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Employers with employees living (just) across the border beware! Circumventing procedural rules on competent court leads to substantial fair compensation

The EU Brussels I-bis regulation designates the competent court in international situations. It contains specific procedural rules for employment disputes. These are fixed procedural rules, from which employer and employee may deviate only by mutual agreement. That an employer may not deliberately circumvent the procedural rules – to the detriment of the employee – and that, if it does so anyway, it risks high costs, is shown by a recent ruling by the Rotterdam court: the employer must pay the employee a fair compensation of €470,000 gross due to deliberately circumventing the law.

Competent court if proceedings are started by employer

In an international employment dispute initiated by the employer, only the court of the employee’s place of residence has jurisdiction to rule.

As such, if an employee lives across the border (in the EU), the employer must apply to the court of the employee’s domicile outside of the Netherlands. This may therefore result in a Dutch employer having to turn to another EU court to decide on an employment dispute (under Dutch law, if this applies).

Competent court in proceedings started by employee

In the opposite case, where an employee starts proceedings against his employer, the employee has more options. He can apply to:

(a) the court in the employer’s place of business,

(b) the court in the place where he habitually works or lastly worked,

or, if there is not one country where he habitually works or lastly worked, (c) the court of the place of business of the employer who hired him.

As such, if the employer is established in the Netherlands and the employee habitually works or has worked in that place, the employee – despite living in another EU country – will have to go to the Dutch court to decide on the labour dispute.

These is fixed procedural law, from which employer and employee may deviate only by mutual agreement and after the dispute arises.

That an employer may not deliberately, unilaterally and to the detriment of the employee circumvent procedural law and that, if it does so anyway, it risks high costs, is shown by a ruling by the Rotterdam court.

Employer does know procedural rules: (draft) request for dissolution in Belgium

The ruling concerns an employer based in Rotterdam and an employee residing in Belgium. Dutch law was declared applicable to the employment agreement. At some point, the employer informs the employee that his position will be taken over permanently and that it will seek termination of the employment agreement.

Initially, the employer follows procedural law: it draws up a (draft) request to terminate the employment agreement. It intends to submit it to the Labour Court in Antwerp (the court of the employee’s place of residence).

Instead of proceedings in Belgium, employer terminates employment agreement

Then the employer (apparently) finds out that the Belgian court route would not be workable given the expected lead time. Employer therefore requests employee to cooperate with proceedings in the Dutch court. The employee does not agree.

Then the employer again changes its strategy: it does not submit the dissolution request to Labour Court in Antwerp, but unilaterally terminates the employment agreement by giving notice, without the employee’s consent.

Employee has to go to the Rotterdam court

The employee wants to claim various compensations (including transition compensation, compensation for unfair dismissal and payment of contractual bonus). He is then forced to start proceedings in the Dutch court, as the employer is based in the Netherlands (please see above). Thus, the parties still (as per the employers wish) end up in the Rotterdam court.

By improperly getting its way, employer acts seriously culpable

The court rules that the employer had acted seriously culpable by “improperly” getting its way (to have the dispute assessed by a Dutch court). The court takes into account, among other things, that it was the employer itself that did not want to go to the Belgian courts (for unclear reasons). There is no reason to suppose that the employer would have wanted to do so in due course, because it “apparently deliberately chose to unilaterally terminate the employment agreement without judicial intervention, with the result that it was up to [employee] to submit the dispute to the Dutch court.” Incidentally, there is also no indication that the employment agreement would ultimately have been dissolved by the Belgian court (there is even no sufficient ground for dismissal).

Fair compensation of €470,000 gross

As a result, the employee is entitled to fair compensation, which the court sets at €470,000 gross. While the statutory transition compensation amounts to around €32,000 gross. In the calculation of the fair compensation, the court considers, among other things, that the employee suffered financial damage, such as income loss and pension damage. In addition, the employee’s job prospects are uncertain (he is 61 years old). Moreover, this fair compensation means to alert the employer to the need to adjust its conduct.

Employers, take note!

From an economical point of view, we can understand that an employer would want litigation to take place in the country where it is itself domiciled. However, the procedural rules are clear, and this ruling makes it clear that circumventing the procedural rules can be severely punished. Nevertheless, options do remain.

Please note that the procedural rules in a dismissal procedure via the UWV (based on long-term illness or business economical grounds) are different, so the above applies to when a dispute is taken to a court.

Do you have employees who live across the border? We are happy to discuss this with you.

Renske Van Herpen

Published On: 15 March 2024

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