The Employment Law Review: Luxembourg
i Employment law framework
The relevant statutes and regulations applicable in Luxembourg are:
ii Courts and tribunals
The relevant courts and tribunals in Luxembourg are:
iii Government agencies with competence for enforcement of employment law
The Inspectorate of Labour and Mines (ITM) is competent in terms of working conditions and protection of workers in the exercise of their professional activity. The ITM's aim is to help develop a culture of prevention and cooperation concerning working conditions, including the health, safety and hygiene of employees with respect to all aspects of employment law.
Year in review
i Modification of leave for family reasons for a child with a disability
The Law of 25 May 20202 provides that the right to take leave for family reasons because of the illness of a dependent child aged between 13 and 18 is available to employees without the condition that the child requires hospitalisation if the child in question receives the special supplementary allowance.
ii New system for internships for pupils and students
The Law of 4 June 20203 introduced two distinct types of internships for pupils and students. In respect of internships organised by an educational establishment, whether in Luxembourg or abroad, the main changes in respect of remuneration are that:
- it is optional for internships lasting fewer than four weeks; and
- for internships lasting four weeks or more, it must in principle correspond to at least 30 per cent of the minimum social wage (€660.58 as of 1 January 2021).
In respect of practical internships to gain professional experience, the Law specifies that they cannot last for more than six months within a 24-month period with the same internship supervisor. Remuneration depends on the duration of the internship:
- less than four weeks: remuneration is optional;
- between four and 12 weeks, inclusive: 40 per cent of the minimum social wage (€880.77 as of 1 January 2021);
- between 12 and 26 weeks, inclusive: 75 per cent of the minimum social wage (€1,651.45 as of 1 January 2021); and
- on successful completion of the first two years of a course at a higher education establishment or university: the reference salary is the minimum social wage for qualified workers (€2,642.32 as of 1 January 2021).
Moreover, the Law of 4 June 2020 provided that the provisions of the Labour Code covering working hours, weekly rest periods, official public holidays, annual paid leave and workplace safety apply.
iii Internal and external reclassification system
The Law of 24 July 20204 has modified the system of internal and external professional reclassification. The purpose of the Law, in particular, is to optimise the procedures in place and improve the financial situation of persons undergoing occupational reclassification.
iv Agreement on teleworking
A new convention on the legal framework of teleworking (the Telework Convention) was signed by the social partners on 20 October 2020. The main changes include:
- removal of the reference to the employee's home as a teleworking location;
- the distinction between regular and occasional teleworking: the Telework Convention specifies that teleworking is occasional when it is carried out to cope with unforeseen events or when it represents, on average, less than 10 per cent of the annual working time. Teleworking is regular in all other cases;
- removal of the adaptation period when teleworking is introduced during the performance of the contract;
- removal of the requirement for an addendum to the employment contract in the framework of regular teleworking as well as the lightening of the mandatory mentions to be contained in the agreement (e.g., removal of the need to refer to the teleworker's functions, work, tasks, contact persons). However, teleworking is still voluntary for the parties, and its implementation must be the result of mutual agreement between the employee and the employer. A written confirmation by the employer is sufficient for occasional teleworking. For regular teleworking, the information relating to the teleworking arrangements (which must be provided in writing) can be defined either by mutual agreement between the employer and the employee, or at company level via a specific teleworking scheme, after consultation with the staff delegation;
- abolition of the right of access of the employer, the safety and health delegate and the competent authorities to a teleworking location, unless the employee requests an inspection visit by the occupational health service, the safety and health delegate or the ITM; and
- recognition of a right to disconnection, which must apply equally between a classic worker and a teleworker.
The Telework Convention will enter into force for three years once it has been declared a general obligation.
v Transposition of EU Directive on posting workers
The Law of 15 December 20205 has transposed Directive (EU) 2018/957 into national legislation. The Law provides, in particular, for the following:
- expanding on the information and documents that need to be sent to the ITM via the online platform to get a 'badge social' (e.g., the expected end date of the posting, the nature of the services being provided, the usual place of residence of the worker being posted and, if applicable, where the posted worker is staying when the employer is providing accommodation for an employee away from their usual place of work);
- extension of the mandatory provisions that must be respected by Member States that post employees in Luxembourg, to include the following:
- the employee's living conditions when the employer is providing accommodation for an employee away from their usual place of work; and
- allowances or refunds for expenses to cover travel, accommodation or food expenses incurred by employees who are away from their home for work.
vi Increase in the social minimum wage
The Law of 15 December 2020 modifying Article L. 222-9 of the Labour Code has increased the social minimum wage by 2.8 per cent as of 1 January 2021. The mandatory minimum wage for a non-qualified employee is €2,201.93 (index 834.76) and the minimum wage for a qualified employee is €2,642.32 (index 834.76).
vii Impact of the covid-19 pandemic on employment law
The crisis resulting from the spread of the coronavirus has had significant repercussions on labour law, given the need to adapt the working conditions of employees to containment measures and to provide a framework for the necessary continuation of activities that are essential for the country and the population.
- adaptation of the short-time working system in the event of force majeure;
- extraordinary leave for family reasons reimbursed by the national health fund;
- the responsibility of the National Health Fund, not the employer, for payment of salaries during employees' incapacity to work;
- the possibility for businesses carrying out essential activities mentioned in the Grand-ducal Regulation of 18 March 2020 to cancel or deny paid leave during the pandemic;
- the suspension of probationary periods, consultation periods in mass redundancies, the term of protection for sick employees and the timelines for mandatory medical examinations for medical and social care workers; and
- the possibility for Belgian, French and German foreign workers to work from home in their own jurisdictions and to remain subject to Luxembourg rules regarding the taxation of their remuneration.
d the possibility of extending the maximum number of working hours to 12 per day and 60 per week for the activities authorised by the Grand-ducal Regulation of 18 March 2020;
Measures have continued to be introduced or extended, in particular:
- new arrangements about short-time working relating to the economic recovery;
- new sanctions introduced in the Labour Code in the event of fraud relating to short-time working benefits;8
- extension of agreements for teleworking by Belgian, French and German cross-border employees in tax and social security matters; and
- extension of the protection against dismissal for sick employees during the state of crisis.
i Entitlement to commissions may be discretionary
Variable pay can be freely modified or abolished as an essential element of the employment contract. The Court of Appeal has confirmed that a commission plan may constitute discretionary variable compensation under the following conditions:
- the individual commission plans are not provided for in the employment contracts;
- the individual commission plans contain objectives specific to each employee, are subject to the agreement of the employee concerned and are concluded for a determined period; and
- employees' participation in a commission plan does not constitute a right acquired through use.9
ii Nullity of a transaction without mutual concessions
The Court of Appeal declared a transaction void for lack of concessions on the part of the employer because the employer only granted the employee a work exemption during the notice period, which was already guaranteed by the letter of dismissal. Furthermore, the Court considered that the waiver of dismissal with immediate effect for the same facts that justified the dismissal with notice is not a reciprocal concession by the employer.10
iii Succession of contracts and validity of the trial period
In the context of successive contracts with the same employee for the same functions, the employer may agree on a new trial period only in the event of a real and effective contractual break. Thus, the Court of Appeal considered valid the three-month trial period in the event of a one-year interruption between two employment contracts, for the same activity, with the same employer.11
Basics of entering into an employment relationship
i Employment relationship
Employment contracts must be evidenced in writing and signed, in principle, no later than on the first day of work. In the absence of a written employment contract, the existence of a contract may be proven by the employee via any other means of evidence, whereas the employer may only prove it via limited means of evidence.
Fixed-term employment contract
Fixed-term employment contracts are permitted only for the performance of specified time-limited tasks and shall be used only under strict conditions (e.g., execution of an occasional and punctual task defined and not falling within the framework of the current activity of the company, the performance of a specific and unsustainable task in the event of a temporary and exceptional increase in the activity of the business, or when starting or expanding the business).
Terms of the employment contract
All employment contracts must contain the following essential terms:
Specific terms should be added, depending on the type of employment contract involved (e.g., fixed-term, part-time or student employment contract). For example, fixed-term employment contracts must contain the following additional essential terms:
In addition, certain provisions must be expressly provided in writing for them to be applicable (e.g., probationary period, non-compete provisions).
Modification of employment contracts
Any modification to an employment contract must be effected by the inclusion of an addendum. The employer may unilaterally impose a favourable change if it concerns a non-significant employment condition.
However, the employer may also unilaterally modify essential clauses of the employment contract (e.g., remuneration or working hours) to the detriment of the employee if it has real and serious reasons to do so. The procedure to be followed is similar to the one applicable to dismissal (with notice or with immediate effect). This involves notifying the employee, providing any notice period (as the case may be) and, if the employment contract is being modified with notice, giving reasons for the modifications if the employee requests them. The time frame for changes to essential terms must also comply with the rules on dismissal. If this procedure is not followed, the modification will be void.
Under the rules, either:
ii Probationary periods
Conditions of the trial period
Probationary periods may, in principle, only be applied if a probationary clause is included in the employment contract at the time it is signed, or at the latest before the beginning of the work, or if the applicable collective work agreement provides that all new employees are subject to a probationary period.
In the absence of a written statement that the contract has been concluded on a trial basis, it is deemed to be concluded for an indefinite period and proof to the contrary is not admissible.
Probationary periods may not be less than two weeks, with the normal maximum probationary period being three months. It is possible to extend a probationary period to six months for employees with a professional qualification (i.e., a certificate of technical and professional capacity) and to 12 months if the employee earns a monthly gross salary of at least €4,474.31 (index 834.76).12
End of the trial period
Employment contracts cannot be terminated unilaterally during the first two weeks of a probationary period, except in cases of gross misconduct. Once this two-week period is completed, the contract may be terminated with notice and without justification by either party through a registered letter or a countersigned copy of the termination letter.
The length of the notice period depends on the length of the probationary period. If the probationary period is expressed in weeks, each week should give rise to one day's notice. If the probationary period is expressed in months, four days' notice should be granted for each month of the probationary period, with a minimum of two weeks and a maximum of one month.
The end of the employment contract (notice period included) should occur within the probationary period. Otherwise, the employment contract will be considered as an open-ended employment contract or a fixed-term employment contract (depending on the type of employment contract initially concluded).
iii Establishing a presence
According to the Law of 2 September 2011, a natural or a legal person cannot exercise, as either a principal activity or an ancillary activity, an independent activity in the field of trade, craft industry, industry or a specific liberal and intellectual profession without an establishment permit.
However, an establishment permit is not required for companies duly established in a Member State of the European Union or the European Economic Area (EEA), or Switzerland, that provide services in Luxembourg on an occasional or temporary basis. This freedom of services does not apply to non-EU companies.
Thus, in principle, a foreign company wishing to carry on any activity in Luxembourg shall obtain an establishment permit before starting its activity in Luxembourg and hiring employees here. An establishment permit is required for a subsidiary as well as for a branch of a foreign company.
To obtain an establishment permit, the company shall demonstrate an effective activity in Luxembourg, notably through premises, administrative and technical equipment, and the regular presence of the business licence holder.
The establishment permit is granted by the Ministry of Economy, the Middle Class and Tourism after a formal application process. The Ministry verifies that the applicant (an individual setting up his or her own business or the legal representative of a company) complies with honourability conditions (e.g., has no criminal record in Luxembourg or abroad, and no record of bankruptcy or insolvency) and qualification conditions (such as diplomas or actual professional experience).
Employment income is mainly taxed by means of withholding payroll taxes, the amount of which depends on the yearly gross income and the personal situation of the employee.
At the beginning of the year, each employee must provide his or her employer with a tax card containing all the information needed by the employer to be able to withhold taxes.
i Non-competition during an employment contract
Employees' obligation of loyalty to their employer (which is implied in any employment contract) prohibits them from any competing activity during the employment relationship.
An employer also may include an exclusivity clause in an employment contract, according to which the employee commits to provide work only for the employer and the employee is expressly prohibited from providing services for any other organisation (whether a competing employer or not). However, exclusivity clauses are only applicable to contracts for full-time employees.
In the event of a dismissal with notice, if the employee is released from performing his or her duties during the notice period, the loyalty obligation still applies. However, according to case law, as the employee has been dismissed, he or she has the right to prepare for a new career during the notice period by working on a future project.
If an employee engages in competing activity during the employment contract, the employer may sanction the employee and bring a claim for damages before the competent labour court.
ii Non-competition after an employment contract
Once an employment relationship has ended, the employee is free to perform any competing activity, provided he or she is not bound by a non-compete clause.
The parties may agree on a non-compete clause in the employment contract, preventing the employee from performing similar professional activities by running his or her own business as a sole enterprise after termination of the employment contract. These clauses are strictly regulated by Luxembourg labour law.13
Non-compete clauses can only apply to employees who are at least 18 years old and whose annual gross salary, at the date of termination of the contract, is more than €56,906.17.
To be valid, a non-compete clause must also comply with the following conditions:
Finally, according to the law, a non-compete clause only prevents a former employee from setting up his or her own undertaking but not from working as an employee for another organisation, which could be a competitor of the former employer.
However, the Court of Appeal14 ruled on the validity of a non-compete clause preventing a former employee from working as an employee for a competitor. The clause in that case prevented the employee from performing similar activities as an employee of a competitor for 12 months within Luxembourg and France (i.e., more than 500 kilometres beyond the Luxembourg border), in exchange for a monthly allowance for 12 months of 25 per cent of the last gross salary (i.e., approximately €20,000). The Court validated the principle of this clause but found it 'excessive' owing to its broad geographical scope. The Court reduced its implementation to Luxembourg and the French border areas. It also ordered the employer to pay the employee the financial compensation stipulated.
There is nevertheless no legal certainty about these extended non-compete clauses since they are not provided for by law. There is a risk that, in a legal challenge, a court will declare such a clause unlawful and not binding for the parties.
i Working time
Working hour regulations
Normal full-time working hours in Luxembourg are eight hours per day and 40 hours per week, or up to nine hours a day provided the weekly working time remains at 40 hours over a maximum of five days. Specific provisions apply in some sectors, such as transport, hotels, restaurants and bars.
The normal duration of work may be increased to a maximum of 10 hours a day and 48 hours per week, including overtime. It is not permitted that employees should work beyond these limits, except in specific circumstances, such as force majeure, and in some sectors, such as transport.
Overtime pay may be incorporated in a work organisation plan or a flexitime regulation. This will apply over a reference period determined by the employer. The maximum reference period is four months, except if a collective bargaining agreement (CBA) provides for a longer period (of up to 12 months).
b Flexitime regulation: This allows employees to organise their working time as they see fit, while observing the core work time imposed by the employer, if any, during the reference period. A flexitime regulation may be implemented only with the mutual consent of the employer and the employee representatives, if any, or if none, the affected employees themselves.
In both cases, any hours worked beyond the eight hours per day and 40 hours per week are not considered overtime if the average weekly hours of work during the reference period do not exceed either 40 or the maximum weekly working hours set by agreement. In other words, at the end of the reference period, the working hours performed with the agreement of the employer that exceed an average of 40 hours of work per week during the reference period are considered overtime.
Exceptionally, in specific sectors and for a period not exceeding six consecutive weeks, a CBA may provide for 12-hour days and 48-hour weeks.
The duration of work performed by young employees (i.e., under 18 years old) must not exceed eight hours a day and 40 hours a week. This maximum includes hours spent at school.
Any work organisation plan applicable within an organisation should contain specific provisions for young employees. As part of a work organisation plan, a reference period of a maximum of four weeks can be set for young employees and only in exceptional cases. The effective duration of work must not exceed nine hours a day, 44 hours a week or 10 per cent more than the normal duration of work within the organisation. The average duration of work for each reference period must not exceed eight hours a day and 40 hours a week.
Specific rules apply to night workers. Employees are deemed night workers if they perform at least three hours of work a day between 10pm and 6am (i.e., the night period) as part of their normal schedule, or may perform hours of work during the night period of more than one-quarter of their annual working hours. The working hours of these employees must not exceed an average of eight hours during a 24-hour period calculated over a period of seven days. Overtime is permitted, with the same limitations as for normal working time.
However, night workers whose work involves particular risks, or significant mental or physical stress factors, must not work more than eight hours within a 24-hour period. In some sectors, such as the hotel and restaurant businesses, the night period is between 11pm and 6am. Young employees (i.e., under 18 years old) are prohibited from working between 8pm and 6am, or between 10pm and 6am in some sectors.
Limits to amount of overtime
Overtime hours are those worked beyond eight hours per day and 40 hours per week (or beyond the part-time hours set in the employment contract) at the request or with the consent of the employer. If a company operates a work organisation plan or a flexitime regulation, overtime is defined as each hour worked beyond the limits fixed by the plan or regulation, at the request or with the consent of the employer.
Overtime worked by full-time employees must not exceed two hours a day and eight hours a week. If an employee decides to work overtime, he or she should ask for the employer's approval so as to be entitled to an overtime payment. Employees may be required to work overtime within the limits and under the conditions provided for by law.
In principle, overtime is limited to specific circumstances, namely:
It is generally prohibited for adolescents (aged 15 to 17 years) to work overtime, except in very specific circumstances and under conditions strictly regulated by law. Under part-time work contracts, overtime hours may be worked only by mutual agreement between the employer and employee.
Overtime is generally compensated by paid leave of one hour and 30 minutes for every hour of overtime. An employer may choose to compensate overtime financially.
If an employer decides to provide financial compensation instead of paid leave, or if an employee leaves the organisation without taking his or her leave, overtime will be paid at the rate of 140 per cent per hour or the normal hourly rate. Some CBAs provide for specific conditions and a higher rate (e.g., 150 per cent in the banking sector).
Specific rules and pay apply to overtime under a work organisation plan (where a CBA does not provide other rules). This should provide that:
Overtime for young employees (i.e., under 18 years old), when exceptionally permitted, is compensated by a 100 per cent increase in the normal hourly rate paid for the hours performed.
CBAs may provide for a different form of compensation or higher rates.
The aforementioned overtime rules do not apply to top executives.
i Register of foreign workers
The hiring of foreign employees directly by a Luxembourg company does not entail a specific obligation for an employer to keep a register of foreign employees. However, the employer shall keep a copy of the employee's residence authorisation in case the ITM carries out an inspection.
Moreover, employees seconded to Luxembourg must be declared to the ITM before starting to work in Luxembourg. This declaration is made through an e-platform and several documents must be uploaded (such as a medical statement, social security certificate and employment contract).
There is no limit on the number of foreign employees that a workplace or company may have.
ii Length of assignment
As regards the secondment of employees to Luxembourg by a foreign company, the length of an assignment shall remain temporary. Although the Luxembourg Labour Code does not provide for a specific time limit, the length of a secondment is limited by the validity of the residence authorisation and by social security rules.
iii Work permit
Citizens of an EU or EEA Member State and Switzerland are exempt from the obligation to obtain authorisation to work in Luxembourg. They only need a valid passport or national identity card. However, if EU nationals intend to stay in the territory of Luxembourg for more than three months, they must make a declaration of arrival registration with the municipality within eight days of their arrival, and fill in a registration certificate for EU nationals no later than three months after their arrival.
Third-country nationals wishing to work in Luxembourg must obtain a residence authorisation. However, and depending on the purpose of their stay in Luxembourg, third-country nationals can rely on an exemption of residence authorisation for work if the stay does not exceed three months. A residence permit is valid for a certain period and may be renewed if the legal requirements are satisfied.
Nationals from certain non-EU countries who wish to visit, travel through or work in Luxembourg must, before their departure, have a valid travel document with a visa issued by a consular authority from one of the countries in the Schengen area.
iv Application of legal provisions
Foreign workers who are authorised to work in Luxembourg benefit from the same protection as Luxembourg nationals under the legal provisions.
Moreover, legal, regulatory and administrative provisions, and provisions resulting from a CBA declared to be generally binding, apply to all employees working in Luxembourg (including on secondment or a short-term posting) as regards the following matters:
Internal rules are not required by law in Luxembourg. If internal rules are established, the content may be freely determined by the employer and the staff delegation, if any, provided that it does not breach Luxembourg labour legislation.
However, it is mandatory for employers to set up a specific written procedure to manage problems of harassment on the basis of an internal assessment and subsequent reassessments of harassment within the enterprise.
If internal rules are established, the organisation must inform and consult the staff delegation before implementing, amending or withdrawing any internal rules. In organisations with at least 150 employees, the establishment or amendment of internal rules must be by mutual agreement between the employer and the staff delegation.
Internal rules are not subject to registration with government authorities or any other legal body. Moreover, the law does not impose the use of a specific language in the drafting of internal rules. Nevertheless, the rules shall be written in a language that can be understood by all employees.
For an internal rule to be considered as binding on an employee, the employer shall be able to prove that this employee has acknowledged the internal regulations. As a result, internal regulations shall be either signed by the employee at the time of recruitment or attached to the employee's employment contract, provided that a mention is inserted in the employment contract, stating that the employee has received a copy of the internal regulations and has acknowledged their contents. Internal regulations may also be placed on a company's intranet but simply posting regulations online would not be sufficient to demonstrate that the employee has acknowledged them.
i Maternity leave
Maternity leave is divided into two periods: eight weeks' prenatal leave and 12 weeks' postnatal leave. While on maternity leave, the employee is paid by the National Health Fund and receives an indemnity equal to her usual remuneration, but limited to five times the monthly minimum social salary for unqualified employees as in force on a particular date (€11,009.65 as of 1 January 2021). Payment of maternity leave is subject to membership of the Luxembourg social security scheme for at least six months during the 12 months before the commencement of maternity leave. However, the EU regulation providing for the aggregation of insurance periods applies.
Employees are protected against dismissal during maternity leave. However, for gross misconduct, an employer may suspend an employee and apply to the courts for permission to dismiss without notice.
ii Adoption leave
If a child under the age of 12 is adopted by a couple, an adoptive parent who is employed through an employment contract is entitled to 12 weeks' leave on presentation of a certificate from the court stating that the adoption application has been filed. If both parents are employed, or if one parent is in a non-salaried position, the adoption leave can be granted to only one of them. If an employee is adopting as a single parent, he or she can benefit from adoption leave, except if the adopted child already lives with the employee, or is the child of the spouse or partner of the employee. Most of the provisions that apply to maternity leave apply equally to adoption leave, including the requirements for being entitled to leave, entitlements and protection against dismissal.
iii Paternity leave
Paternity leave can be taken as an 'extraordinary leave for personal reasons'. The father is entitled to 10 paid days off work.
Paternity leave can be split, but must be taken within two months of:
An employer may refuse to allow paternity leave to be split if it is contrary to the needs of the business. If an employer and an employee disagree on a possible split of paternity leave, it must be taken in one block, immediately after the birth or arrival of the child.
In practical terms, the employee must inform the employer in writing, with two months' notice, of the expected dates on which he would like to take his paternity leave. If this notice is not given, the employer may reduce the leave to two days.
There are no specific conditions for entitlement to paternity leave except the birth of the child.
Only the first two days of paternity leave are paid by the employer; the government pays from the third day onwards. The employer must submit its request for a refund of salaries paid to the Minister responsible for employment within five months of the birth or arrival of the child, failing which the request will not be considered. The salary taken into consideration for this refund is limited to five times the minimum social wage for unqualified employees (i.e., €11,009.65 as of 1 January 2021).
There is no protection against dismissal during paternity leave.
iv Parental leave
Parental leave is offered to parents following the birth of one or several children until they are six years old, or the adoption of one or several children under 12 years old. The parent can request:
Leave can be taken full-time, part-time or split (under certain conditions provided by law), whether it is for the first or second parental leave, provided that the employee has completed at least one year of service with the same employer.
The leave may be granted if the parent:
The parent must submit a request for leave to his or her employer by registered mail (with acknowledgement of receipt) at least two months before the start of maternity leave or adoption leave (for first parental leave) or at the latest four months before the start of second parental leave.
The employer is obliged by law to accept parental leave on a full-time basis, except if the request was not made in the manner and within the timescale required.
While on parental leave, the employee is directly paid by the Fund for the Future of Children and receives an allowance calculated on the basis of his or her normal monthly income. The allowance must not be lower than the monthly minimum social wage for unqualified employees (i.e., €2,201.93 as of 1 January 2021) nor higher than the monthly minimum social wage for unqualified employees increased by two-thirds (i.e., €3,669.88 as of 1 January 2021).
An employee is protected against dismissal starting from the last day of the notice period for requesting the leave and during the parental leave. Any attempted dismissal during this period is null and void but the employee is not protected against immediate termination for gross misconduct.
The aim of Proposed Law No. 7434, submitted on 25 April 2019, is to make the provisions relating to parental leave more flexible and to extend the granting of parental leave to include grandparents.
The main purpose of the Proposed Law is to set a maximum period that each parent can take as parental leave – more specifically, six months for full-time employees, 12 months for part-time employees, or even a number of days on a pro rata basis based on the actual time worked if less than half the normal maximum working time is worked.
The main new points would also include:
- parental leave can be taken until the child reaches the age of 12;
- the right to parental leave would no longer be lost when not taken consecutively with maternity or adoption leave;
- one of the parents will be able to transfer all or part of any parental leave not taken to the other parent or to a grandparent.
There are three official languages in Luxembourg: French, German and Luxembourgish.
Luxembourg law does not impose the use of any specific language in the drafting of employment contracts. However, the use of a language understood by both parties is recommended to avoid any discussion regarding lack of consent.
In the event of litigation, a court could request translation into one of the three official languages, but particularly French or German. If a contract is written in more than one language and there is doubt about its meaning, the version with the meaning that is more favourable to the employee will prevail.
i Obligation to set up a staff delegation
Undertakings with at least 15 employees during the 12 months prior to the announcement of social elections must set up a staff delegation. Members of the staff delegation are elected by and from the eligible employees through a secret vote.
The renewal of the staff delegation takes place every five years within a statutory time frame on a date set by the Ministry of Labour. Thus, the term of a staff delegate is five years. If the threshold is staggered between two statutory time frames, a staff delegation must be set up as well.
ii Number of staff delegates
The size of the staff delegation varies according to the number of employees represented:
|Composition of the staff delegation|
|Represented employees||Number of delegates|
|Between 15 and 25||1|
|Between 26 and 50||2|
|Between 51 and 75||3|
|Between 76 and 100||4|
|Between 101 and 200||5|
|Between 201 and 300||6|
|Between 301 and 400||7|
|Between 401 and 500||8|
|Between 501 and 600||9|
|Between 601 and 700||10|
|Between 701 and 800||11|
|Between 801 and 900||12|
|Between 901 and 1,000||13|
|Between 1,001 and 1,100||14|
|Between 1,101 and 1,500||15|
|Between 1,501 and 1,900||16|
|Between 1,901 and 2,300||17|
|Between 2,301 and 2,700||18|
|Between 2,701 and 3,100||19|
|Between 3,101 and 3,500||20|
|Between 3,501 and 3,900||21|
|Between 3,901 and 4,300||22|
|Between 4,301 and 4,700||23|
|Between 4,701 and 5,100||24|
|Between 5,501 and 5,500||25|
|More than 5,500||+1 for each 500|
For each effective member, a substitute shall be elected so that a deputy is available should an effective member no longer be able to exercise his or her duties.
iii Attributions of staff delegations
The Law of 23 July 2015 on the reform of social dialogue abolished works councils. All the rights and attributions previously granted to works councils were transferred to staff delegations in undertakings with at least 150 employees.
A staff delegation's general duty is to safeguard and defend employees' interests with respect to working conditions, job security and social welfare. More precisely, a staff delegation is expected to:
- prevent or solve individual or collective disputes arising (or likely to arise) between the employer and the employees;
- submit employees' individual or collective claims to the employer; and
- in the event of unsuccessful negotiations, submit a claim to the Labour Inspectorate regarding the legal or contractual rights of the employees.
A staff delegation is also expected to ensure compliance with the principles governing equal treatment, access to employment, vocational training, promotion, working conditions and remuneration.
To enable a staff delegation to carry out its mission, the employer is required to provide information and data regarding the functioning of the organisation, including the evolution of its activities and its economic situation. It is also required to provide information regarding health, safety and absenteeism.
A staff delegation must be informed and consulted in certain matters, especially:
- on the situation, structure and likely evolution of employment within the company as well as possible anticipatory measures envisaged, in particular threats to employment;
- on decisions likely to lead to substantial changes within the organisation, in particular redundancies and transfers of undertakings;
- before implementing, amending or withdrawing a supplementary pension plan, a specific teleworking regime at company level, and before publishing or amending internal rules; and
- on any issue relating to working time or apprenticeships.
Moreover, in organisations with at least 150 employees, certain decisions must be made jointly by the employer and the staff delegation (such as the introduction or application of technology to monitor or control employees' behaviour and performance, or the introduction or modification of measures concerning the health and safety of employees and the prevention of occupational diseases, the establishment or amendment of internal regulations, in particular concerning a specific teleworking regime at company level, etc.).
iv Rights of staff delegations
A staff delegation is allocated a credit of hours in proportion to the number of employees represented, namely 40 hours per week for 500 employees (in an undertaking with fewer than 150 employees) or 250 employees (in an undertaking with between 150 and 259 employees).
Members of the staff delegation have the right to participate in training sessions, even during working hours and without loss of wages, organised by trade unions or a specialist institution, such as professional chambers, with the purpose of improving their knowledge in economics, their social and technical skills, as far as this is in relation to their role as employee representatives. The duration of time taken for training depends on the number of employees in the undertaking:
- fewer than 50 employees: one working week over the full term of the member's term of office (i.e., five years);
- between 50 and 150 employees: two working weeks over the full term of the member's term of office; or
- more than 151 employees: one working week per year.
A staff delegation may meet once a month during working hours. Notice of five working days shall be given to the employer, unless both parties agree on a shorter notice period. These meetings are paid as working time.
A staff delegation is compelled to meet at least six times per year during working hours, and three of those six meetings must be attended by the employer.
Finally, the employer is required to convene the staff delegation whenever at least one-third of the regular members so request.
vi Protection against dismissal and unilateral modification of employment contracts
The members of a staff delegation are protected against dismissal during their term of service and for six months after the end of that term. Any dismissal of a staff representative may be declared null and void. However, in a case of gross misconduct, the employer may suspend a staff representative with immediate effect and ask the labour court to terminate the employment contract. Similarly, the employer cannot introduce any modifications to a staff representative's employment contract.
i Requirements for registration
The Law of 1 August 2018 on the organisation of the National Data Protection Commission and the general data protection framework does not require the data controller to register with the Luxembourg Data Protection Authority (CNPD). The obligation to notify each instance of personal data processing provided for by the Law of 2 August 2002 on the protection of persons with regard to the processing of personal data no longer exists as of the Law of 1 August 2018.
However, the data controller and, where applicable, the data controller's representative must, in principle, maintain a record of processing activities as part of their responsibilities. Moreover, the data controller or the processor must communicate the details of the undertaking's data protection officer to the CNPD.
ii Cross-border data transfers
Personal data can circulate freely from Luxembourg within the EEA, as long as the general principles of the EU General Data Protection Regulation (GDPR) are respected.
Any data controller who wishes to export personal data outside the EEA must first establish that there is an adequate level of protection in the recipient country. Indeed, when the third country is considered to offer an adequate level of protection, the transfer can be carried out as if it were a transfer within the EEA. However, the general principles of the GDPR must be respected.
If a country that is not a member of the EEA, or an international organisation to which the data is to be transferred, has not been recognised as adequate by the European Commission, the transfer must be subject to appropriate safeguards or be based on one of the legally recognised derogations. Among the appropriate safeguards that may be put in place for a transfer of personal data to a country without an adequate level of protection, the data exporter and the data importer may sign standard data protection clauses adopted by the European Commission (contractual clauses), or may rely on binding corporate rules, codes of conduct, certification mechanisms, or guarantees specific to transfers between public authorities or bodies.
For transfers of personal data to the United States, the data exporter and the data importer must also have recourse to respect of privacy. The Privacy Shield (which replaced Safe Harbour), under which entities established in the United States could certify their processing of personal data to facilitate the transfer of personal data, was used previously. In a judgment of 16 July 2020, the Court of Justice of the European Union16 invalidated Decision 2016/1250 on the adequacy of protection provided by the EU–US Privacy Shield. According to the Court, the Privacy Shield did not provide a level of protection substantially equivalent to that guaranteed by the GDPR and the EU Charter of Fundamental Rights.
An employer must inform the employee in question (the data subject) that his or her personal data can be transferred to a third country. In limited cases, the data subject's consent can be required.
iii Sensitive data
The processing of personal data that are regarded as sensitive is prohibited. Sensitive data includes information that reveals racial or ethnic origin, political opinions, religious or philosophical beliefs, or trade union membership, and genetic data, biometric data for the purpose of uniquely identifying a natural person, or data concerning health or data concerning a natural person's sex life or sexual orientation.
This prohibition does not apply when the data subject has given explicit consent to the processing (although it is usually not recommended to rely on an employee's explicit consent as the sole legitimate ground in the context of employment) or when the processing operations are necessary to comply with specific rights and liabilities in relation to the employment legislation to which the data controller (the employer) is subject, provided that there is a legal requirement (e.g., requirements regarding safety and security in the workplace).
Social security numbers are not regarded as sensitive data under Luxembourg data protection laws.
iv Background checks
The legislation does not specifically rule, restrict or prohibit background checks on applicants. However, background checks must comply with the general principles resulting from legislation on privacy, protection of personal data and discrimination.
Hence, an employer may conduct background checks only if applicants are informed of the process used, its purposes and the rights relating to the processing of their personal data (e.g., the right to access, rectify, request or erase). Further, the processing operations shall be legitimate, operated loyally and in proportion to the objective sought (i.e., limited to the data directly linked to and necessary for filling the vacant position). The processing of sensitive data such as religious beliefs, political opinions, sexual orientation or ethnicity is subject to very restrictive rules.
The processing of criminal data (i.e., convictions or judicial proceedings) shall be prescribed by law, otherwise it is strictly forbidden. Following the reform of the legislation on criminal records – in force as of 1 February 2017 – except for specific activities where specific rules apply (e.g., childcare workers) – an employer may request a job applicant's criminal record provided that the request is specified in the job advertisement and is justified by the specific needs of the position. The criminal records of an applicant cannot be kept longer than one month following the conclusion of the employment contract; the criminal records of unsuccessful applicants must be destroyed immediately.
During employment, restrictive rules apply (except where specifically prescribed by law) as the employer cannot request new criminal records unless the employee is assigned to new functions. Specific rules apply for jobs involving regular contact with minors.
Dismissal with notice and dismissal with immediate effect
An employer can dismiss an employee with notice or with immediate effect only in the following circumstances:
According to labour law, an employer with 150 or more employees must invite any employee affected by a potential dismissal (with or without notice) to a meeting prior to giving notice of the dismissal. A copy of this invitation must be sent to the staff delegation, if any.
If an employee disagrees with the grounds for dismissal, he or she is entitled to bring a claim against the former employer.
In cases of dismissal with notice, notification must be sent by registered letter or in a letter for which the employee must sign to acknowledge receipt. The notice period that must be given by the employer depends on the length of service of the dismissed employee:
Employment contracts or applicable collective agreements may provide for specific notice periods. However, these must not be, in principle, less than the minimum length of notice period provided for by law (as above).
The notice period may be extended in lieu of the payment of a departure allowance provided the employer has fewer than 20 employees and depending on the employee's length of service.
Luxembourg labour law does not provide for a lump sum payment, that is, a payment in lieu of notice. However, an organisation may discharge an employee from the obligation to work for the entire notice period or a part of it. The release date must be included in the letter of termination or in a subsequent letter.
If an employment contract has been terminated for reasons unrelated to an employee's conduct at work, the employee may request in writing a hiring priority during the 12 months following the date on which he or she left the undertaking. If the employee exercises this hiring priority, the employer is obliged to inform the employee of any vacancy corresponding to that employee's qualifications and to rehire him or her if he or she applies for the position.
Protection against dismissal
Some categories of employees are protected against dismissal and their dismissal may therefore be declared void. For example:
At the end of an employment contract, the employee is entitled to:
Once a notice of termination has been served on an employee, both the employee and the employer may conclude a settlement agreement under Luxembourg civil law. This agreement settles any existing or potential disputes about the termination.
Settlement agreements are valid only when both parties make reciprocal concessions (e.g., the employer accepts to pay an out-of-court indemnity and in return the employee undertakes to waive his or her right to bring an action against the employer in court). Thus, to be enforceable, the settlement agreement must:
- be drawn up in writing, in as many copies as there are parties;
- contain reciprocal concessions; and
- be initiated and drawn up with the full consent of the parties.
In the case of individual redundancies on the grounds of a restructuring, reorganisation or staff reduction, the employer must observe the above-mentioned rules for a dismissal. However, specific procedures apply to collective dismissals.
For collective dismissals, a social plan must be prepared and negotiated. This procedure applies when an employer with at least 15 employees is contemplating dismissing at least seven employees within 30 days, or at least 15 employees within 90 days, for a reason unrelated to the employees' conduct or behaviour at work, that is, for an economic reason, or in relation to a reorganisation or restructuring.
The collective dismissal rules apply if at least four dismissals are contemplated during the relevant period for reasons unrelated to conduct at work. The employer must then include in the calculation of the threshold for collective redundancies any termination of employment (other than a dismissal) based on economic reasons that it offers as an incentive, such as redundancy for economic reasons by mutual consent and employees retiring for economic reasons before the usual retirement date.
Content of the social plan
The negotiation of the social plan must cover ways of avoiding or reducing collective dismissals and of mitigating the consequences by using social measures for redeploying or retraining employees who are made redundant.
Further, the social plan may, and usually does, contain provisions on outplacement or training measures.
Information and consultation
The employer must inform and consult the staff delegation about any decisions likely to lead to substantial changes in work organisation or contractual relations, including those relating to collective dismissals. In undertakings with at least 150 employees, the staff delegation must be informed and consulted before any decision is made of an economic or financial nature that might have a determining effect on the structure of the organisation or on the number of employees, such as a restructuring.
After completing the information and consultation process and before entering into negotiations with social partners, or at the beginning of the negotiations of the social plan at the latest, the employer must notify the employee representatives of its intentions to proceed with a collective dismissal.
The employer should provide the following information:
Notification to the National Employment Agency
At the beginning of the negotiations at the latest, the employer must notify the National Employment Agency in writing of any proposed collective redundancies. The Agency must then forward this information to the Inspectorate of Labour and Mines.
The employer must also send a copy of the information given to the employee representatives to the National Employment Agency, which will forward the information to the ITM. The employee representatives may notify the Agency of any observations in relation to the information provided by the employer. These observations will also be forwarded to the ITM.
Protection against dismissal
In addition to the protections against dismissal mentioned in Section XIII.i, during the period of negotiation of a social plan, dismissal for a reason unrelated to the employees' conduct or behaviour at work is void. During the period of negotiation, the employer can notify a dismissal with notice or with immediate effect for reasons relating to the aptitude or conduct of an employee.
Payments due in collective dismissals
There are no legal requirements for additional payments in the context of collective dismissals. However, in addition to statutory severance pay, the employer will have to respect any payment commitments made under the social plan (e.g., moving allowance, training allowance or other financial assistance).
Transfer of business
A transfer of undertaking is defined as a transfer of an economic entity that retains its identity and constitutes an organised grouping of resources (notably human and material) with the objective of pursuing an economic activity, whether or not that activity is central or ancillary.
i Employee's rights and protection
In a transfer of undertaking, employment contracts and employment conditions are automatically transferred from the transferor to the transferee. If the transferred employees benefited from the application of a CBA with the transferor, the transferee is required to maintain all the conditions that result from the CBA until the termination date or the expiry date of the CBA, or until the entry into force or the application of a new CBA.
There is no requirement for a transfer to be personally approved by employees.
A transfer of undertaking leads to a restriction on the employer's rights to dismiss employees or to amend a substantial provision of employment contracts to the detriment of the employees.
Neither the transferor nor the transferee can dismiss employees on the grounds of the transfer of undertaking itself. Moreover, neither the transferor nor the transferee can justify a modification of a substantial provision of the employment contract that is detrimental to the employee on the transfer itself.
ii Informing and consulting staff representatives
During the transfer of an undertaking, the staff delegation of both the transferor and the transferee must be informed both before and after the decision to transfer is made. If there is no staff delegation, the employees are informed directly.
After the decision to transfer is made, but before the transfer is effective, the transferor and the transferee must disclose the following information to the staff delegation (or directly to the employees):
When the transferor and the transferee contemplate implementing measures in respect of their respective employees, they must consult their respective staff delegations about these measures in a timely manner.
i Bill modifying right to leave for family reasons
Bill No. 7489 modifying Articles L. 234-51, L. 234-52, L. 551-2 and L. 552-1 of the Labour Code in respect of leave for family reasons and professional redeployment was submitted to the Chamber of Deputies on 10 October 2019. The legislative procedure is still in progress.
The aim of the Bill is to add an exception to the condition relating to hospitalisation if a child, from the age of 13:
- receives a special supplementary allowance in accordance with Article 274 of the Social Security Code; or
- is suffering from an exceptionally serious illness or impairment, as defined by the Grand-ducal Regulation specified in Article L. 234-52 of the Labour Code, confirmed by the child's doctor.
In these two situations, the parent who is an employee would be able to claim his or her leave entitlement for family reasons, even if the child was not hospitalised.
In addition, the Bill allows both parents to take leave for family reasons at the same time in both the cases described above.
ii Extension of beneficiaries of the right to leave for family reasons
Bill No. 7436 (submitted to the Chamber of Deputies on 25 April 2019) provides for the extension of the circle of beneficiaries of leave for family reasons to grandparents, and amends the Labour Code accordingly. The legislative procedure is still in progress.
iii Impact of the covid-19 pandemic
The covid-19 pandemic will continue to affect labour law in 2021. In particular, the government has announced that certain provisions will be extended (adaptation of short-time working, extension of agreements for teleworking by Belgian, French and German cross-border employees in tax and social security matters, among others).
1 Guy Castegnaro is the founder and managing partner and Ariane Claverie and Christophe Domingos are partners at Castegnaro – Ius Laboris Luxembourg.
2 Law of 25 May 2020 modifying Article L. 234-52 of the Labour Code (Mémorial A No. 441 on 25 May 2020).
3 Law of 4 June 2020 modifying the Labour Code to introduce a system for internships for pupils and students (Mémorial A No. 476 of 5 June 2020).
4 Law of 24 July 2020 modifying (1) the Labour Code, (2) the Social Security Code, (3) the Law of 23 July 2015 modifying the Labour Code and the Social Security Code regarding the internal and external reclassification system (Mémorial A No. 663 of 5 August 2020).
5 Law of 15 December 2020 modifying the Labour Code to transpose Directive (EU) 2018/957 of the European Parliament and Council of 28 June 2018 modifying Directive 96/71/EC on the posting of workers within the framework of the provision of services (Mémorial A No. 1024 of 18 December 2020).
6 The state of health crisis was declared by the Grand-Ducal regulation of 18 March 2020, introducing a series of measures in the fight against covid-19, then extended for three months by the Law of 24 March 2020 extending the state of crisis declared by the Grand-Ducal regulation of 18 March 2020, introducing a series of measures to cope with covid-19. The state of crisis ended on 24 June 2020.
7 This point does not exhaustively cover all the exceptional measures taken in the context of coping with the covid-19 virus, but only the most significant measures.
8 Law of 20 June 2020: (1) introducing a temporary exemption to certain provisions relating to employment law connected to the state of crisis associated with covid-19; and (2) introducing a change to the Labour Code.
9 Court of Appeal, 23 April 2020, No. CAL-2018-00064.
10 Court of Appeal, 23 April 2020, No. CAL-2019-00034.
11 Court of Appeal, 28 May 2020, No. CAL-2019-00591.
12 Wage indexation is an automatic mechanism for the adjustment of salaries when the cost of living increases by at least 2.5 per cent. The current index of 834.76 is applicable as of 1 January 2020 and was not changed as of 1 January 2021.
13 Labour Code, Article L. 125-8.
14 Court of Appeal, 13 November 2014, No. 39706.
15 See footnote 11.
16 CJEU, 16 July 2020, Case C-311/18.