The Enforcement of Employment Contracts post-Brexit

In this piece, Grahame Anderson of Littleton Chambers explores a further and less discussed consequence of our exit from the European Union: the knotty question of enforcement of cross-border contracts. At the end of the transition period we will at present lose the reciprocity of existing measures which ensure claims are brought in the appropriate forum.

At present, the UK’s legal systems (England and Wales, Scotland, Northern Ireland) sit within a pan-EU framework for jurisdiction in respect of and enforcement of employment contracts and employment rights. While the UK may be leaving the institutions and rules of the European Union, it is not leaving the increasingly globalised employment market. It will thus be vital to ensure that proper structures are in place (i) to ensure clarity and (ii) to ensure that workers (in a non-technical sense) retain access to justice.

I What is the situation in the transition period?

The law

The European Union (Withdrawal Agreement) Act 2020 (“the Withdrawal Act”) was enacted on 23 January 2020. The transition period it brought into law runs until 31 December 2020, subject to any extension. The Withdrawal Act effects in UK law the withdrawal agreement convened between the UK and the EU (“the Withdrawal Agreement”).

During the transition period, the UK is treated for most purposes as if still a member state. Therefore, the current framework remains in place:

  • The Brussels Recast Regulation (1215/2012) (“Brussels Recast”): in any matter “relating to individual contracts of employment” (Art. 20.1), there are, in effect, two overlapping routes that establish whether a Court or Tribunal has jurisdiction. The first is that the employer is domiciled in the relevant Member State; the second is that the employee habitually carries out his or her work in the Member State or if that Member State is where the business which engaged the employee is or was situated.

  • The Lugano Convention makes similar provisions in respect of the way in which Switzerland, Norway and Iceland fit into the system of civil judicial cooperation.

The effect of Art. 67 of the Withdrawal Agreement – which applies from the end of the transition period - is to retain the current regime to all legal proceedings instituted prior to the end of the transition period but which continue after it has ended.

Things to watch for

The rules on international jurisdiction in the employment tribunal have been particularly wont to give rise to appellate case law. It would not be surprising if the jurisdictional rules came up for further consideration by the UK courts (or indeed the CJEU) even prior to the end of the transition period. Indeed, I will be appearing in April in the Employment Appeal Tribunal on an important point on jurisdiction as it applies to workers who work for stints in the UK and for stints abroad (Crew Employment Services Camelot v Gould).

II What is the situation likely to be post-transition?

The law

Naturally, the final arrangements will depend on any agreement the UK is able to reach with the EU.

It is worth noting that the government has expressed an intention to continue to participate in the Lugano Convention. In response to a written question in the Lords by the Earl of Kinnoull (HL10826), the Minister, Lord Keen of Elie, said

‘We have made clear our intention to continue the UK’s participation in the Lugano Convention after our exit from the EU, in order to maintain our existing civil judicial cooperation with Norway, Iceland and Switzerland. We expect our continued participation in this Convention to form part of the wider agreement on civil judicial cooperation we will reach with the EU.’)

This may be laudable: but the Court of Justice of the European Union holds sway as the final arbiter in disputes of interpretation (insofar as any Member State’s legal system is concerned) regarding Lugano and, as we all know, any continuing role for that institution post-Brexit remains politically divisive. Protocol 2 of the Lugano Convention merely requires non-Member States to “pay due account” to the Court’s rulings. It remains to be seen whether the government will be satisfied with that.

As the law stands, the Civil Jurisdiction and Judgments (Amendment) (EU Exit) Regulations 2019 (“the Regulations”) will, at the end of the transition period, revoke Brussels Recast and the Lugano Convention.

Regulation 26 inserts a s. 15C into the Civil Jurisdiction and Judgments Act 1982 to the following effect: an employee will be able to sue her employer in the part of the UK where:

  • where the employer is domiciled (as defined);

  • the employee habitually carried out their work;

  • if she did not habitually work in one place, where the business which engaged the employee is or was situated.

An employer will only be able to sue an employee where the employee is domiciled (employers can bring contract claims against employees in the Employment Tribunal only where the employee has made a contract claim in the proceedings: Employment Tribunals (Extension of Jurisdiction) Orders 1994). The s. 15C position may only be derogated from by an agreement convened after a dispute has arisen or one that broadens the options for the employee.

Plainly, at face value the provisions of s. 15C mirror those of the Brussels Recast regime (and thus Lugano). However, the difficulty is that the Brussels Recast system at present creates a reciprocal regime. Imagine a case where the employee of a British company habitually works in France. The Brussels Recast regime allows her to bring a claim in the UK courts as the place of the employer’s domicile (the English courts if her employer is domiciled in England), or the French courts as the place of habitual work. But if she tries to do both, Art. 29 of Brussels Recast requires the courts seized of the matter second to stay the proceedings pending determination of the jurisdiction of the first seized. Nothing in the post-transition scheme will require this (save as between different parts of the UK). The parties and UK courts would then fall back on common law rules around challenging jurisdiction, giving rise to the likelihood of satellite litigation.

Things to watch for

What progress has the government made towards its apparent intention to continue to participate in the Lugano Convention or in any other pan-EU/European jurisdictional and enforcement framework? What derogations or exceptions is in intent on enacting and why? In particular, what arrangement does the new regime arrive at vis-à-vis any ongoing role for the CJEU.

What provisions will the government seek to put in place to deal with the same causes of action being raised in the courts of other EU nations? This will need to cover the circumstances in which the employee sues in one country, but the employer seeks to sue in the other.

I hope this is useful. I would be very happy to discuss these issues, or any other employment law issue, and can be contacted at ganderson@littletonchambers.co.uk

©2020 by Society of Labour Lawyers.