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27.092021

European Court of Justice: minimum wages among mandatory clauses

In the European Court of Justice’s 15 July 2021 ruling on two separate proceedings, it has observed that the rules concerning the country’s minimum wage by which the posted worker habitually carried out their activities could not be derogated from by agreement.

Case C152/20

Two workers sued their employer before the relevant Romanian court to pay the difference between their wages and the minimum wages. In their view, they were entitled to the minimum wages under the Italian legislation set out in the collective sector agreement.

The workers considered that the Italian legislation on the minimum wage was applicable to them under Article 8 of the “Roma I” Regulation. Although the contracts were stipulated in Romania, they carried out their duties in Italy. They argued that the place from which they carried out their missions, received instructions, and returned was Italy, where most of the transport activities were carried out.

In objecting, the employer observed that:

  • the two employees worked on lorries registered in Romania and based on transport licences issued under applicable Romanian legislation; and
  • the communication of instructions and organisation on the activity carried out took place in Romania.

Case C218/20

The main proceedings in Case C-218/20 concern the law applicable to the remuneration of a Romanian lorry driver employed by a Romanian company who worked exclusively in Germany.

Two clauses were attached to the employment contract

  • one under which the contract contents were supplemented by the provisions of Law no. 53/2003 and
  • one under which disputes relating to this contract were to be dealt with by the court having ratione materiae and ratione loci (by topic and by place) jurisdiction.

The employment contract did not expressly mention the place where the worker was to carry out his work. He argued that the location from which he carried out his work and received instructions was Germany. In addition, he argued that the lorries used were parked in Germany, and the transport missions carried out took place within the country borders.

By an action brought before the referring court, the Romanian trade union of which the worker was a member requested that the employer be ordered to pay him the difference between the wage received and the minimum wage to which he would have been entitled under German law.

According to the union, the German legislation on the minimum wage applied to the employment relationship under Article 8 of the “Roma I” Regulation. Although the contract was stipulated in Romania, the worker habitually carried out his duties Germany and was entitled to the minimum wage under German law.

However, according to the employer, it was explicitly agreed that the individual employment contract would be governed by Romanian labour law.

The European Court of Justice opinion

As a preliminary point, the Court found that, in both cases, it was not clear whether the lorry drivers were posted workers as a provision of services or workers who, although not having this status, habitually carried out their work in a country other than that in which the employer was established.

The Court noted that Article 8 of the “Roma I” Regulation lays down special conflict-of-law rules on individual employment contracts.  These rules apply where, during contract performance, the work is carried out in at least one country other than that of the chosen law. Paragraph 1 of that Article states that:

  • the individual employment contract shall be governed by the law chosen by the parties under Article 3 of that Regulation, and
  • that choice may not have the result of depriving the worker of the protection given by provisions from which it is impossible to derogate by agreement under the law which would be applicable to the contract in the absence of such a choice.

“If those provisions give the worker better protection than those provided by the chosen law,” the Court observed, “they prevail over the latter, whereas […] the chosen law remains applicable to the remainder of the contractual relationship.”

Article 8 para. 2 of the “Roma I” Regulation refers to the law of the country worker habitually works under the employment contract.

The regulation “thus seeks to ensure compliance with provisions guaranteeing the worker protection laid down by the law of the country where they carry out professional activities.”

The correct application of this regulation implies that the national court:

  • first, identifies the law which would have been applicable in the absence of choice and determines the rules from which it is not permitted to derogate by agreement; and
  • secondly, it compares the level of protection for the worker under those rules with that provided for by the law chosen by the parties. If the level provided for by those rules guarantees better protection, they must be applied.

In this case, the referring court considered that, due to the places where the drivers habitually carried out their work, specific provisions of Italian and German law on the minimum wage could apply instead of the Romanian law chosen by the parties, under Article 8 paragraph 1 of the “Roma I” Regulation.

As for the issue of whether those rules constitute provisions from which it is impossible to derogate by agreement under that article, the Court noted that “From the wording of that provision, that issue must be assessed under the law which would have been applied in the absence of a choice. The referring court will interpret the national rule in question.”

According to the Court, the rules on the minimum wage of the country where the worker habitually works may, in principle, be classified as “provisions from which it is not permitted to derogate by agreement” under the law which, in the absence of a choice, would have been applicable”, under Article 8 paragraph 1 of the “Roma I” Regulation.

Considering the above, for both proceedings, the Court held that Article 8 paragraph 1 of the “Roma I” Regulation “must be interpreted as meaning that, the law governing the individual employment contract has been chosen by the parties to that contract and is different from the applicable law […. ], the application of the latter is to be excluded, except for “provisions from which it is impossible to derogate by agreement” under Article 8 paragraph 1 of that regulation, which may include minimum wage rules.”