When working in Germany, there is a good chance, that the employment contract is governed by German law even though both parties of the contract are not German and the application of German law was not agreed upon. This could especially be of huge interest and benefit to the employee and an unwelcome surprise to the employer in case of a termination as Germany has rather strict laws protecting employees from (wrongful) terminations.
What to do in case of termination of employment? Click here
Whether German law applies and thus the German Kündigungsschutzgesetz (translates to: Protection Against Dismissal Act) depends on many different circumstances.
When can German law apply?
The obvious case is, if in the contract the parties have agreed that German law shall apply.
But if the governing law was not expressly agreed upon in the contract or even if the law of another country was agreed upon (for instance a certain State law of the USA), then the relevant clause to determine which law applies, is Article 8 of the Regulation (EC) No 593/2008 of the European Parliament on the law applicable to contractual obligations (Rome I) .
Article 8 reads:
1. An individual employment contract shall be governed by the law chosen by the parties in accordance with Article 3. Such a choice of law may not, however, have the result of depriving the employee of the protection afforded to him by provisions that cannot be derogated from by agreement under the law that, in the absence of choice, would have been applicable pursuant to paragraphs 2, 3 and 4 of this Article.
2. To the extent that the law applicable to the individual employment contract has not been chosen by the parties, the contract shall be governed by the law of the country in which or, failing that, from which the employee habitually carries out his work in performance of the contract. The country where the work is habitually carried out shall not be deemed to have changed if he is temporarily employed in another country.
3. Where the law applicable cannot be determined pursuant to paragraph 2, the contract shall be governed by the law of the country where the place of business through which the employee was engaged is situated.
4. Where it appears from the circumstances as a whole that the contract is more closely connected with a country other than that indicated in paragraphs 2 or 3, the law of that other country shall apply.
Based on this provision German law applies, if the employment contract shows stronger ties to Germany than to another country. This is even the case, if the law of another country has been agreed upon in the contract, but the German law is of advantage to the employee.
Thus, German law can especially apply,
- if the employee was hired in Germany,
- if the employer was only searching for an employee in Germany,
- if the employee has made Germany his home regardless of the employment. In other words: the employee is not (temporarily) in Germany because of the job, but would also be in Germany, if that certain job or employer did not exist.
Article 8 of the Rome-I-Regulation can even apply to military contractors in Germany working for the US or British forces, if the employee has no SOFA (Status of Forces Agreement) or TESA (Technical expert status accreditation) status. The labor court in Trier/Germany has therefore ruled on 30 March 2011 in favor of an American employee represented by me and working for an American contractor on Spangdahlem AB (Case No. 1 Ca 1405/10) that German law applies. As well, the High Labor Court of Rheinland-Pfalz in Mainz has ruled so in favor of an American not receiving SOFA status on 14 Jan 2010 (LAG Rheinland-Pfalz, Case No.: 11 Sa 200/09).
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