Crossborder dispute rules

These are fixed procedural rules, from which employer and employee may deviate only by mutual agreement. An employer may not deliberately circumvent the procedural rules to the detriment of the employee; if it does so, the consequences can be severe. This is demonstrated by a recent ruling by the Rotterdam court, as discussed below. 

In an international employment dispute initiated by the employer, only the court of the employee’s place of residence has jurisdiction to rule. 

As such, if an employee lives across the border (in the EU), the employer must bring the action in the court of the employee’s domicile outside of the Netherlands (under Dutch law, if this applies). 

In the opposite case, where an employee starts proceedings against his employer, the employee has more options. The employee can apply to: 

• the court where the employer has its place of business; 
• the court in the place where the employee habitually works or last worked; or 
• if there is not one country where the employee habitually works or last worked, the court in the place of business of the employer who hired him or her. 

As such, if the employer is established in the Netherlands and the employee habitually works or has worked there, then the employee – despite living in another EU country – must go to the Dutch court to decide the labour dispute. 

The ruling concerns an employer based in Rotterdam and an employee residing in Belgium. Dutch law was declared applicable to the employment agreement. At some point, the employer informed the employee that his position would be taken over permanently and that it would seek termination of the employment agreement. 

Initially, the employer properly followed the procedural law: it drew up a (draft) request to terminate the employment agreement, intending to submit it to the Labour Court in Antwerp (the court of the employee’s place of residence). However, the employer then (apparently) learned that the Belgian court route would not be workable given the expected lead time. The employer therefore asked the employee to agree to proceedings in the Dutch court, but the employee did not agree. 

The employer then changed its strategy: it did not submit the dissolution request to Labour Court in Antwerp, but instead unilaterally terminated the employment agreement by giving notice, without the employee’s consent. 

This move effectively forced the employee to start proceedings in the Dutch court in order to claim various items of compensation relating to the termination (including transition compensation, compensation for unfair dismissal and payment of contractual bonus). Since the employer was based in Rotterdam, these proceedings had to be filed in the Rotterdam court (due to the jurisdictional rules outlined above). 

The court in Rotterdam ruled that the employer had acted seriously culpable by ‘improperly’ getting its way in having the dispute assessed by a Dutch court. The court took into account, among other things, that it was the employer itself that did not want to go to the Belgian courts. It ‘apparently deliberately chose to unilaterally terminate the employment agreement without judicial intervention, with the result that it was up to [employee] to submit the dispute to the Dutch court.’ Incidentally, there was also no indication that the employment agreement would ultimately have been dissolved by the Belgian court, as there was no sufficient ground for dismissal. 

As a result, the employee was entitled to fair compensation, which the court set at EUR 470,000, even though the statutory transition compensation only amounted to around EUR 32,000. In the calculation of the fair compensation, the court considered, among other things, that the employee suffered financial damage, such as income loss and pension damage. In addition, at age 61 the employee’s job prospects were uncertain. Moreover, the amount of compensation awarded was meant to alert the employer to the need to adjust its conduct. 

From an economic point of view, it is understandable that an employer would want litigation to take place in its home country. However, the procedural rules are clear, and this ruling makes plain that circumventing the procedural rules can be severely punished.