contracts. Consequently, it decided to refer a question to the ECJ based on Council Regulation (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial matters ("Brussels I"). 1
In particular, Brussels I designates employment contracts as being in a special category, and states that jurisdiction clauses are only valid if entered into after a dispute has commenced. Brussels I provides that an employer may be sued by an employee in: (i) the Courts of the Member State in which the employer is domiciled; or (ii) in the Member State where the employee habitually carries out his/her work; or (iii) if the employee did not habitually work in any one country, then in the Courts of the place where the business which engaged the employee was situated. This Ryanair case concerned the interpretation of the "place where the employee habitually carries out his work" in the specific context of the air navigation sector.
The ECJ has followed the opinion of the Advocate General and determined than an employee's stated home base amounts to a "significant indicator" when determining the place from which an employee habitually carries out his/her work. The ECJ also pointed out that "as regards disputes related to employment contracts, the European rules concerning jurisdiction are aimed at protecting the weaker party".
The ECJ stated that an employee is entitled "to sue his employer before the courts which he regards as closest to his interests, by giving him the option of bringing proceedings before the courts of the Member State in which the employer is domiciled or the courts of the place in which the employee habitually carries out his work". In this instance the employees concerned habitually carried out their work from Charleroi Airport; it was their home base, and accordingly the Belgian courts had jurisdiction to determine the employment disputes. In the case of these employees, that means they can have their cases heard in Belgium notwithstanding that the employment contracts state that disputes should be heard in Ireland.
Ryanair has insisted that the ruling does not change the status quo of its thousands of crew members who work for the carrier under Irish contracts. It stated that it will continue to issue Irish law contracts of employment to all employees. It added that: "Irish legislation has adopted all EU directives on employment rights, which are also covered in Ryanair contracts of employment, and in some cases offer better protection than some EU countries."
Both the International Transport Workers' Federation (ITF) and the European Transport Workers' Federation (ETF) welcome the ruling stating that it "is a defeat for Ryanair and a victory for workers' rights".
But which party really won? From an employer's perspective, the ruling upholds the principle in Brussels I (and the subsequent Recast Regulation) that employees can hold their employer to account in the country in which they habitually carry out their work. This will not be news to employment lawyers, but a worthwhile reminder nevertheless that multinational employers ought to be cognisant that jurisdiction clauses in employment contracts are typically not enforceable.
Of note though is the confusion in the media reporting of this ECJ decision. A large number of the media are reporting that Ryanair can no longer insist on Irish law being used in the employment contracts of foreign workers, and this is incorrect. This ECJ case concerned 'jurisdiction' only, i.e. which courts would hear the matter; it did not concern 'governing law', which is the applicable law when interpreting and implementing a contract. "Rome I" (Regulation (EC) No 593/2008 of the European Parliament and of the Council of 17 June 2008 on the Law Applicable to Contractual Obligations) legislates for governing law, and it gives parties in Member States the ability to choose a governing law, and to stick to that governing law. It is important to note however that Rome I does not allow parties to derogate from the "mandatory laws" of a country. What this means in practice in the context of these Belgian workers is: their dispute can be heard in Belgian courts, but the courts must interpret and apply the Irish law contracts except to the extent that the mandatory employment laws of Belgium contradict the Irish employment contracts.