Employers Beware: Why an Exclusive Jurisdiction Clause Won't Always Work

...was not enforceable.

In particular, the clause could not prevent employees from bringing cases in the courts of the countries where they habitually carry out their work in accordance with the 2001 Brussels Regulation. Subject to certain exceptions, an employee may sue an employer either in the courts of the member state where the employer is domiciled, or in the courts of the 'place where the employee habitually carries out his work, or in the courts for the last place where he did so'.

Background

Airline cabin crew employees working for Ryanair brought actions in respect of their employment rights in 2011, issuing those claims in courts in Belgium. The Claimants had signed employment contracts written in English, that were stated to be subject to Irish Law, and containing an exclusive jurisdiction clause purporting that the Irish courts had jurisdiction as regards to any disputes arising from their employment. The contracts stated that, as the employees' services were carried out on an aircraft registered in Ireland, their services were deemed to be performed in Ireland. However, the employees 'home base' was designated as Charleroi airport (near Brussels) and it was a contractual requirement that they live less than an hour away from this location.

The Belgian courts were unsure if they had jurisdiction to hear the disputes arising out of these employment contracts, so referred the case to the ECJ.

Decision

The ECJ held that the clause was unenforceable. The ECJ stated that an employee is entitled to bring a claim against their employer before either the courts of the Member State in which the employer is domiciled or in the place where the employee habitually carries out their work. Article 21 of the 2001 Brussels Regulation prohibits exclusive jurisdiction clauses except where they have been agreed after the dispute has arisen between the parties. Therefore, an employee cannot be prohibited from bringing claims before courts which have jurisdiction in accordance with the Brussels Regulation. 

The location of the 'home base' referred to in the crew's contract was a relevant factor in determining where the employees habitually carried out their work, alongside other factors including the place where they receive instructions concerning their tasks, and from which the work is organised, and the place where they return to after completion of their tasks. In this case, the ECJ held that the Belgium courts had jurisdiction to determine the employment disputes.

Best Practice

• Jurisdiction cannot be determined by the employer's preference. Choice of law clauses (determining the law that will apply to the contract, rather than the court that might hear the dispute) may be treated differently, however.
• When giving consideration as to where an employment dispute might be litigated, employers must take into account where the employees spend most of their working time, where their working activities are organised and where they start and end their working day.
• The position may change when the UK leaves the EU, but this is uncertain.

For further information or advice on compliance, please contact Mark Stevens in our Employment Law team on 0117 314 5401.