Working in Germany does not automatically mean that German employment law applies. And an agreement in the employment contract selecting German law should not be relied upon in isolation. Two recent decisions by the Court of Justice of the European Union and the German Federal Labor Court make this clear.

Their shared core message is this: the place of work, the choice of law, and the wording of the contract matter. But they cannot be assessed in isolation. What is decisive is how the employment relationship is actually structured and carried out in practice.

Choice of Law in the Contract: Significant, but Not Unlimited

The parties to an employment contract may agree which law will govern their employment relationship (Article 8(1), sentence 1, Rome I Regulation). That choice, however, has limits. Employees may not, by virtue of a choice-of-law clause, be deprived of the protection afforded by mandatory provisions that would apply in the absence of that choice (Article 8(1), sentence 2, Rome I Regulation). In practice, this may result in a split approach: certain mandatory employee-protection provisions may be governed by the law of State A, while the remainder of the employment relationship is governed by the law of State B selected in the contract.

For mandatory employee-protection rules, the analysis will often point to the law of the country in which the employee habitually carries out his work (Article 8(2), Rome I Regulation). But that is not necessarily the end...

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