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In its recent ruling of 11 December 2025 (Case C-485/24), the CJEU clarified how to determine the law applicable to an employment contract when the habitual place of work changes throughout the relationship. Employers must thus be particularly cautious when dealing with employees in cross-border employment relationships within the EU in order to ensure compliance in the right jurisdiction, as a change of the employee’s habitual place of work may result in a change of the applicable law and, consequently, of the employee protections afforded.

The Locatrans case
Locatrans, a Luxembourg-based transport firm, hired a French driver in 2002 under an employment contract governed by Luxembourg law. Initially, the driver worked across multiple EU countries. Over time, the driver increasingly performed his activities in France, prompting payment of social security contributions in France in 2014. Further to a dispute over reduced working hours, Locatrans terminated the employee. 

The latter brought a wrongful dismissal claim before the Dijon Labour Court (Conseil de prud’hommes de Dijon), which applied Luxembourg law as chosen by the parties in the employment contract and dismissed the claim. The Dijon Court of Appeal (Cour d’appel de Dijon) overturned the first instance decision, invoking the Rome Convention and ruling that French law applied due to employee’s habitual place of work being based in France. 

Locatrans then brought the case before the Supreme Court (Cour de Cassation), which referred the matter to the CJEU, asking the latter how to determine the applicable law in a situation where the employee’s habitual place of work has evolved during the employment relationship.

The CJEU ruling

TheCJEU replied that if an employee, in the course of the employment relationship, performs his work activities in a different place, which is intended to become the new habitual place of work, this new place should be factored in when determining the applicable law. 

The CJEU reminded that the Rome Convention limits the choice of law made by the parties, in that such a choice is not to have the result of depriving the employee of the protection afforded to him by the mandatory rules of the law which would be applicable in the absence of such a choice. To determine the applicable law in such scenario, the Rome Convention focuses on the employee’s habitual place of work, unless it appears from the circumstances that the contract is more closely connected with another country, in which case the law of that country shall apply.

In this respect, the CJEU indicated that the place where the employee has carried out his work during the most recent period of the performance of his contract of employment, which place is intended to become a new habitual place of work, constitutes a relevant factor to be taken into consideration when determining the country most closely tied to the employment relationship; the same applies to the obligation to pay social security contributions.

Implications for global employers
To stay compliant and minimise legal exposure, employers should regularly review employment arrangements for employees working either across several jurisdictions and/or whose habitual place of work is about to be changed in a lasting manner to ensure that mandatory rules of the country most closely connected to the employment relationship are being observed.