Determinants in matters regulated by individual employment law

Article 6 of the Rome Convention governs conflicts of norms of substantive labour law. A separate conflict of law regulation relating to labour relations is the justification of needing to ensure special protection of the worker as the “weaker party” in the relationship law. The Commission preparing the draft of the Rome Convention perceived a need for a separate regulation of the conflict rules used in international private law work to resolve conflicts in a contract of employment with an international element.

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This necessity is caused by the different interests of the parties in employment

relationships. The Commission sought to retain in employment relations the fundamental principle of freedom of parties to choose the national system of substantive law. It

perceived the need to regulate this principle in a way that ensures the protection of the workers’ entitlements. The Commission strived to create a privileged category of contractors in contractual relations. [footnote 125 ] It was aware that in addition to the employee, the “weaker parties” in contractual relations are consumers, as contractors concluded trade agreements with businesses and entities conducting commercial

activities. The distinct nature of labour relations and trade relations hindered the uniform regulations on how to resolve a conflict of national systems of substantive law used to shape individual employment contracts and consumer contracts. The Commission had the

task of adapting a separate regulation of a conflict of substantive labour law to the general principle of freedom of choice of law and a separate regulation adopted with a view to resolving a conflict of commercial law in contracts entered into for the purpose of receiving goods or services by individuals for payments rendered, i.e. consumers who cannot be considered to be related to professional activity or to businesses receiving such goods and services and contracts entered into for financing such activities. These agreements have been named in Article 5, paragraph 1 of the Rome Convention as consumer contracts.

[footnote 126 ] These requirements led to changes in the editorial and structural conflict of law rules used to resolve conflicts between contracts of employment with an international element. In the first version of the draft law rules of the Rome Convention in the field of international labour law are contained in Article 5. In another, the final version of the draft law rules relating to labour relations are exclusive and regulated by a separate provision.

This is currently Article 6 of the Rome Convention. Lawyers involved in private

international law work are not unanimous in the interpretation of Article 6, paragraph 1 of this Convention. Some believe that Article 3, paragraph 1 of the Convention limits the principle of freedom of parties to individual contracts of employment with an international element to choose the applicable national substantive law system. [footnote 127 ] Others are of the opinion that this freedom has been preserved and, in the case of not choosing an appropriate system of substantive law Article 6, paragraph 2, which reproduces the structure used in Article 4, paragraph 2 of this Convention and introduces a presumption of law that allows switching point determining the appropriate national system of substantive labour law in case of failure to be chosen by the individual employment contract. [footnote 128]

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In this dispute it is difficult to favour one party’s position over the other because none of them invoke the arguments to support their own stance. According to the report prepared by M. Giuliano and P. Lagarde, Article 6, paragraph 1 of the Convention was introduced in order to limit the freedom of parties to individual contracts of employment with an

international element to choose the applicable substantive national labour law system that could be applied to regulate the content of this contract and would be applied by courts recognising the contested case of claims arising from such a contract of employment.

[footnote 129 ] Detailed analysis of the content provision, Article 6, paragraph 1 of this Convention does not provide any arguments to establish the relevance of the hypothesis presented above. In my opinion, Article 6, paragraph 1 affirms the principle of freedom of

choice of law. It does establish however that the choice may not lead to depriving the employee of protection afforded by the mandatory provisions of labour law that would apply to individual employment contract with a foreign element on the basis of Article 6, paragraph 2 of the Rome Convention, where the parties to that agreement would not benefit from the right choice of a national system of substantive labour law. Article 6, paragraphs 1 and 2 of the Rome Convention is a conflict rule, which satisfies the functions in labour relations carried out by the provisions of Article 3, paragraph 1 and Article 7, paragraph 1 of the Convention, the provisions applicable to other contractual relations arising from contracts involving an international element. Provisions of a national system of substantive labour law that would apply to individual employment contract with an

international element, to ensure stronger legal protection from the standards chosen by the parties shall have precedence over the laws freely chosen. Similarity of the conflict rules of substantive labour law used in Article 6, paragraph 1 to the legal mechanism formulated in Article 7, paragraph 1 of the Convention is expressed in the automatic replacement of the appropriate laws with necessary laws – rules evoking their own application. In the case of regulations formulated in Article 6, paragraph 1 of the Convention, laws selected by the parties to the individual employment contract, remain at the will of the international legislature, and therefore ex lege are replaced by the mandatory rules of the national system of labour law that applies in the country where the employee usually carries out work or in the country of the workplace employing the worker. According to the legal concept expressed in Article 7, paragraph 1 of this Convention, the standards deemed mandatory by the country’s authorities, whose rules would be applied as appropriate to regulate the contractual relationship with an international element because of the close relationship with the facts of the case law of that country, may replace both the rules chosen by the parties and the provisions set out using a determinant listed in the private international law. By contrast, Article 6, paragraph 1 of the Convention permits only the substitution of some of the mandatory laws, which would be indicated by one of the two determinants mentioned in Article 6, paragraph 2 of the Convention.

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This difference, as well as the use of the different basis for the comparison of the two provisions (Article 6, paragraph 2 indicated by the determinant, Article 7, paragraph 1, given the close connection with the case law of a specific country) mean that despite a similar function, Article 7 of the Convention shall also apply to labour relations with a foreign element. This is developed in the next section of this chapter.

Partially those lawyers claiming that to some extent the principle of freedom of choice of the proper national system of substantive law has been maintained are right. In the event of absence of choice in accordance with Article 3, paragraph 1 of the Rome Convention for the individual contracts of employment with an international element, the parties may apply the provisions of labour law of the country in which the employee usually carries out his work even when he has been posted to work in another country (Article 6, paragraph 2, point “a”), or the labour laws in force in the country where the workplace is employing the worker (Article 6, paragraph 2, point “b”). The last case applies in a situation where the employee does not work in the one and the same country. I write about “partially right”

because unlike Article 4, paragraph 2 in Article 6, paragraph 2 of the Rome Convention does not draw any legal presumptions. There was no such need, for in Article 6, paragraph 1 of the Convention no general clauses were introduced or non-definable phrases, which would have to be supplemented by defining laws. An additional argument pointing to a lack of legal presumptions that prevent the establishment of treatment directives in Article 6, paragraph 2 of the Convention in a similar manner in which they were treated as

presumption laid down in Article 4, paragraph 2 of this Convention is the wording

contained in Article 6, paragraph 2, whereby the determinants established to indicate the relevant national regime of substantive labour law applies to individual contracts of employment with an international element “notwithstanding Article 4, in the absence of choice in accordance with Article 3.” The Directives listed in Article 6, paragraph 2 of this Convention shall have the status of legal presumptions, because they can effectively be revoked on the basis of Article 6, paragraph 3 of the Convention. From all the

circumstances of the case it is possible to conclude that the individual contract of

employment with an international element is more closely connected with the labour law of another country than the one in which the employee usually carries out his work or the laws of the country in which the company is located employing that worker. I share the sentiment expressed by the authors of the report – commentary on the Rome Convention, the legal arrangements used in Article 6, paragraphs 1 and 2 are significantly different to the legal presumptions referred to in Article 4, paragraph 2 of this Convention. [footnote 130] In addition to the previously submitted comments, it should be noted that Article 6, paragraph 2 of the Rome Convention is applicable only in those cases where there is a need to resolve a conflict of substantive labour law in individual employment relations with an international element, which form the basis of employment of an employee in any country.

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These provisions do not apply to employment in areas, which are not regulated by labour law of any country, including, for example, drilling platforms located outside the continental shelf.

Article 6 of the Rome Convention applies only to individual employment contracts.

Because the Rome Convention governs conflicts of the substantive rules that are

applicable to the obligations arising from contractual relations, the question arises whether the scope of this provision, Article 6 of the Convention, differs from the scope of its other provisions that are used to resolve conflicts arising from contractual relations on the basis of other agreements than a contract. Unusual and different from the standards adopted by other provisions of the Rome Convention a solution applicable to individual contracts of employment creates certain difficulties for lawyers involved in the conflict rules laid down in the rules of private international labour law to resolve conflicts between individual

provisions of labour law, used to indicate the relevant provisions of national substantive law governing individual employment relationships, not only for collisions of individual employment contracts. In the literature on private international labour law these differences are either ignored or overlooked. The report-commentary to the Rome Convention

mentions this problem when applying the provision of Article 6, paragraph 2. M. Giuliano and P. Lagarde consider that the mandatory provisions, which would be appropriate if the individual work contracts involving an international element would not benefit from the rights guaranteed in Article 6, paragraph 1 of this Convention, are applicable not only to the matters covered by the contract of employment, but also issues of health and safety regulations governed by the national individual labour law of the Member States. It is clear that the doctrine of labour law does not allow you to place an equal sign between the terms “contract of employment” and “individual employment relationship.” An employment relationship is a legal bond, which arises under the contract of employment. So they are not identical concepts. Therefore, M. Giuliano and P. Lagarde’s arguments should be treated as erroneous, relating to provisions on collective bargaining agreements involving the social partners who have entered into such agreements above normatively. [footnote 131] With the exception of the United Kingdom, where collective agreements are not binding on employers in other EU Member States, collective bargaining agreements are classified as sources of employment law. The above authors are of the opinion that certain provisions of collective bargaining agreements take on the form of mandatory laws, which means workers who are beneficiaries of these provisions cannot be denied legal protection afforded by theses provisions in the event the parties to the individual contract of

employment select the substantive labour law of other country than the one in which the employee usually carries out his work or the country of the employing company.

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Arguments presented are based on a misunderstanding of the views of proving specific mandatory provisions of labour law. These are usually the laws laid down by labour law set by national authorities, rather than the standards negotiated by the social partners. Juris cogentis characteristic feature is the inevitability of sanctions established by the state legislature. The provisions of collective bargaining agreements and other agreements negotiated by the social partners are not protected by such sanctions. They cannot therefore be regarded as mandatory standards. As a rule, the laws established by the country and standards negotiated by the social partners are dependent on the basis of employee benefits such as those protected by labour laws. The provisions of collective bargaining agreements and other collective agreements cannot be less favourable to employees than universally applicable labour laws established by the state (labour codes).

This rule means that the social partners have the right to regulate in collective agreements and other normative powers regulated by the laws established by the state, provided that they deviate from generally applicable rules of employment law exclusively for the benefit of the employees. Any changes to the legal status of workers in minus shall be considered void, and do not have the desired legal consequences. The intention of the legislature is to generally replace the existing labour law. The principle of favouring the employee and the automatic application of rules of positive law of the state in place of the less favourable provisions for workers negotiated by the social partners, which are entered into collective bargaining agreements, shall be considered by Member States of the European Union, with few exceptions, as the basic canon of labour law. The exception to this rule, which I take as evidence of its functioning in the national systems of substantive labour law of the Member States of the European Union is found in Finland. Labour laws in this country are based on the standards established by the state and negotiated by the social partners.

State labour law standards set high standards, which are not mandatory in nature. Labour laws issued by the state allow social partners to derogate from the standards established by competent authorities and to negotiate provisions less favourable to employees. A precondition for making use of this power is involved in the negotiations carried out by an entity representing the interests of employers of the nationwide employers’ organisations.

These two are thus assurances to maintain the current standards established under the provisions of generally binding state labour law. The first one refers only to the party of

industrial relations, namely the employer. Finnish labour law deems valid and effective only those collective agreements and normative agreements replacing universally

applicable standards established by the state, which are detrimental to the worker, only if a signatory to the collective agreement or the normative agreement is a legislative

organization of employers. [footnote 132 ]

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The second assurance stems from the very process of representing the interests of workers by trade unions, negotiating collective bargaining agreements or other normative agreements. The specificity of the Finnish labour law involves establishing the social partners as guarantors of the state labour standards. As long as the “state” labour law has been superseded by the provisions of collective agreements or regulatory agreements, employers are obliged to observe them. In this obligation there is a duty to proceed in accordance with the generally applicable rules of labour law, even though such laws are not formally mandatory in nature.

Returning to the main discussion on the legal consequences of Article 6 of the Convention one must look to the opinion expressed in the report by M. Giulano and P. Lagarde, in which the authors write that the change in legal terminology, using the wording “individual employment contracts” instead of the term “employment relationship,” which appeared in the original version of this draft Convention does not matter, because the conflict rules of substantive law applies to all employment relationships regardless of whether the source of these relations are individual employment contracts. [footnote 133 ] I do not fully agree with this viewpoint. [footnote 134 ] The Rome Convention applies only to obligations based on agreements. In my opinion, you can accept the report’s opinion, provided that it relates to contractual obligations which the parties have made whilst breaching the formal legal requirements prescribed by national labour law in matters relating to confirmation of an employment contract. As I mentioned before, an agreement in principle shall be deemed valid and effective despite the failure to meet the formal requirements. Therefore, the allegation contained in the report should be understood as referring to the validity and effectiveness of obligations in labour relations, which can arise only from individual job agreements. These objections to the application of conflict rules governed by the Convention to individual employment relationships, which should be established on the basis of a contract of employment, although part of the legal relations of such an

agreement is not concluded. Writing about the usefulness of Article 6 of the Convention, despite the fact that the above provision clearly shows that it applies to individual contracts

of employment, the report’s authors had in mind primarily the so-called “real” relationships (de facto employment relationships). [footnote 135 ] The above definition is only a historical connotation. It was used for the determination of labour relations under which the legal relationship was entered into by allowing the employee to perform work.

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Allowing employers to involve workers in a particular part of the work team is today regarded as an implied act establishing a labour relationship agreement. Article 6 of the Rome Convention is thus applicable to solve the conflict of the substantive labour law relations in the case of obligatory work relationships for which its legal basis is the established individual contract of employment, regardless in what form this arrangement has been concluded. [footnote 136]

The authors of the report-commentary on the Rome Convention, express that Article 6 does not apply to collective bargaining agreements. They also consider that the

submission of the individual employment contract with an international element to the provisions of labour law of another state may not exert influence on the powers of trade union organization representing the interests of workers employed under these contracts.

[footnote 137] I share some of the views expressed. I agree with the authors of the report that the subject of legal regulation as defined in the Convention are only individual

employment contracts involving a foreign element. These agreements may only be

employment contracts involving a foreign element. These agreements may only be