The new Recast Brussels Regulation replaces the 2001 Brussels Regulation and applies to claims brought from 10 January 2015. Under the Regulation, special jurisdiction rules apply to individual employment contracts, to protect employees as the perceived weaker party to the contract.
This article focuses on one particular aspect of these rules which has changed, the new jurisdiction rules for non-EU employers who employ staff in the EU.
Previously, employees could only sue a non-EU employer in an EU member state if:
- that employer had a branch, agency or other establishment in that member state, and
- the employment dispute related to that branch, agency or other establishment Now, employees can also sue them in a member state:
- where the employee habitually works, or – where the business that engaged the employee is situated
So, for example, an employee who routinely works in France for a company situated in Hong Kong which has no branch or establishment in the EU can now choose whether to sue the company in France or in Hong Kong.
The impact of an exclusive jurisdiction clause
An exclusive jurisdiction clause will only be effective if it is entered into after an employment dispute has arisen, or where it is the employee who seeks to rely on it.
So in practice, employees can choose to bring a claim in any permitted jurisdiction under the new rules that is best for them, irrespective of any exclusive jurisdiction clause in their employment contract.
Implications for non-EU employers
This new rule is specifically designed to enable employees to choose which of the applicable jurisdictions is most favourable for them. The jurisdiction they choose is likely to be influenced largely by cost and convenience. So in many cases, employees will opt to bring an employment claim in the courts of the member state in which they habitually work.
Inevitably, therefore, the implications of this new rule for non-EU employers who employ staff in the EU is that they face an increased risk of having to defend employment claims in the courts of a member state, which in most cases will be more costly and inconvenient for them.