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European courts refine laws applicable to cross-border employment
02/06/2021
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CJEU
Authors
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Willy van Eeckhoutte
Willy van Eeckhoutte is a professor in the University of Ghent, member of the bar at the Supreme Court of Belgium, and an employment law specialist at Bellaw, part of the Innangard international employment law alliance

In May, two higher courts ruled on a partial aspect of the question of which legislation is applicable when an employee works in different countries. The Court of Cassation of Belgium dealt with the applicable employment law, while the Court of Justice of the European Union (CJEU) clarified the designation of the social security law to be applied.

The key legal norms addressed in their rulings are provisions of EU regulations, respectively, Article 8.2 of Regulation No 593/2008 and Article 13.1 of Regulation No 883/2004 (the judgment of the Court of Justice still relates to Article 14.2 of Regulation (EEC) No 1408/71 of the Council of 14 June 1971 on the application of social security schemes to employed persons and their families moving within the Community, but the terms have remained the same in Regulation No 883/2004).

Court of Cassation: which labour law applies?

The parties to an employment contract are free to choose the law applicable to their employment relationship, just as they are free to choose the law applicable to any contract. However, this choice cannot cause the employee to lose the protection of the mandatory provisions (“provisions that cannot be derogated from by agreement”) of the employment law of the country in which or, failing that, from which the employee “habitually carries out his work in performance of the contract”.

What is the place where or from where the work is habitually carried out? According to the case law of the Court of Justice of the European Union, to which the Court of Cassation refers in its judgment, (Court of Cassation of Belgium 10 May 2021, S.20.0003.N (D v Intrasoft International)), it is the place where or from where the employee “actually” carries out his working activities and, if there is no centre of activities, to the place where he carries out the majority of his activities (Case C-384/10, Voogsgeerd, consideration 37; Case C-29/10, Koelszch, consideration 45).

The adverb “actually” suggests that it is the situation existing in reality that is taken into account, not the one “on paper”. However, this is reasoning somewhat short of the mark, as the cassation judgment shows. In order to determine the place of “habitual” work, the way in which the parties arranged the performance of the contract, may indeed be taken into consideration. Only if the employee demonstrates, on the basis of objective factors, that they were required to carry out their work at another place, should what is provided for in the contract be disregarded.

It is therefore certainly useful to lay down the place of habitual employment by agreement, as the judgment shows.

Court of Justice: which social security law applies?

When someone works in different countries, thoughts of secondment quickly spring to mind. However, when an employee is sent to another country, but keeps on working under the instructions and supervision of his employer, there is no question of posting. Other rules than those that apply to posting are then applicable to determine which social security legislation will apply. 

In the case of cross-border employment within the European Union, other than a secondment, the following rules apply, whereby the starting point is always that only the social security legislation of one single EU member state applies to the whole of the work or activities.   

The principle is that the social security legislation of the country in which the employee performs his work applies. The country of residence and the country in which the employer’s business is established are, in principle, irrelevant.

If the employee works in two or more EU member states, then there is a deviation from the above-mentioned rule. By way of exception, the social security legislation that applies to the employment in all countries is that of:

  • the member state where the employee resides if they perform part of their activities in that member state; and
  • the member state in which the registered office of the undertaking is situated if they do not reside in one of the countries in which they work.

In Case C‑879/19, the CJEU had to rule on whether, in the event of a succession of long-term activities for one employer in various member states, the principle (the social security legislation of the country of employment) should be applied separately to each of those activities or the exception (the social security legislation of the country of residence or that of the country in which the registered office of the undertaking is situated) on the entirety of the activities.

In its answer, the court first refers to previous case law. Accordingly, if employment in the territory of a single member state constitutes the normal arrangement for the person concerned, such employment is covered by the rule and not by the derogation.

The question is how to know when an employment in the territory of a single member state constitutes the normal arrangement for the person concerned. For this, the court draws inspiration from the time limit that must be observed in the case of posting: when a worker is posted to another member state for a maximum period of 12 months, the social security legislation of the country from which they are posted remains applicable.

Well, says the court, let us assume that, outside the context of a posting, successive periods of work in different countries under a single employment contract only constitute activities in two or more member states in so far as the duration of the uninterrupted periods of work in each of them does not exceed 12 months. Only such an interpretation can prevent circumvention of the rule (application of the social security legislation of the country of employment).