The Employment Law Review: Luxembourg

Introduction

i Employment law framework

The relevant statutes and regulations applicable in Luxembourg are:

  1. EU regulations;
  2. the Constitution;
  3. the Labour Code;
  4. grand-ducal regulations;
  5. agreements resulting from multi-industry social dialogue declared generally binding by grand-ducal regulations;
  6. collective bargaining agreements (CBAs) (industry or company-level agreements). Some CBAs are declared generally binding by a grand-ducal regulation, others are not; and
  7. case law.

ii Courts and tribunals

The relevant courts and tribunals in Luxembourg are:

  1. the labour courts, competent to settle disputes concerning employment contracts and apprenticeship contracts;
  2. the Court of Appeal, competent to settle appeals against decisions from the labour courts; and
  3. the Court of Cassation, competent to review decisions from the Court of Appeal on the grounds of legal or procedural error.

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 New procedure for leave taken for family reasons

The Law of 22 January 2021 adds a new criterion for opening the right to leave for family reasons: employees can claim leave for family reasons, in particular if they have a child under the age of 13 who has had to quarantine, has been required to self-isolate or has been expelled, excluded, segregated or kept at home, for compelling reasons of public health, dictated or recommended by the competent national or foreign authority, with a view to limiting the spread of an epidemic.

ii Agreement on teleworking

The convention on the legal framework of teleworking (the Telework Convention) signed by the national social partners (i.e., Luxembourg Employers Association and trade union representatives at the national level) on 20 October 2020 has been declared a general obligation by a Grand-Ducal Regulation of 22 January 2021.

iii Law modifying the short-time working scheme and job retention plan

The Law of 24 November 2021 provides for increasing the number of working hours eligible for short-time working from 1,022 hours to 1,714 hours per calendar year and per full-time employee, for companies eligible for short-time working for structural reasons, provided that they are covered by an approved job retention plan accompanying fundamental restructuring, and resulting from a tripartite sectoral agreement between national social partners (i.e., trade unions and representatives of employers in the sector of activity concerned) and the government. This applies retroactively from 1 January 2021 with the exception, however, of the requirement that the job retention plan must result from a tripartite sectoral agreement, which is not required for 2021. The Law also provides for some new mandatory provisions to be included in a job retention plan in order to be approved.

iv Impact of the covid-19 pandemic on employment law

The crisis resulting from the spread of the coronavirus that began in 20202 has continued to have significant repercussions on labour law, given the need to adapt the working conditions of employees to the legislative and government measures adopted to combat the spread of the pandemic.

During 2021, the following exceptional measures applied3 in particular:

  1. adaptation of the short-time working system (until 30 June 2021);
  2. extension of the extraordinary leave for family reasons reimbursed by the national health fund;
  3. extension of agreements temporarily authorising 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 and social security legislation; and
  4. implementation of a covid check scheme applying to establishments that are open to the public, gatherings or events to which entry is exclusively reserved for those with:
    • either a vaccination certificate with a QR code; or
    • a recovery certificate (valid between the 11th and 180th day after the date of the result of a positive PCR test) with a QR code; or
    • until 17 December 2021 only, a covid-19 test certificate (PCR test valid for 72 hours or certified rapid antigen test valid for 48 hours) showing a negative result, either with a QR code or certified by somebody specified by law.

The covid check scheme is compulsory in hospital establishments, restaurants (including companies' canteens), bars and cafés. In the workplace, the covid check scheme was optional for employers but became mandatory as of 15 January 2022.

Significant cases

i Legitimate exercise of hierarchical power versus moral harassment

The Court of Appeal declared that the dismissal of a company's head of compliance based on her management style, which could have exposed her to complaints of moral harassment, was unfair.4 The Court pointed out that the dismissal for 'potential' moral harassment is not valid without first providing concrete evidence that any moral harassment actually existed and that the normal and legitimate use of the hierarchical power does not constitute moral harassment.

ii Job suppression during parental leave

The Court of Appeal validated the economic dismissal of an employee who was the only aesthetician in the company, motivated by the proven economic difficulties of the company which had to stop her aesthetic care activity and suppress the employee's position while the latter was on parental leave. The Court clarified that, in this case, the employer was materially unable to keep open the job of an employee whose special professional qualification did not allow for assignment to a similar position.5

Basics of entering an employment relationship

i Employment relationship

Employment contract

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 prove it via only 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:

  1. identity of each party;
  2. date of the beginning of the performance of the employment contract;
  3. place of employment (or if there are various places of employment, a statement that the employee will perform work in various places (including abroad), and the employer's headquarters or address, as the case may be);
  4. nature of employment (and, as the case may be, a description of the tasks assigned at the moment of hiring);
  5. daily or weekly standard working hours;
  6. standard working schedule;
  7. remuneration and any benefits;
  8. length of paid holiday or the method of determining it;
  9. length of notice period for termination of the employment contract or the method of determining it;
  10. length of the probationary period, if any;
  11. any complementary or derogatory provisions;
  12. any collective work agreement governing the employee's working conditions; and
  13. any supplementary pension scheme.

Specific terms should be added, depending on the type of employment contract involved (e.g., fixed-term, part-time or student employment contract).

In addition, certain provisions must be expressly provided in writing in order to be applicable (e.g., probationary period and 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 only 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:

  1. the employee does not challenge the modification or its reasons and accepts the change to his or her employment contract. If the employee does not resign and remains with the employer after the changes come into force, he or she is deemed to have accepted them; or
  2. the employee refuses to accept the changes. The employee must then resign before the end of the notice period, if applicable. This will be considered as a dismissal rather than a resignation. The employee must then start a procedure before the competent labour court to claim for damages. If the labour court determines the reasons for the modification are not sufficiently real and serious, or not provided to the employee with sufficient precision, it will declare the dismissal as wrongful and the employer will be required to pay compensation for material and moral harm to the employee.

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 shorter 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 €4,586.12 (index 855.62).6

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 an open-ended employment contract or a fixed-term employment contract (depending on the type of employment contract initially concluded).

iii Establishing a presence

Establishment permit

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 in the country. 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.

Tax

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.

Restrictive covenants

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.

If an employee engages in competing activity during the employment contract, the employer may sanction the employee and bring a claim for damages based on a civil action before the 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 setting up an undertaking that performs similar professional activities after termination of the employment contract. These clauses are strictly regulated by Luxembourg labour law.7

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 €58,328.21.8

To be valid, a non-compete clause must also comply with the following conditions:

  1. it must be in writing in the employment contract;
  2. it must refer to a specific professional sector and to similar professional activities to those performed by the employer;
  3. it must be limited to 12 months following the day the employment contract ends; and
  4. it must be geographically limited to a relevant area (i.e., locations in which the employee could effectively compete with the employer) and cannot extend beyond the national territory of Luxembourg.

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.

Wages

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 hours 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 CBA provides for a longer period (of up to 12 months).

  1. Work organisation plan: This allows the employer to plan the working hours over a reference period. If the reference period is longer than one month, the employee is entitled to supplementary annual leave (up to 3.5 days) and to specific overtime pay (if the CBA does not provide other rules). A work organisation plan may be implemented only after consulting employee representatives or the employees concerned; for some issues, their consent is required.
  2. 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 employees concerned.

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.

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.

Night workers

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.

ii Overtime

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:

  1. to prevent the loss of perishable goods or to avoid compromising the results of work;
  2. to allow for special work, such as inventories or balance sheets, timelines, liquidations and statements of account; and
  3. exceptional cases in the public interest and events of national danger.

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 compensation

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:

  1. monthly working hours exceeding the statutory monthly working hours by more than 12.5 per cent are treated as overtime, when the reference period is more than one month and less than three months. The rate is 10 per cent when the reference period is between three and four months;
  2. work performed at the request of the employer beyond the limits set in the initial planning for the day, week or during an entire work organisation plan, is deemed to be overtime if the employer gives the employees less than three days' notice; and
  3. if the employer changes a work plan with fewer than three days' notice and this does not result in an increase in the hours scheduled but is simply a change of schedule, the hours of work exceeding the initial work plan by more than two hours should be paid at a rate of 1.2 times the hourly rate for the first two hours.

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 senior executives.

Foreign workers

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 must keep a copy of each foreign 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, in particular).

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. The length of the secondment is also limited by the validity of the residence authorisation (in the case of posting a third-country national) and by social security rules. Moreover, the Labour Code imposes additional working and employment conditions to be complied with by a foreign company that posts an employee within the Luxembourg territory for a period exceeding 12 months. Thus, the company is subject, as from the 13th month, to all legislative, regulatory or administrative provisions as well as to those resulting from CBAs declared to be of general obligation or from an agreement in the field of interprofessional social dialogue, applicable in the field of work and employment, with the exception of those relating to procedures, formalities and conditions governing the conclusion and termination of contracts, including non-competite clauses and supplementary pension schemes.

Nevertheless, the Labour Code provides that the 12-month period may be extended to 18 months upon duly motivated notification by the foreign company to the ITM prior to expiry of the 12-month period.

iii Work permit

Citizens of a Member State of the European Union or the EEA and of Switzerland are exempt from the obligation to obtain authorisation to work in Luxembourg. They need only 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:

  1. minimum wage and its automatic adjustment to the cost of living;9
  2. working time, daily breaks, 11 hours of daily rest, 44 hours of weekly rest;
  3. annual leave;
  4. public holidays;
  5. interim work and loan of workforce;
  6. protection of young workers (i.e., under 18 years old) and workers who are pregnant or breastfeeding;
  7. non-discrimination;
  8. unemployment resulting from weather disruptions;
  9. temporary lay-off;
  10. prohibition of illegal work;
  11. health and security at work;
  12. accommodation conditions when the employer provides accommodation for employees away from their usual place of work; and
  13. allowances or reimbursement of expenses for travel, accommodation or food incurred by an employee removed from his home for professional reasons.

Global policies

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.

For an internal rule to be considered as binding on an employee, the employer must 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.

Parental leave

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 Fund10 and receives an indemnity corresponding to her remuneration, but limited to five times the monthly minimum social salary for unqualified employees as in force on a particular date (€11,284.75 as of 1 October 2021).11 Payment of maternity leave is subject, generally, 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 upon 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

The father is entitled to 10 paid days off work. Paternity leave can be split, but must be taken within two months of:

  1. the birth of the child; or
  2. in the case of adoption, the arrival of a child under the age of 16. However, this leave is not available if the parent had the benefit of leave for the adoption of a child under the age of 12 (see Section IX.ii).

An employer may refuse to allow paternity leave to be split if it is contrary to the needs of the business.

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.

Only the first two days of paternity leave are paid by the employer; the government pays from the third day onwards. The salary taken into consideration for the latter is limited to five times the minimum social wage for unqualified employees (i.e., €11,284.75 as of 1 October 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:

  1. first parental leave, which must be taken immediately after maternity or adoption leave; or
  2. second parental leave, which must be taken before the child's sixth birthday or, in the case of adoption, no more than six years after the adoption leave or, if no adoption leave was taken, after the date of the adoption order but before the child's 12th birthday.

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:

  1. has been affiliated to the Luxembourg social security scheme at the time the child is born or adopted, and for at least 12 continuous months prior to the parental leave, via one or more employment contracts totalling at least 10 hours of work per week as an employee;
  2. is engaged as an employee via one or more employment contracts during the full period of the parental leave;
  3. ceases any professional activity during the course of the leave (in the case of full-time parental leave) or reduces his or her working hours (in the case of part-time parental leave); or
  4. during parental leave, raises the child in his or her home and mainly uses the time to take care of the education of the child.

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 Children12 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., €2,256.95 as of 1 October 2021) nor higher than the monthly minimum social wage for unqualified employees increased by two-thirds (i.e., €3,761.58 as of 1 October 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 dismissal for gross misconduct.

Translation

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.

Employee representation

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, as set out in the table below.

Composition of the staff delegation
Represented employeesNumber of delegates
Between 15 and 251
Between 26 and 502
Between 51 and 753
Between 76 and 1004
Between 101 and 2005
Between 201 and 3006
Between 301 and 4007
Between 401 and 5008
Between 501 and 6009
Between 601 and 70010
Between 701 and 80011
Between 801 and 90012
Between 901 and 1,00013
Between 1,001 and 1,10014
Between 1,101 and 1,50015
Between 1,501 and 1,90016
Between 1,901 and 2,30017
Between 2,301 and 2,70018
Between 2,701 and 3,10019
Between 3,101 and 3,50020
Between 3,501 and 3,90021
Between 3,901 and 4,30022
Between 4,301 and 4,70023
Between 4,701 and 5,10024
Between 5,501 and 5,50025
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:

  1. prevent or solve individual or collective disputes arising (or likely to arise) between the employer and the employees;
  2. submit employees' individual or collective claims to the employer; and
  3. 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:

  1. on the situation, structure and likely evolution of employment within the company as well as possible anticipatory measures envisaged, in particular threats to employment;
  2. on decisions likely to lead to substantial changes within the organisation, in particular redundancies and transfers of undertakings;
  3. before implementing, amending or withdrawing a supplementary pension plan, a specific teleworking regime at company level, and before publishing or amending internal rules; and
  4. 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:

  1. fewer than 50 employees: one working week over the full term of the member's term of office (i.e., five years);
  2. between 50 and 150 employees: two working weeks over the full term of the member's term of office; or
  3. more than 151 employees: one working week per year.

v Meetings

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. The candidates for the post of staff delegate are also protected against dismissal upon submission of applications and for a period of three months. 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.

Data protection

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 promulgation of 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 Regulation13 (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, the general principles of the GDPR must be respected.

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 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.

Discontinuing employment

i Dismissal

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:

  1. dismissal with notice: relating to an employee's aptitude or conduct, or reasons relating to the operational needs of the organisation, establishment or department (i.e., economic grounds); or
  2. dismissal with immediate effect: in the event of gross misconduct (i.e., conduct that is considered immediately and definitively to make it impossible for the working relationship to continue.

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.

Notice period

In cases of dismissal with notice, the dismissal letter must be sent by registered post or must be delivered by hand. The employee must acknowledge receipt, otherwise the notice of termination will be invalid. The notice period that must be given by the employer depends on the length of service of the dismissed employee:

  1. less than five years: two months;
  2. between five and nine years: four months; or
  3. 10 years or more: six months.

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 dismissal letter or in a subsequent letter.

Hiring priority

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:

  1. dismissal of a pregnant woman, or dismissal during maternity leave or parental leave (see Section IX);
  2. dismissal of a victim or a witness of sexual harassment;
  3. dismissal during a period of sickness (under specific conditions);
  4. dismissal during the protection period for an employee declared disabled in his or her last position who has been internally professionally redeployed by the joint committee (commission mixte); and
  5. dismissal of a member of a staff delegation (see Section XI).

Dismissal indemnities

At the end of an employment contract, the employee is entitled to:

  1. payment for any remaining untaken annual leave calculated up to the end of the notice period, even if the employee has been released from the obligation to perform active work during the notice period;
  2. the prorated amount of a contractual 13th-month payment or a bonus, provided that the bonus can be considered part of the remuneration (i.e., not a discretionary bonus); and
  3. a legal departure allowance (i.e., severance pay) if the employee has at least five years' service within the organisation (excluding dismissal for reasons of gross misconduct).

Settlement agreement

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.

To be enforceable, the settlement agreement must:

  1. be drawn up in writing, in as many copies as there are parties;
  2. contain reciprocal concessions; and
  3. be initiated and drawn up with the full consent of the parties.

ii Redundancies

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.

Social plan

For collective dismissals, a social plan must be 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. 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.

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 will usually contain provisions for outplacement or training measures.

Information and consultation

The employer must inform and consult the staff delegation about any decisions likely to lead to collective dismissals.

After completing the information and consultation process and before entering into negotiations with social partners (i.e., the employer and the trade unions in the company or sector concerned), 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:

  1. reasons for the proposed (collective) redundancies;
  2. number and categories of employees affected by redundancy;
  3. number and categories of employees working regularly for the organisation;
  4. period during which the proposed redundancies will take place;
  5. selection criteria for employees to be made redundant (with the input of the staff delegation); and
  6. method of calculation of any compensation above the minimum provided for by law, or CBA, if any, or the reason for not awarding any additional compensation.

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.

Neither the transferor nor the transferee can dismiss employees, or justify a modification of a substantial provision of the employment contract that is detrimental to the employee, on the grounds of the transfer of undertaking 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):

  1. the fixed or proposed date for the transfer;
  2. the reasons for the transfer;
  3. the legal, economic and social consequences of the transfer for the employees; and
  4. the envisaged measures towards the employees.

Outlook

i Bill on moral harassment

The only national system covering moral harassment is currently the convention of 25 June 2009 on harassment and violence at work. Therefore, employees who are victims of moral harassment in the workplace are currently obliged to base their action for damages on Article 1134 of the Civil Code and the good faith execution of the employment contract. To remedy this legal vacuum, the Bill proposes to introduce a new chapter in the Labour Code dealing with moral harassment at work and the protection of employees. Bill No. 7864, introducing in the Labour Code a device relating to protection against moral harassment, was submitted on 23 July 2021.

ii Bill on right to disconnect

Bill No. 7890, introducing in the Labour Code a provision on the right to disconnect, was submitted to the Chamber of Deputies on 28 September 2021. The main purpose of the Bill is to provide for an obligation to define a specific scheme to make sure that the right to disconnect outside working hours is respected when employees use digital devices for their work. This scheme should be adapted to the specific situation of the company or sector, and be introduced and modified in compliance with the attribution of staff delegation, if it exists.

iii Bill on establishing specific rules for posting drivers in road transport sector

Bill No. 7901 was submitted to the Chamber of Deputies on 18 October 2021. The Bill is intended to transpose Directive (EU) 2020/105714 into national law, establishing specific rules for posting drivers in the road transport sector. The Bill also provides for some adaptations of the general rules in the Labour Code on posting of employees.

Footnotes

1 Guy Castegnaro is the founder and managing partner and Ariane Claverie and Christophe Domingos are partners at Castegnaro – Ius Laboris Luxembourg.

2 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.

3 This point does not exhaustively cover all the exceptional measures taken in the context of coping with covid-19, but only the most significant measures.

4 Court of Appeal, 4 March 2021, No. CAL-2020-00227.

5 Court of Appeal, 18 March 2021, No. CAL-2020-00187.

6 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 855.62 is applicable as of 1 October 2021.

7 Labour Code, Article L. 125-8.

8 Since the adaptation of wages, salaries and pensions (+2.5 per cent) occurred on 1 October 2021, the gross minimum wage required to apply a non-compete clause at the end of the employment contract increased from €56,906.17 to €58,328.21 (index 855.62).

9 Labour Code, Article L. 223-1.

10 Caisse Nationale de Santé.

11 Since the adaptation of wages, salaries and pensions (+2.5 per cent) occurred on 1 October 2021, the new minimum monthly social wage for a non-qualified employee is €2,256.95 (index 855.62).

12 Caisse pour l'Avenir des Enfants.

13 Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons with regard to the processing of personal data and on the free movement of such data, and repealing Directive 95/46/EC (General Data Protection Regulation).

14 Directive (EU) 2020/1057 of the European Parliament and of the Council of 15 July 2020 laying down specific rules with respect to Directive 96/71/EC and Directive 2014/67/EU for posting drivers in the road transport sector and amending Directive 2006/22/EC as regards enforcement requirements and Regulation (EU) No. 1024/2012.

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