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28 November 2018
In today's globally interconnected world of work, cross-border issues play an increasingly prominent role – particularly for corporates with a multi-jurisdictional presence in the European Union. However, in view of the United Kingdom's impending departure from the European Union, questions of structuring in this context have taken on new meaning across the board.
In employment contracts with a cross-border reach, it is always necessary to determine:
The primary deciding factor in this context is the place in which the employee generally performs their work.(1)
Employment contracts and relationships are primarily subject to the law of the country in or from which the employee habitually carries out their work in performance of their employment contract (Article 8(2) of EU Regulation 593/2008 (Rome I)). However, a number of problems may be encountered when determining the place of work in this context.
Generally, an employee's habitual place of work is the place in which they predominantly fulfil their duties to their employer, taking into account every aspect of relevant activity. It is also where employees establish the closest links and focus their employment relationships. In the context of business integration, the place of work is generally the business site; however, if no such integration exists, the relevant location is the place in which the focus of the activity (ie, time and content) lies.
De facto relationships play a key role in this regard. If an employee is allocated to a particular branch, this does not automatically become their place of work because the law specifies no link between an employee's place of work and their allocation in terms of business structure, but rather between an employee's place of work and the actual place in which the majority of work is performed. If an employee works in several countries, the country from which they organise their activities and to which they return from business trips is deemed to be their place of work.
If an employee performs their work from home, the place of work is the place in which the work is actually performed. The same applies in cases of teleworking via electronic means for a permanent establishment run by the employer in another country. Thus, the place of work is, in most cases, the place in which the electronic equipment used to perform the work is located.
If no main place of activity can be identified on this basis, the place in which the employee performs most of their work is deemed to be their place of work.
It is generally advisable to agree a choice of law that corresponds to the objectively applicable jurisdiction (eg, the employment contract of a member of staff who is deployed in Germany should thus be subject to German law and meet the requirements of German employment law). This applies irrespective of the employee's nationality or the national corporate law to which the employer is subject.
For further information on this topic please contact Anja Glück or Hans-Peter Löw at Allen & Overy LLP by telephone (+49 69 2648 5000) or email (firstname.lastname@example.org or email@example.com). The Allen & Overy LLP website can be accessed at www.allenovery.com.
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