28 September 2026
In July 2026, the Court of Justice of the European Union (CJEU) delivered its judgment in Hortis GRC SA v JA (Case C-768/24), providing important guidance on the determination of the law applicable to international employment contracts for cross border workers.
The case concerns the interaction between contractual choice-of-law clauses and the employee protection rules contained in Article 6 of the Rome Convention. While the judgment largely follows previously established principles, it is noteworthy for its detailed examination of the objectives underlying the employment-specific conflict-of-law rules and the role of employee protection within that framework.
The CJEU confirms that these rules are not designed to guarantee employees the benefit of the most favourable employment law regime. Rather, they seek to ensure that the mandatory provisions of the legal system with which the contract is genuinely most closely connected are applied.
The decision is particularly relevant in the context of increasing levels of cross-border mobility and remote working. Traditional conflict-of-law rules were developed on the assumption that an employee's habitual place of work would usually correspond with the economic and social environment in which the employment relationship was embedded. Modern working arrangements increasingly challenge that assumption, making the Court's analysis especially significant for multinational employers.
The case concerned a French national employed by a Swiss IT services company. Although the employee habitually performed his work in France, his employment contract contained a Swiss governing law clause, and the employment relationship displayed several connections to Switzerland.
These included:
The employee's employment was subsequently terminated in accordance with Swiss law. Unlike French employment law, Swiss law did not require a pre-dismissal meeting or a statement of reasons for dismissal. The employee argued that, notwithstanding the parties' contractual choice of Swiss law, the mandatory protections of French employment law should apply as the law of the country in which he habitually worked.
The French Cour de cassation referred two questions to the CJEU concerning the interpretation of Article 6(2) of the Rome Convention:
The Court answered both questions in the affirmative.
First, the CJEU held that there is nothing in Article 6(2) preventing the law chosen by the parties from also being identified as the law of the country with which the employment contract is most closely connected. Where this occurs, the chosen law applies and national courts are not required to separately apply the mandatory provisions of the law of the employee's habitual place of work.
Secondly, the Court confirmed that determining the country most closely connected to the employment relationship requires an overall assessment of all objective circumstances of the relationship. Although the contractual choice-of-law clause itself cannot operate as a connecting factor, courts may consider objective elements arising from the implementation and performance of the contract.
Relevant considerations may include:
The judgment therefore reinforces the importance of examining the reality of the employment relationship rather than focusing solely on contractual provisions.
A particularly significant aspect of the judgment is the Court's explanation of the purpose underlying Article 6 of the Rome Convention. Throughout its reasoning, the CJEU emphasised that the objective of Article 6 is to ensure that employees benefit from the mandatory rules of the legal system with which the employment relationship is most closely connected. In the Court's view, this is the mechanism through which employees receive "adequate protection".
Importantly, the judgment makes clear that adequate protection does not necessarily equate to the application of the law most favourable to the employee. Rather, employee protection is achieved through the application of the legal system that most accurately reflects the reality of the contractual relationship.
This aspect of the decision is particularly significant. It confirms that the conflict-of-law rules governing employment contracts are fundamentally proximity-based. Their purpose is not to identify the "better" or more protective law, but rather to ensure that the contract is governed by the legal system with which it has the closest genuine connection.
The judgment is likely to attract particular attention in the context of international remote working arrangements. Historically, an employee's habitual place of work often served as a reliable indicator of the social, economic and legal environment in which the employment relationship existed. As remote and hybrid working arrangements become increasingly common, that assumption becomes less straightforward.
Employees may perform their day-to-day duties in one jurisdiction while remaining integrated into an employer's operations in another. In such circumstances, identifying the country with which the contract is most closely connected may require a more nuanced assessment of factors such as payroll arrangements, management structures, reporting lines, taxation and social security affiliation.
The Court's emphasis on an overall assessment of objective connecting factors provides a framework for addressing these increasingly complex arrangements. At the same time, the decision raises questions as to the extent to which employers may be able to structure remote working arrangements so that multiple objective factors point towards a preferred jurisdiction.
While the judgment makes clear that artificially manufactured connections should not be decisive, it leaves considerable scope for national courts to distinguish between legitimate organisational structures and arrangements designed primarily to influence the applicable law.
The decision may also have broader implications beyond employment law. Many of the objective factors considered by the Court, including payroll arrangements, tax treatment and social security affiliation, are equally relevant in determining an employee's tax and social security position. Consequently, where the factual reality of a cross-border working arrangement differs from the contractual position adopted by the parties, questions may arise not only as to the applicable employment law, but also as to the correctness of payroll withholding, social security coverage and related compliance obligations.
As cross-border remote working arrangements continue to evolve, the application of the "closest connection" test is likely to become an increasingly significant area of employment law litigation and compliance risk management.
The decision has important implications for multinational employers and organisations managing international workforces.
The Hortis judgment does not fundamentally alter the established approach to determining the law applicable to international employment contracts. Its significance lies in the Court's clear articulation of the policy objectives underpinning the employment-specific conflict-of-law rules.
For employers managing cross-border and remote working arrangements, this serves as a timely reminder that governing law clauses are most effective where they reflect the practical reality of the working arrangement. As international mobility and remote working remain prevalent, consistency between contractual documentation and day-to-day operations will become increasingly important in managing employment, tax and social security risks.
Accordingly, Hortis serves as a reminder that employers should not view employment law, tax and social security compliance as separate considerations. Rather, all three should be assessed holistically when designing and managing international and remote working arrangements, with particular attention paid to ensuring that the contractual framework accurately reflects the practical reality of the working relationship.
At KPMG Law LLP, our Employment Law team led by Aoife Newton, provides comprehensive advice on all matters relating to employment contracts and the most effective strategies for employers in light of this recent decision.
