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Choice of law and GTC law

Labor law

Choice of law and GTC law

For employers who employ people across borders in the EU, it is very rarely a good idea to agree their own law in the employment contracts. If, for example, the Italian employer has offered its employees working in Germany Italian law, they enjoy double protection: Italian protection under the contract and German protection under German labour law (Art. 8 para. 1 sentence 1 Rome I Regulation).

This also pushed Ryanair to its limits. The Irish airline had employed a pilot working in Germany under Irish law. The employment contract consisted of a large number of pre-formulated clauses that constituted general terms and conditions in the legal sense; the clauses also included an obligation for the pilot to repay the training costs if the employment relationship was terminated prematurely.

Ryanair sued for repayment of the training costs under Irish law and fell flat on its face. “A form employment contract must be subject to a general terms and conditions review (Sections 305 et seq. BGB) even if the parties have chosen a different law, if German law would be applicable without the choice of law”, said the Federal Labour Court on 23th January 2024 (9 AZR 115/23). As the clause would unreasonably disadvantage the employee, it is invalid in accordance with Section 307 (1) sentence 1 BGB. This clarifies that the law on general terms and conditions is also part of the indispensable employee protection law.