¹ Consolidated Version of the Treaty on the Functioning of the European Union [2008] OJ C115/47.

² The European Commission has recognised the importance of these new forms of labour mobility (particularly in the construction sector and public works). ‘Thus, a new intra-Community mobility of workers within their jobs, different from the traditional mobility in search for new employment, is increasingly growing within the European Community’: Explanatory Memorandum to the Proposal for a Council Directive concerning the posting of workers in the framework of the provision of services, COM (91) 230 final, para 1: see further Bercusson, B, European Labour Law 2nd edn (Cambridge, Cambridge University Press, 2009) 356 CrossRefGoogle Scholar and Barnard, C, EC Employment Law 3rd edn (Oxford, Oxford University Press, 2006) 275 Google Scholar.

³ This article will concentrate on (though the legal interests of posted workers are not limited to) the sort of rights that in English domestic law are asserted through proceedings in the employment tribunal but it is international jurisdiction, ie which country’s courts can hear the case, which is important for the purposes of private international law.

⁴ See further Merrett, L, ‘The Extra-Territorial Reach of Employment Legislation’ (2010) Industrial Law Journal 355 Google Scholar.

⁵ European Parliament and Council Dir 96/71/EC concerning the posting of workers in the framework of the provision of services.

⁶ Reg (EC) No 593/2008 on the law applicable to contractual obligations, which replaces the Rome Convention (implemented into English law by the Contracts (Applicable Law) Act 1990) for contracts entered into after 17 December 2009.

⁷ I will focus in this article on claims brought by employees against their employers rather than the other way round. Claims by employers, such as a claim to enforce a restrictive covenant, are less likely to arise in posted worker cases.

⁸ The PWD, for example defines ‘posted workers’ as being workers who, for a limited period, carry out work in the territory of a Member State other than the State in which they normally work (Art 2(1)).

⁹ In the Rome Convention (which preceded the Regulation) both were referred to as ‘mandatory rules’. As will be described, in the RIR the distinction is clearer because the two forms of mandatory rules are referred to in different ways.

¹⁰ Although in rare cases it might be possible to argue that applying the applicable law is contrary to English public policy, eg, if there is no protection for whistle-blowers under Latvian law: see further Barnard, C, ‘The UK and Posted Workers: The Effect of Commission v Luxembourg on the Territorial Application of British Labour Law’ (2009) Industrial Law Journal 122, 130Google Scholar.

¹¹ Art 8(1) RIR.

¹² Like ERA 1996, the Equal Pay Act 1970 expressly provided that for the purposes of the Act it was immaterial whether the law which is the law applicable to the contract is the law of any part of the United Kingdom or not (s 1(11) as amended by Contracts Applicable Law Act 1990, s 5 and sch 4). The position under the Equality Act 2010 is considered below.

¹³ Some Acts, eg, Working Time Regulations 1998 (Reg 35) and Equality Act 2010 (s 144) have a provision against contracting out which indicate that they may well be non-excludable rules, but not necessarily overriding rules.

¹⁴ See Morris, Dicey and Collins, The Conflict of Laws 14th edn (London, Sweet & Maxwell, 2006) para 33-098Google Scholar (in relation to Sex Discrimination Act 1975): Although there is no express provision to this effect it would seem axiomatic that these Acts will be applied irrespective of the law applicable to the contract; and para 33-102 in relation to the National Minimum Wage Act 1998: ‘Although the Act does not explicitly state that its provisions apply irrespective of the law applicable to the contract of employment, it would seem clear that it has this effect, with the consequence that the relevant provisions of the Act will be regarded as mandatory for the purposes of Arts 6 and 7(2) of RC.’ See also R Plender and Wilderspin, M, The European Private International Law of Obligations 3rd edn (London, Sweet & Maxwell, 2009) para 11-065Google Scholar ‘some statutes do not state to which contracts they apply but may nevertheless implicitly apply to contracts governed by foreign laws. Such statutes also often specify their territorial application’. Examples of such statutes in the UK are said to include Sex Discrimination Act 1975 (plus other discrimination legislation) and the National Minimum Wage Act 1998.

¹⁵ This section was abolished by Employment Relations Act 1999, s 32(3).

¹⁶ Section 196(1)(a) and (2)(f).

¹⁷ Particularly, Carver v Saudi Arabian Airlines [1999] ICR 991. Before the repeal of s 196 the relevant Minister singled out the case of Mrs Carver in stating that those who had worked for some years in the UK might be prevented from relying on the protection of the Act. See Jackson v Ghost Ltd [2003] IRLR 824, para 39 referred to under the principle in Pepper v Hart [1993] AC 593.

¹⁸ In the case of employment rights which give effect to EU directives, any express or implied territorial limitation which might otherwise be deemed appropriate must be modified to ensure that any employee working in the EU can claim, Bleuse v MBT Transport [2008] ICR 488 and Ministry of Defence v Wallis EAT/0546/08/ZT.

¹⁹ Lawson v Serco [2006] UKHL 3, [2006] ICR 250.

²⁰ The main provisions of which came into force on 1 October 2010.

²¹ The Government’s Explanatory Notices to the Bill for the Act provide: ‘As far as territorial application is concerned, in relation to Part 5 (work) and following the precedent of the Employment Rights Act 1996, the Bill leaves it to tribunals to determine whether the law applies, depending on for example the connection between the employment relationship and Great Britain.’

²² In this case the posting of workers by the employer is ancillary to the provision of services. The PWD (Art 1(3)(c)) also covers situations where an employment undertaking hires out a worker to a user in another Member State. In the latter situation, the movement of workers to another Member State is the very purpose of the transnational provision of services: Vicoplus v Minister van Sociale Zahen en Werkgelegenheid Case C-307/09 and Joined Cases C-308/09 and C-309/09, para 46.

²³ Explanatory Memorandum to the Proposal for a Council Directive concerning the post ing of workers in the framework of the provision of services, COM (91) 230 final, para 1.

²⁴ Rush Portuguesa v Office Nationale d’Immigration Case C-113/89 [1990] ECR I-1417.

²⁵ These cases are reviewed in detail in Davies, P, ‘The Posted Workers Directive and the EC Treaty’ (2002) 31 Industrial Law Journal 298 Google Scholar. Cf the approach taken in the US contrasted in Barnard, C, ‘Restricting Restrictions: Lessons for the EU from the US?’ (2009) Cambridge Law Journal 575 CrossRefGoogle Scholar.

²⁶ See Recitals 13 and 14 and Summary by AG General Bot in Rüffert v Land Neidersachsen Case C-346/06 [2008] IRLR 467: AG12: citing the communication from the Commission to the Council of 25 July 2003 COM (2003) 458 final, point 2.3.1.1. See also Advocate General Trstenjak Commission v Luxembourg Case C-319/06 [2008] ECR I4323, para 33.

²⁷ The protection can be set out in law, regulation or administrative provision; but PWD also extends to protection provided for by collective agreements which have been declared universally applicable within the meaning of Art 3(8) PWD (see Art 3(1) PWD).

²⁸ Art 3(7) of the PWD confirms this. See further Plender and Wilderspin above n 14, para 11-078.

²⁹ Bleuse v MBT Transport [2008] ICR 488.

³⁰ Indeed any implied territorial limit in relation to rights based on EU legislation is no longer legitimate following Bleuse v MBT Transport [2008] ICR 488.

³¹ Case 341/05 Laval un Partneri Ltd v Svenska Byggnadsarbetareförbundet [2008] IRLR 160. This case built on the principles established in International Transport Workers’ Federation and Finnish Seamen’s Union v Viking Line ABP Case C-438/05 [2008] IRLR 14 which dealt with freedom of establishment and is therefore less directly relevant for the purposes of this article.

³² Barnard, C, ‘Viking and Laval: An Introduction’ (2007–2008) 10 Cambridge Yearbook of European Legal Studies 463, 465CrossRefGoogle Scholar.

³³ It was also argued, successfully, that the Swedish laws on collective agreements were discriminatory.

³⁴ Advocate General Mengozzi para 149. Furthermore, the unions were not entitled to rely on the public policy exception in Art 3(10) because the agreement was established through negotiation between management and labour.

³⁵ Case C-346/06 Rüffert v Land Neidersachsen [2008] IRLR 467.

³⁶ Para 33.

³⁷ Of course since the whole process of collective bargaining is reinforced by collective action in practice, it might be hard to say when an agreement is reached of an employers own accord: see Davies, ACL ‘One Step Forward, Two Steps Back? The Viking and Laval cases in the ECJ’ (2008) Industrial Law Journal 126 CrossRefGoogle Scholar.

³⁸ Case C-319/06, above n 26.

³⁹ Para 29, citing the earlier decision in Case 369/96 Arblade [1999] ECR 8453 which, as will be seen, also provides the basis for the express definition of overriding mandatory rules in Art 9(1) of RIR.

⁴⁰ Para 50.

⁴¹ Para 51.

⁴² Technically, Laval suggests that reliance on Art 3(10) would have to be express. ‘It is not at all clear that general assertions made by the UK to the Commission and on the relevant websites constitute a sufficiently positive step to constitute “national authorities having had recourse to Article 3(10)”‘: see Barnard above n 10, 127.

⁴³ It has been said that: ‘It is difficult to imagine the host-state labour rules typically at stake in posted worker cases falling under such a definition’, Kilpatrick, C, ‘Laval’s Regulatory Conundrum: Collective Standard-setting and the Court’s New Approach to Posted Workers’ (2009) European Law Review 844, 849Google Scholar.

⁴⁴ See Knofel, S, ‘Mandatory Rules and Choice of Law: A Comparative Approach to Article 7(2) of the Rome Convention’ [1999] Journal of Business Law 239 Google Scholar and Plender and Wilderspin, above n 14, para 12-010 ff.

⁴⁵ See Barnard, above n 10.

⁴⁶ Cf AG Bot who said the measures secured a benefit for those workers and that was enough.

⁴⁷ Para 59.

⁴⁸ Cf Duncombe v SOS for Children [2010] ICR 815. The Court of Appeal, applying the principle in Bleuse v MBT Transport [2008] ICR 488, held that there could be no territorial limit to rights based on Fixed-Term Employment (Less Favourable Treatment) Regulations 2002 which implemented the EU Dir 1999/70/EC of 28 June 1999 concerning the framework agreement on fixed-term work concluded by ETUC, UNICE and CEEP. However, the Directive laid down only minimum criteria. The decision of the Court of Appeal seems to give extra territorial effect to UK rights which might not be available in the Member State where the employee worked. On appeal, [2011] UKSC 14, the Supreme Court held that there was no breach of the Regulations and accordingly did not need to determine the territorial limits, if any, of the Regulations.

⁴⁹ Davies, P, ‘The Posted Workers Directive and the EC Treaty’ (2002) 31 Industrial Law Journal 298, 302CrossRefGoogle Scholar.

⁵⁰ For example, Finalarte Case C-49/98 [2001] ECR I-7831 and Portugaia Case C-164/99 [2002] ECR I-787 both concerned a German law whose aim was, according to the accompanying explanatory memorandum, to protect the German construction industry from competition in the European internal market ie social dumping. The expressed aim of the legislation seemed to be wholly economic. However, the Court said that while the political debates might indicate the intention of the legislature it was not conclusive. It was for the national court to check whether, viewed objectively, the rules in fact conferred a genuine benefit on the workers which significantly added to their social protection. See further Barnard, above n 2, 269.

⁵¹ Barnard, above n 10, 129: ie the doctrine of pre-emption.

⁵² Council Reg (EC) No 44/2001 of 22 December 2000 on jurisdiction and the recognition and enforcement of judgments in civil and commercial cases. The BIR, which came into force on 1 March 2002, replaced the Brussels Convention which was first negotiated between the original six Member States and to which new Member States acceded on entry into the Union.

⁵³ A modified version of the Brussels regime applies to allocate jurisdiction within the UK, and also between European States and the EFTA states: Iceland, Norway and Switzerland (the Lugano Convention).

⁵⁴ Art 1(1). The fact that labour law has some public policy aspects (and indeed in some countries is not regarded as part of civil law) does not in itself take employment matters outside the scope of the Regulation. See the Schlosser Report (on the accession of the UK to the Brussels Convention) 1979 OJ C59/71, para 23: ‘the term “civil law” also includes certain important special subjects which are not public law, especially, for example, parts of labour law’.

⁵⁵ Art 4. The rules also engage if there is an agreement that the courts of a Member State have jurisdiction under Art 23, or in certain situations involving exclusive jurisdiction under Art 22 which are not relevant in employment cases.

⁵⁶ It should be noted that there is an extended definition of domicile in employment cases because Art 18(2) provides that an employer who is not domiciled in a Member State will be treated as being so if it has a branch, agency or other establishment in a Member State and the dispute arises out of the operations of that branch.

⁵⁷ Art 18(1) also makes it clear that employees can rely on the special head of jurisdiction set out in Art 5(5), ie an employee can sue in the courts for the place where the defendant has a branch, agency or other establishment in relation to disputes arising out of the operations of that branch. However, this will be of no assistance unless the employer has a branch in England and the employee was recruited or works through that branch.

⁵⁸ The rules apply to ‘matters relating to an individual contract of employment’. Complex issues can arise. For example, claims for unfair dismissal and discrimination will probably fall within the scope of s 5, even though they are not contractual claims, because an essential element of the claim is the existence of the employment contract (see Arcado Sprl v Haviland Case 9/87 [1988] ECR 1539 and Agnew v Lansförsakringsbolagens [2001] 1 AC 223). It is also unclear whether ‘contract of employment’ is to be given an autonomous Union meaning, and, if so, whether it will be broad enough to cover the wider category of ‘workers’ now given certain rights in English law, for example, under the Working Time Regulations 1998 and the National Minimum Wage Act 1998.

⁵⁹ The Jenard Report (on the Rome Convention, 1979 OJ C59/1), noted that it is ‘desirable that disputes over contracts of employment should as far as possible be brought before the courts of the State whose law governs the contract’. See also Ivenel v Schwab Case 133/81 [1982] ECR 1891, para 15 and Shenavai v Kresicher Case 266/85 [1987] ECR 239: employment contracts are linked to the place where activities are pursued, which determines the application of mandatory rules and collective agreements, para 16.

⁶⁰ For example, s 111 ERA 1996 in relation to unfair dismissal.

⁶¹ It would also cover mandatory rules of the otherwise applicable law relied on under Art 3(7). The advantage of this interpretation is that it avoids splitting the jurisdiction with different courts having to hear different claims: see Kidner, R, ‘Jurisdiction in European Contracts of Employment’ (1998) Industrial Law Journal 103, 114CrossRefGoogle Scholar.

⁶² See, eg, Davies, above n 37; Hinarejos, A, ‘Laval and Viking: The Right to Collective Action Versus EU Fundamental Freedoms’ (2008) Human Rights Law Review 714 CrossRefGoogle Scholar; Deakin, S, ‘Regulatory Competition after Laval ’ (2007–2008) CYELS 581, 583 ffGoogle Scholar; Barnard, above n 32; Bercusson, above n 2, 446 commenting on the decision of the Court of Justice in Rüffert: ‘It came as a considerable shock when the Court of Justice took an entirely different view: the Court of Justice subordinated the policy of allowing social clauses in public contracts to protect collective agreements to the priority of eliminating obstacles to free movement.’

⁶³ See generally, Barnard, C, The Substantive Law of the EU: The Four Freedoms 3rd edn (Oxford, Oxford University Press, 2010) Ch 11Google Scholar. See Advocate General Mengozzi in Laval para 249 ‘as we know, the Court has accepted that the overriding reasons relating to the public interest that are capable of justifying a restriction on the freedom to provide services include both the protection of workers and the fight against social dumping’.

⁶⁴ Case C-369/96, above n 39.

⁶⁵ Para 30.

⁶⁶ Para 31.

⁶⁷ Para 36.

⁶⁸ See generally, Bonomi, A, ‘Overriding Mandatory Provisions in RIR’ (2008) Vol X Yearbook of Private International Law 285 Google Scholar.

⁶⁹ See the Commission Green Paper on turning the Rome Convention into a Regulation Brussels, 14 January 2003 COM (2002) 654.

⁷⁰ Recital 37 RIR acknowledges both purposes: ‘Considerations of public interest justify giving the courts of the Member States the possibility, in exceptional circumstances, of applying exceptions based on public policy and overriding mandatory provisions. The concept of “overriding mandatory provisions” should be distinguished from the expression “provisions which cannot be derogated from by agreement” and should be construed more restrictively.’

⁷¹ Case C-381/98 Ingmar GB Ltd v Eaton Leonard Technologies Inc [2008] ECR I 9305.

⁷² Para 2.3.8.3.

⁷³ Brussels, 15 December 2005 COM(2005) 650.

⁷⁴ See further Fentiman, R, International Commercial Litigation (Oxford, Oxford University Press, 2010) para 3.52Google Scholar: ‘Article 9(1) suggests that whether a given rule is internationally mandatory is a matter for the law of the country whose rule is in issue… But it also supplies a bench-mark for determining when a given rule has such status for the purposes of the Regulation.’ See also Verhagen, HE ‘The tension between party autonomy and European Union law: some observations on Ingmar GB Ltd v Leonard Technologies Inc ’ (2002) International and Comparative Law Quarterly 135, 143CrossRefGoogle Scholar: ‘It is submitted that the scope of Article 7 RC should, in principle, be confined to rules of a “public law” nature, aiming to protect important social, economic, cultural or other state interests’. See also Bonomi, above n 68, 289 noting that the introduction of the definition should ‘restrain the temptation of the national courts to attribute too easily the nature of overriding mandatory provisions to all mandatory norms and thereby prevent too many derogations of the conflicts rules of the Regulation by means of the mechanism of Article 9’.

⁷⁵ Cf Plender and Wilderspin, above n 14, para 12-004. It is submitted that the most appropriate interpretation is that when a rule of the forum expressly states that it is to apply irrespective of the law governing the contract, that express statement would act as strong prima facie evidence that respect for that rule was indeed regarded by the country as crucial to its public interests.

⁷⁶ See McGee, A, The Single Market in Insurance, Breaking Down the Barriers (European Business Law Library, Dartmouth Pub Co, 1998) 15 Google Scholar.

⁷⁷ See Lando, O and Neilsen, P ‘The Rome I Regulation’ (2008) Common Market Law Review 1687, 1708Google Scholar. When commenting on the application of mandatory rules under Art 6, the authors note that parts of the business community, in particular, small business and e-commerce sectors, argued that the commission proposals would require businesses to examine the entire law of contracts in every country where it supplied goods and services and that this would be an impediment to the proper functioning of the internal market.

⁷⁸ A McGee, The Single Market in Insurance, Breaking Down the Barriers, n 78, 79: ‘there would be considerable advantages from the point of view of developing the internal market if the insurance contract law of Member States could be wholly or at least substantially harmonized’. See further, Weber-Rey, D, ‘Harmonisation of European Insurance Contract Law’, in Vogenauer, S and Weatherill, S (eds), The Harmonisation of European Contract Law (Oxford, Hart Publishing, 2006) Ch 12, 209 Google Scholar: insurance contract law is still shaped by different mandatory and semi-mandatory provisions of national insurance contract law, which are likely to create barriers up to the final completion of the internal market. Ibid, 233: the differing insurance contract laws are substantial barriers to cross-border transactions.

⁷⁹ See Merkin, R and Rodger, A, EC Insurance Law (London, Longman, 1997 Google Scholar) where it is noted that, for example, Belgium Loi du 25.6.92 sur le contract d’assurance terreste is arguably not properly classed as mandatory.

⁸⁰ Para 29.

⁸¹ Para 50. The Court of Justice also noted that the Commission’s Communication on the implementation of the Directive (COM(2003) 458, 13) noted that ‘public policy provisions’ refers to imperative requirements of public interest, but then gives as an example: ‘These may include prohibition of forced labour’.

⁸² Case 30/77 [1977] ECR 1999. See Barnard, above n 10, 129.

⁸³ Para 35.

⁸⁴ It has been noted (Barnard, above n 10, 128) that Luxembourg said that Art 7(2) of the RC and Art 3(10) PWD were coextensive. The Court effectively agreed with Luxembourg’s analysis but reached the opposite conclusion when applying these provisions.

⁸⁵ In both cases, measures aimed at protecting employees or preventing social dumping might provide grounds for an overriding public interest but the measures must also be necessary.

⁸⁶ Provisions on whistle-blowing might be a possible example: see Barnard, above n 10, 130.

⁸⁷ See Mackinnon, J, ‘Dismissal Protection in a Global Market: Lessons to be Learnt from Serco Ltd v Lawson ’ (2009) Industrial Law Journal 101 CrossRefGoogle Scholar: although she argues that the rules should be overriding.