Working Abroad: Precedence of the Law Chosen by the Parties Where There Is a Closer Connection

Edited by Francesca Tironi, Gianluigi Baroni, Luca Saglione and Geljarda Domi

In employment relationships involving international elements, the fact that an employee habitually performs the work in a particular country does not, in itself, entail the application of the mandatory provisions of that country’s legal system. In its judgment of 9 July 2026 in Case C-768/24, the Court of Justice of the European Union clarified that the law chosen by the parties may apply even where it affords the employee less favourable protection, provided that the circumstances as a whole show that the employment contract is more closely connected with the country whose law was chosen.

The Legal Framework

The judgment concerns the interpretation of Article 6 of the 1980 Rome Convention, which was applicable to the employment relationship ratione temporis. As regards individual employment contracts, the parties’ choice of applicable law cannot, as a general rule, have the effect of depriving the employee of the protection afforded by the mandatory provisions of the law that would apply in the absence of such choice.

In the absence of a choice of law, the applicable law is determined primarily by reference to the law of the country in which the employee habitually carries out their work and, alternatively, by the law of the country in which the place of business through which the employee was engaged is situated. The Convention, however, provides for an exception clause under which, where it appears from the circumstances as a whole that the contract is more closely connected with another country, the law of that country is to apply.

For contracts concluded from 17 December 2009 onwards, the Rome Convention was replaced by Regulation (EC) No. 593/2008 (“Rome I”), Article 8 of which provides for a similar mechanism for determining the law applicable to individual employment contracts.

The Case

The dispute concerned the dismissal of an employee who resided and habitually worked in France for a Swiss company under an employment contract governed by Swiss law. The dismissal was carried out in accordance with Swiss law, which, in the circumstances of the case, required neither a preliminary meeting nor the reasons for dismissal to be stated in the relevant notice, unlike French law.

The employee therefore sought to rely on the more favourable French mandatory provisions. The company, by contrast, argued that the employment relationship was more closely connected with Switzerland, relying, among other factors, on the payment of the employee’s remuneration in Swiss francs into a Swiss bank account, the employee’s affiliation with the Swiss social security system and the tax regime applicable to the employee.

The Principle Established by the Court

The Court of Justice clarified that the relevant rules are not intended to ensure that the employee benefits from the application of the most favourable law, but rather to identify the legal system with which the contract is most closely connected. Accordingly, where such a connection exists with the country whose law has been chosen by the parties, the court must apply that law, even where the law of the country in which the employee habitually carries out their work contains more favourable mandatory provisions.

Criteria for Determining the “Closer Connection”

Determining the “closer connection” requires an overall assessment of the objective factors characterising the employment relationship. According to the Court, this assessment cannot be reduced to a mere quantitative comparison of the factors connecting the relationship with the various legal systems concerned. Rather, the relevance and significance of each factor must be assessed in light of the actual manner in which the employment relationship is performed.

For these purposes, particular relevance is attached to: (i) the country in which the employee fulfils tax obligations relating to employment income; (ii) the country in which the employee is affiliated with the social security system and pension, health and invalidity schemes; and (iii) the criteria used to determine remuneration and other terms and conditions of employment.

The contractual choice of the applicable law does not, in itself, constitute an independent criterion for establishing the closer connection. However, objective factors arising, in the actual performance of the employment relationship, from the application of the law chosen by the parties may be taken into account.

Finally, the Court emphasised the need to ascertain whether the factors relied upon to determine the closer connection were actually agreed between the parties or were instead determined unilaterally by the employer, so as to prevent the employer from artificially influencing the identification of the legal system with which the employment relationship has the most significant connection.

Practical Implications for Businesses

The judgment is particularly relevant for businesses managing employment relationships involving international elements, particularly employees who permanently carry out their work abroad, international mobility arrangements and cross-border remote-working arrangements.

In this context, a choice-of-law clause in an employment contract cannot be regarded as a merely formal provision, nor can it be assessed independently of the actual manner in which the employment relationship is performed. Employers should therefore verify the consistency between the law contractually chosen and the actual performance of the employment relationship, taking into account, as part of an overall assessment, the place where the employee habitually carries out their work, as well as other factors capable of demonstrating the relationship’s connection with the legal systems concerned, such as the applicable tax and social security regimes, the methods used to determine and pay remuneration and the organisational structure within which the employee actually operates.

Particular attention should also be paid to changes occurring during the course of the employment relationship. An employee’s permanent relocation to another country, as well as a structural change in the location from which the work is habitually performed, may affect the factors relevant to determining the applicable law and the legal system with which the employment relationship is most closely connected.

From an operational perspective, businesses should therefore monitor over time the consistency between the contractual arrangements originally established and the actual manner in which the employment relationship is performed, particularly where changes to the latter become permanent. Such review also allows businesses to promptly identify any mandatory provisions protecting employees that may apply and that cannot be excluded merely by virtue of a contractual choice of a different governing law.