Law applicable to the employment contract: can an employee choose the protection of another country?

Imagine: you own a flat in Mont-de-Marsan and you rent it to an executive who works for a Swiss company. Your tenant spends the week in Geneva but returns every weekend to the Landes. Suddenly, a dispute arises over his working conditions. Which law applies? Swiss law, chosen in his contract, or French law, which is more protective? This is exactly the question referred to the Court of Justice of the European Union (CJEU) by the Court of Cassation in this decision of 23 October 2024.

Every landlord or employer asks: is my contract secure? Employees, for their part, seek the best protection. This case illustrates the conflict between contractual freedom (choosing the applicable law) and the mandatory protection of the worker. The French judges decided to stay the proceedings and refer the question to the European judges.

But what exactly does this change? In short, the Court of Cassation asks whether, when the parties have chosen a law (e.g. Swiss), the judge must disregard the more protective mandatory provisions of another law (e.g. French) if the contract is more closely connected with the country of the chosen law. And if so, must he take into account those connections resulting from the parties' choice itself?

The facts: a story that happens every day

Mr X, a cross-border worker, lives in Dax but works for a Swiss company. His employment contract stipulates that Swiss law governs the relationship. Yet, in the event of a dispute (redundancy, overtime), he invokes the protection of French law, which is more favourable in terms of notice periods and compensation. The employer retorts: 'You signed, Swiss law applies.'

The employee brings the matter before the employment tribunal of Mont-de-Marsan, which partly rules in his favour. The employer appeals, and the Pau Court of Appeal applies Swiss law, finding that the contract is more closely connected with Switzerland (place of performance of the work, employer's registered office). Mr X appeals to the Court of Cassation, arguing that the mandatory provisions of French law (such as the cap on redundancy payments) must apply because they are more protective.

The Court of Cassation, perplexed, notes that Article 6 of the Rome Convention (now the Rome I Regulation) allows the employee to benefit from the mandatory provisions of the law that would apply in the absence of choice, if they are more favourable. But does this provision fade away when the contract is more closely connected with the country of the chosen law? That is the heart of the problem. The judges therefore decided to refer the question to the CJEU, which alone has jurisdiction to interpret this European text.

undefined, I have come across cases where an expatriate employee in Monaco or Switzerland found himself without protection in the event of redundancy, because the local law was less favourable. This decision could change the situation for hundreds of cross-border workers.

The reasoning of the court — broken down

The Court of Cassation relies on Article 6 of the Rome Convention of 19 June 1980 (now Article 8 of the Rome I Regulation), which governs the law applicable to employment contracts. This text provides that, in the absence of choice, the contract is governed by the law of the country where the employee habitually carries out his work (paragraph 2). But if the parties have chosen a law (paragraph 1), that choice cannot deprive the employee of the protection of the mandatory provisions of the law that would have been applicable without choice (paragraph 1 in fine).

The difficulty arises from the last part of Article 6: '... unless it appears from the circumstances as a whole that the contract of employment is more closely connected with another country, in which case the law of that other country shall apply.' In other words, even if the employee habitually works in France, if the contract is more closely connected with Switzerland (for example, because the parties have chosen Swiss law and all relations take place in Switzerland), then Swiss law applies.

But can this 'closer connection' result from the parties' very choice of law? The Court of Cassation hesitates: if we say yes, the employee loses all mandatory protection; if we say no, the choice of law becomes ineffective. The French judges therefore ask the CJEU to decide: 1) Must the judge disregard the more protective mandatory provisions of the law claimed by the employee when there is a closer connection with the country of the chosen law? 2) If so, must he take into account the connections resulting from the parties' choice of law or disregard them?

This is a technical question but with enormous practical consequences. However, note: the decision does not rule on the merits; it merely refers the preliminary question. The parties will have to wait for the CJEU's answer (usually 12 to 18 months).

What this means for you — practically

For the expatriate or cross-border employee: If you work in a country whose law is less protective than yours (e.g., Switzerland vs France), you may be able to invoke French mandatory provisions (notice periods, redundancy payments, paid leave) even if your contract chooses Swiss law. But be careful: if the CJEU finds that the closer connection prevails, you will lose that protection. Example: an unfair dismissal in France can give rise to 6 months' salary, in Switzerland often less. The difference can be up to €30,000.

For the employer: You must be vigilant when drafting the contract. Do not rely solely on the choice of law. If the employee mainly works in another country, the judges could set aside the chosen law in favour of local law, especially if it is more protective. In Dax, if you hire an employee who works from his home in the Landes for a Swiss company, French law could apply.

For the landlord (via a domestic employment contract): If you employ a domestic worker (cleaner, gardener) and choose the law of your country of origin, the employee could claim the protections of French law. For example, a British employer in Mont-de-Marsan cannot impose English law if the employee works in France.

If you are in this situation, you must check the law applicable in the absence of choice (the law of the habitual place of work) and compare protections. If the chosen law is less favourable, the employee can demand the more protective law, unless the CJEU decides otherwise.

Four tips to avoid this type of dispute

• Draft a precise employment contract: Clearly mention the chosen law AND the law of the habitual place of work. Specify that the choice of law is made with full knowledge, after informing the employee of his rights.
• Assess the connections of the contract: If the employee mainly works in France, French law will likely apply, whatever you choose. Do not attempt to circumvent local protections.
• Consult a lawyer lawyer: Before signing, have the applicable law and jurisdiction clauses analysed. A lawyer can help you choose the most appropriate law without risking litigation.
• Anticipate disputes: In the event of redundancy, compare compensation under both laws. Offer the employee a settlement that at least meets the minimum standards of the most protective law.

Besoin d'un conseil personnalisé ? Contactez Maître Zakine — première consultation 30 min à 45€.

Further reading: related case law and developments

The CJEU had already interpreted Article 6 of the Rome Convention in the Koelzsch case (C-29/10, 2011), where it held that the habitual place of work is the primary criterion, and that the choice of law clause cannot override the mandatory provisions of the law of that place. But the question of 'closer connections' remained open. In the Schlecker case (C-64/12, 2013), the CJEU clarified that the habitual place of work criterion prevails, unless the contract is more closely connected with another country, but did not decide the role of the choice of law.

The trend of French courts is rather protective of the employee. They often apply the most favourable law, even if the parties have chosen another law. But the Court of Cassation wants to clarify the scope of the choice of law clause. If the CJEU rules in favour of the possibility of disregarding the more protective law, this could reduce the scope of protection for mobile workers.

What few people know is that the Rome I Regulation (No 593/2008) replaced the Rome Convention from 2009, but the provisions are almost identical. The CJEU's decision will therefore have a direct impact on contracts concluded after 2009.

In practice: what to do

FAQ:

Q: Can I choose the law of a less protective country for my employment contract?
R: Yes, but the employee can claim the mandatory provisions of the law that would apply in the absence of choice (the law of the habitual place of work), if they are more favourable. This decision does not call this principle into question, but clarifies its limits.

Q: What should I do if I am an employee and my contract chooses a less protective foreign law?
R: You can bring a claim before the employment tribunal to request the application of French law. Note: the CJEU's decision may delay the judgment. Consult a lawyer to assess your chances.

Q: What are the time limits for taking action?
R: The limitation period is 2 years for redundancy, 3 years for wages. However, the preliminary question suspends the proceedings. Better to act quickly.

Q: How much does a consultation cost to clarify the applicable law?
R: An initial consultation with Maître Zakine costs €45 for 30 minutes. This can save you months of proceedings and much higher legal fees.

Q: Does this decision apply to contracts concluded before 17 December 2009?
R: Yes, because the Rome Convention applies to earlier contracts. For later contracts, the Rome I Regulation applies, but the rules are similar.

Are you in a similar situation? An initial 30-minute consultation with Maître Zakine (€45) can save you months of proceedings — and often much more. Book an appointment →