Ryanair (FR, Dublin International) has been told by the European Court of Justice that labour disputes must be heard in the country where the employee is based, rather than in Ireland. In its ruling, the ECJ said that the clause which determines under which jurisdiction labour grievances will be heard – "the place where the employee habitually carries out his work" – should be interpreted to mean the employee's place of work, not where the employer's contract is sited.
The Irish low-cost carrier has periodically run into labour disputes over the years. This particular case stems from 2011, when six former employees based in Charleroi wanted a labour dispute heard in a Belgian court. Ryanair argued that as they were employed under Irish employment law, any grievance should be dealt with by the Irish courts.
Being unable to decide the matter itself, the Higher Labour Court of Belgium referred it to the ECJ. As all six former employees were based in Charleroi and lived there during the course of their contracts, the Advocate General found that their place of employment "is the place where or from which the employee principally discharges his obligations towards his employer."
Thus, within the jurisdiction of the European Union, the "place where the employee habitually carries out his work" is the same as a "home base".
While labour groups across Europe have welcomed the decision as a measure to improve workers' rights, Ryanair Chief Michael O'Leary seemed unfazed by the ruling.
“Our contracts comply fully with EU employment law," O'Leary is quoted as saying in Reuters. "We expect no change to staffing agreements, contracts or labour costs. This won’t change Ryanair’s cost base by one cent."
However, speaking with the Irish Times, Darren McKinley, senior equity analyst at Merrion Capital, said that it is likely to increase costs by 5%.
"The consensus is this will increase their cost base by 5 per cent. That would be in line with a €100 million impact," McKinley said. More pessimistic analysts have put the figure at closer to 10 or 15%.
Ryanair shares fell 4.4% following the ECJ's announcement.
