The Labour and Employment Disputes Review: Luxembourg

Introduction

In Luxembourg, the labour court is responsible for resolving employment law disputes and has exclusive competence for all such disputes, regardless of the amount at stake. Thus, the labour court has jurisdiction for all complementary pension scheme disputes and disputes in relation to apprenticeship agreements, among others.

There are three labour courts in Luxembourg: one in Diekirch (in the north of the country); one in Luxembourg City (the capital); and one in Esch-sur-Alzette (in the south). Each court covers all towns and cities within its jurisdiction. To determine which court is competent to rule on a case, one must know in which jurisdiction the employee performed his or her employment contract. If the employee has performed work all over Luxembourg, the Labour Court of Luxembourg City will have jurisdiction.

The parties do not need to be represented by a lawyer before the labour court. They may either defend themselves or be represented by a lawyer, their partner, a relative in the direct or collateral line up to the third degree, or a person from their company, as the case may be. If a party is represented by a person other than a lawyer, the representative will need a special mandate to represent one of the parties before the court.

Generally, a labour court is composed of one professional judge and two non-professional assessors. Litigation with respect to a dismissal is generally submitted to a labour court.

Luxembourg procedural rules provide for certain specific cases in which a labour court's decisions are to be made by a single judge. This is the case, for instance, concerning requests for reintegration of employees if a dismissal has been declared null and void (e.g., in cases of dismissal during a declared pregnancy, redundancy prior to the signing of a social plan or dismissal of a staff delegate) or, in the case of a request for unemployment benefits following a dismissal with immediate effect or (since 2018), a resignation with immediate effect.

Proceedings before the labour court are oral, meaning that, as a rule, except for the document introducing proceedings and any documentary proof, no written documents are submitted to the court, and all arguments must be made orally. Hence, the court will take into consideration and base its decision solely on what has been orally discussed between the parties during the pleadings.

If a party is not satisfied with a decision of the labour court, it may lodge an appeal up to 40 days after the notification of the judgment. While Luxembourg has three different labour courts, it has only one court of appeal, which deals with any challenge to a labour court judgment. The challenging party needs to introduce its appeal against the labour court's decision before the Luxembourg Court of Appeal, which includes two chambers that are exclusively competent to deal with labour law-related disputes.

Unlike the conduct of proceedings before the labour courts, proceedings before the Court of Appeal are made in writing and require the parties to be represented by attorneys-at-law to defend their respective interests. In written proceedings, the legal arguments are expressed through written submissions called 'conclusions', which are communicated by the concluding lawyer to his or her constituted opponent. Through these conclusions, the parties alternatively take a position on the arguments and merits developed by their opponents.

As proceedings before the labour courts, and especially before the Court of Appeal, may prove to be cumbersome and may take several months, it is common practice in Luxembourg to solve disputes extrajudicially by way of a settlement agreement.

Finally, although Luxembourg employment law may be considered business-friendly, some provisions of the Labour Code are set out in a framework that is more favourable to employees than employers, given that employees are considered to be the 'weaker party' in the employment relationship by virtue of their subordination to the employer within the performance of their employment contract. Consequently, if there is any doubt, labour courts tend to rule in favour of employees.

As a general rule, no government bodies or quasi-government bodies assist in resolving employment disputes. In this respect, employees dismissed with notice are entitled to employment benefits if they are resident in Luxembourg and meet the applicable conditions. Employees residing in Luxembourg who are dismissed with immediate effect may file a request for unemployment benefits. In cases of dismissal, Luxembourg's Employment Development Agency (ADEM) must also be present, or represented, during related court proceedings, as one of its roles is to pay unemployment benefits to the employee. If the termination is declared wrongful by the court, the employer will have to reimburse ADEM for any unemployment benefits the employee received during the proceedings.

Procedure

i Process for resolution of individual actions and labour disputes

Individual disputes are conducted separately between the employer and each employee. Even if several employees have the same conflict with their employer, each employee will take legal action individually by bringing his or her own action. There is no collective action (i.e., class action) under Luxembourg law in this case. Each procedure will thus be treated as a separate, individual case.

Before bringing an action before the labour court, employers and employees can try to reach an agreement, either by negotiating on their own, or through public authorities in certain specific cases.

There are four public authorities that intervene in employment cases: (1) the labour courts (while it is rare for a dispute brought before the court to result in conciliation, the judges have the preliminary task of reconciling the parties); (2) the Individual Conciliation Body, which was created in 2007 and can be consulted by mutual agreement between the parties to the dispute before legal proceedings are initiated to reach a settlement, although at present this body is not yet operational; (3) the Litigation Commission, whose role is to attempt mediation at the pre-claim stage in the area of apprenticeships; and (4) the Labour Inspectorate, whose role at the pre-claim stage is to intervene informally by hearing each party's side and attempting to find an extrajudicial solution.

In practice, the most common way to end litigation in an extrajudicial manner is to settle. In labour law, a settlement is a contract concluded by and between the employer and the employee to end any dispute (mostly in connection with the termination of an employment relationship), whereby the parties agree to make mutual concessions and covenants. Once the parties have reached a settlement, they can no longer bring an action before the labour court to resolve the questions raised in the settlement. Furthermore, the settlement agreement is strictly construed and relates only to the points it explicitly addresses. Each party can only take legal action to compel the other to comply with the terms of the settlement agreement.

When individual disputes cannot be resolved before litigation, employers and employees must bring their actions before the labour court. In addition to the employer and employee, other parties may be involved. This is the case when, at the end of the proceedings, the employer or employee is likely to have to reimburse unemployment benefits. In this case, the Luxembourg state intervenes and becomes a party to the dispute. Trade unions may also intervene if they are signatories to a collective bargaining agreement applicable to the employee who initiated the dispute, and if the outcome of the case may be of collective interest to the members of the trade union.

Proceedings are initiated by the employer or employee (usually through a lawyer) by filing a simple request with the court clerk's office in as many copies as there are parties. Unlike other proceedings, it is not necessary to notify the opposing party by bailiff that such a request has been filed. The court clerk's office will then contact the opposing party. The parties will subsequently be summoned to a first hearing, at which the hearing date will be set for oral pleadings. Cases are rarely pleaded at the first hearing.

There is also a fast-track procedure, known as summary proceedings, which must be introduced before the president of the labour court (this usually applies to cases of unpaid wages). This procedure is generally aimed at allocating a provision for a determined amount. The president of the labour court grants such a provision only in the absence of serious objection (otherwise, the president is automatically required to declare that they lack competence, and the case will be subject to the proceedings on the merits in accordance with the standard procedure).

Other specific procedures, subject to special rules, also exist, in particular actions for nullity of a dismissal for certain specific employees (e.g., pregnant employees, employees benefiting from professional reclassification and staff representatives) or actions for interim maintenance of remuneration for protected employees who have been suspended.

Actions for payment of remunerations are barred after three years from the date on which the payment is due.

There are specific evidentiary requirements with regard to dismissals. The employee must prove that a valid employment relationship existed, that a dismissal has taken place (this is a challenging question in the case of oral dismissal specifically). The employee must also establish the damage caused by the dismissal and demonstrate that active steps have been undertaken to find a new job. The employer must prove that the reasons for the dismissal are precise, serious and real.

ii Process for resolution of collective actions and labour disputes

Collective actions are of two kinds: the promotion of rights (aiming to ensure that the employer complies with positive law) and the struggle for rights (aiming to improve an existing situation).

Collective actions do not fall within the jurisdiction of the labour courts, but lead to a conciliation procedure before the National Conciliation Office (ONC). When conciliation fails, it remains possible for employees to go on strike (although strikes are rare in Luxembourg). According to case law, a strike is lawful if it takes place after all possible conciliation means of settling conflicts have been exhausted and provided that a report of non-conciliation has been duly established.

There are three categories of collective disputes, subject to three different conciliation procedures: (1) disputes relating to working conditions; (2) disputes relating to collective bargaining agreements, in particular when the employer refuses to enter into negotiations or when negotiations do not lead to a concrete result; and (3) disputes relating to collective dismissal, when the parties cannot reach an agreement on a social plan within the legally established conditions.

Disputes relating to working conditions

The ONC has jurisdiction to resolve collective disputes concerning working conditions (i.e., genuinely collective disputes concerning the collective interests of all, or most of, the company's staff), and disputes arising from problems of organisation, reorganisation or restructuring of the company that have an impact on the working conditions of all, or most of, the company's staff.

The ONC is composed of a president (the Minister of Labour), a joint committee composed of eight assessors (four employee representatives and four employer representatives) and an administrative service. The joint committee is assisted by delegates who are directly involved in the matter and who represent the employer or the employee of the company concerned, respectively. This should allow the assessors to decide in full knowledge of the facts.

The employer or the representatives of the employees concerned in the dispute must refer to the ONC by submitting a written request stating the reasons for the referral and including any relevant documentation. The request must be accompanied by a file specifying the subject matter of the dispute and the context. The president of the ONC may request additional documents and forward the file to the members of the joint committee so that it can decide whether the file is complete and can be submitted for conciliation.

The joint committee investigates the case and then meets in camera for the first time no later than two weeks after the date on which the dispute was referred to the ONC. The two groups of assessors may jointly formulate a conciliation proposal. The relevant vote is to be held by a group with a majority of the votes cast. If this proposal is rejected by at least one of the parties, the president may submit a proposal on their own initiative. The rejection of this proposal by at least one of the parties is deemed to constitute a declaration of non-conciliation. In the event of non-conciliation, the parties may decide to commence a strike. In that respect, an employee's participation in a lawful strike does not constitute valid grounds for dismissal.

Disputes relating to collective bargaining agreements

During the term of a collective agreement, the parties are obliged to refrain from strikes and lockouts. Collective disputes regarding employment matters that are not subject to a collective agreement, or regarding the failure of the parties to reach a collective agreement (including cases in which an employer refuses to engage in collective bargaining when properly requested to do so), must be referred to the ONC before any party to the dispute can take industrial action. During the ONC conciliation process, the parties to the dispute must not hold a strike or lockout.

In disputes relating to collective bargaining, a first conciliation meeting must generally be held by the first day of the sixth week after the date on which the dispute was referred to the ONC.

During the conciliation process, the ONC will seek to broker an agreement between the parties to the dispute. Conciliation ends when a collective agreement is reached, or it is agreed unanimously that conciliation has failed. If no settlement has been reached 16 weeks after the first conciliation meeting, any party to the dispute may declare the conciliation to have failed. When conciliation fails, the ONC draws up a statement of the points still in dispute.

When conciliation fails, any party to the dispute may commence industrial action.

If conciliation fails, either party to the dispute may, in the following two weeks, ask the government to nominate an arbitrator (even while industrial action is under way). The government will then propose an arbitrator to the parties within two weeks of the request. The parties then have two weeks to accept or reject the arbitrator. If both parties accept, the arbitrator will make an arbitration award, which is binding on the parties and has the effect of a collective agreement.

Disputes relating to collective dismissal

Collective redundancies are defined as dismissals made by the employer, for reasons not inherent to the employees concerned, affecting at least seven employees over a period of 30 days or at least 15 employees over a period of 90 days.

Before initiating collective redundancies, an employer must hold negotiations with employee representatives with a view to reaching agreement on a 'social plan'. The negotiations must deal with means of avoiding the redundancies or reducing their number, and of mitigating the consequences by recourse to accompanying social measures aimed, in particular, at helping to redeploy or retrain redundant employees and to return them to the labour market immediately.

For the purposes of the negotiations for a social plan, the employee representatives are the staff delegation (an employee representative body that must be set up in all establishments employing 15 or more employees), the joint company committee, if one exists (companies with 150 or more employees are obliged to set up such a committee) and, in certain circumstances, trade unions.

If, after 15 days have passed since the negotiations started, no agreement on a social plan has been reached, the parties must draw up a document setting out their respective positions on the various issues that were negotiated and submit it to the public labour authorities. Then, within three days, the parties must jointly refer the matter to the ONC. Within two days of being notified, the ONC will invite representatives of the parties to a meeting, which must take place within three days of the invitation. The conciliation process, aimed at brokering agreement on a social plan, lasts a maximum of 15 days from the first meeting.

The employer may not notify employees affected by the planned collective redundancies of dismissal before a social plan is agreed or, where agreement is not possible, before the end of the conciliation process involving the ONC. Any notice of redundancy issued before the agreement is signed, or before the process ends, is null and void, and any employee dismissed in these circumstances can obtain a court order to this effect under an expedited procedure.

When an employer notifies an employee of dismissal as part of a collective redundancy, the minimum period before the dismissal may take effect is generally 75 days – the public authorities may extend this to 90 days in some circumstances. If employees are entitled to a longer notice period by law, or as a result of their employment contract or an applicable collective agreement, this longer notice applies.

At the latest at the time when it begins negotiations with employee representatives for a social plan, an employer contemplating collective redundancies must notify ADEM in writing, providing the same information that is required to be given to the employee representatives. The employer must give a copy of this notification to the employee representatives, who may make any observations they have about the planned redundancies to ADEM.

Furthermore, employers with 15 or more employees are obliged to report all redundancies to the national tripartite Economic Committee. If an employer reports more than five redundancies over a period of three months, or eight redundancies over a period of six months, or if the Committee foresees financial or economic difficulties within the company, the Committee can ask the employer and employee representatives to negotiate a job protection plan aimed at preventing further job losses. For the purposes of these negotiations, the appropriate employee representatives may be staff delegations, the joint company committee or trade unions. Employers or employee representatives may also take the initiative to negotiate a job protection plan, if they foresee financial or economic problems that may have a negative effect on employment.

The negotiations for a job protection plan must broadly address the same issues as those covered for a social plan to accompany collective redundancies, plus several additional topics, such as special measures for older employees. There is no obligation or deadline to reach an agreement on a job protection plan. If the negotiations lead to an agreement, that agreement must be sent to the Economic Committee, which will pass it on to the public authorities for approval. If a job protection plan is approved, the employer benefits from certain advantages such as training subsidies and partial reimbursement of early retirement costs. Further, employers that are covered by an approved job protection plan are not required to negotiate a social plan if they proceed with collective redundancies in the six months following the approval of the job protection plan.

Types of employment disputes

i Dismissal matters before Luxembourg courts

Most of the court proceedings in Luxembourg handle unfair dismissal matters.

According to labour law provisions, an employee who is dismissed with notice may, within one month of the notification of the dismissal, request to be provided with the reasons for the dismissal (Article L124-5 of the Labour Code). Within one month of receipt of the request, the employer must provide the employee with the reasons for the dismissal, which must be precise, serious and real. Upon receipt of those reasons, the dismissed employee has three months to challenge the dismissal before the court, or to formally challenge the dismissal. If the employee formally challenges the dismissal, he or she will have one year from lodging a formal complaint to challenge the dismissal in court.

If the employee files a claim before a given court, the court will consider whether the reasons for the dismissal are sufficiently precise, serious and real. If the court does not consider the reasons to be sufficiently precise, serious or real, it will declare the dismissal wrongful, thereby entitling the employee to damages.

In the event of unfair dismissal, the amount of the damages awarded by a court depends on the actual loss suffered by the employee as a result of the termination of their employment.

A distinction is made between material loss and non-material loss.

Material loss

The period between the date of termination and the date on which the employee has either found new employment or should have found new employment constitutes the reference period, which the labour court will set in the event that it declares the dismissal to be wrongful.

If the employee has not been able to find new employment, the duration of the reference period is determined by the courts based on different criteria, such as the duration of the notice period (if the employee has been exempted from work during the notice period, the notice period will be set off against the reference period), the employee's seniority, age, expertise, ability to find new employment and the situation on the employment market.

Throughout the reference period, the employee is entitled to damages for an amount equal to the compensation that the employee would have earned if he or she had not been dismissed. Unemployment benefits or income derived from a professional activity conducted by the employee during the reference period must be set off against the amount of damages. If the dismissed employee lives in Luxembourg, he or she will be entitled to unemployment benefits that will be paid by the Luxembourg state. If the termination is declared unfair, the employer will be ordered to reimburse the Luxembourg state for the amount of unemployment benefits awarded to the employee during the reference period.

Non-material loss

In addition to material damages, the employee may be awarded damages to compensate for the non-material loss suffered. In this respect, the circumstances surrounding the termination and the inconvenience caused to the employee (for example, in light of the employee's seniority, age or ability to find new employment) because of the termination of the employment constitute the key criteria. This assessment will be made by the courts on a discretionary and case-by-case basis.

ii Psychological and sexual harassment claims

There has been a noticeable increase in claims before the labour courts relating to psychological harassment in the workplace.

Dismissed employees frequently make these claims together with a request for financial compensation for unfair dismissal.

Although the Labour Code provides a framework for sexual harassment claims, despite the increase in psychological harassment claims before the courts, there is no legal framework as yet under Luxembourg law. Only one collective agreement has been concluded with the Luxembourg trade unions with respect to harassment and violence in the workplace. Consequently, decisions on psychological harassment are made on the basis of this agreement, and on the basis of Article 1134 of the Luxembourg Civil Code, according to which contracts must be performed in good faith.

It is very likely that, because of the increase in harassment cases and because very few provisions exist in this respect, the Luxembourg legislator will update existing laws and regulations on this matter.

iii Recharacterisation of the employment contract

Employment contracts are normally drawn up for an unlimited period, meaning that fixed-term employment contracts should be the exception. In this respect, Luxembourg labour law provisions further foresee, among other things, that the reasons for recourse to a fixed-term employment contract must be precisely indicated in that contract. Moreover, the maximum duration of such an employment contract is 24 months.

Because these conditions are frequently not respected, employees often request that the court proceed with a 'recharacterisation' of their fixed-term employment contract as an open-ended employment contract.

Year in review

i Significant legal developments

Luxembourg labour law is always evolving to adapt to the changing circumstances of the social environment. In recent years, several important legal developments have been made with the aim, among other things, of providing employees with a better work-life balance and improving their general quality of life.

Accordingly, the legal changes of past years have resulted in several important court decisions, changing previous rulings and, hence, amending the general understanding of certain matters and aspects of Luxembourg labour law.

During 2020, Luxembourg, like many countries, had to adapt its law to face the covid-19 pandemic. A large number of laws and regulations were adopted in a very short timeframe in order to protect the health and safety of all workers in Luxembourg. The majority of this emergency legislation no longer applies, though certain provisions are still being extended each month in early 2021 (e.g., regarding mask-wearing in public areas, the closure of high-risk business such as bars and restaurants, a national curfew).

New law on internships for pupils and students

The law of 4 June 2020 amending the Labour Code and introducing an internship scheme for pupils and students entered into force on 9 June 2020.

The law differentiates between three types of occupation of pupils and students by companies: (1) during school holidays; (2) during mandatory internships required by an educational institution; and (3) during voluntary internships to acquire professional experience.

In particular, the law sets the formal requirements for internship agreements. The law also sets out the remuneration requirement, where relevant, to be observed in each specific case, subject to the following conditions:

  1. remuneration during school holidays must be equivalent to a minimum of 80 per cent of the minimum wage for unskilled workers;
  2. for mandatory internships of less than four weeks, remuneration remains discretionary, but remuneration of at least 30 per cent of the minimum wage for unskilled workers is now mandatory for all internships of over four weeks; and
  3. for voluntary internships of less than four weeks, remuneration remains discretionary, but for internships of more than four weeks remuneration of at least 40 per cent of the minimum wage for unskilled workers, and of up to 100 per cent of the minimum wage for skilled workers (depending on the duration of the internship, age and the qualifications of the intern) is now mandatory.

New law on internal and external employee reclassification

The law of 24 July 2020, which entered into force on 1 November 2020, amends the provisions on the internal and external reclassification of employees.

In particular, this law defines the missions and powers of the Mixed Committee, the body that is competent regarding decisions on internal or external reclassification, as well as the status of the person undergoing occupational reclassification; changes to working hours; compensation; and rehabilitation, conversion or continuous vocational training measures for persons under internal reclassification.

The new eligibility criteria for internal or external reclassification measures are also set out in this law (i.e., employees are now eligible for reclassification if they have at least three years' seniority or if they obtained a certificate of suitability for the job, issued at the time of hiring).

In addition, the law provides that employers which, on the day the request is submitted to the Mixed Committee, employ at least 25 employees and do not occupy a number of employees benefiting from internal or external reclassification that is within the limits of the rates relating to the employment of disabled workers provided for by the Labour Code, are obliged to reclassify the employee concerned by this measure. To this end, the law reintroduced provisions classifying employees benefiting from internal or external reclassification as disabled workers for the purposes of the threshold.

This new law also amended the conditions for granting the compensatory allowance in the event of reclassification, as well as for its calculation, payment and the consideration for unemployment or pension allowances, for example. Furthermore, the law provides that individuals under reclassification status who are at the end of their unemployment compensation entitlement (including any extension) may receive a specific benefit provided they can show at least five years of suitability for their last job, or five years of seniority. In the case of fraud concerning compensatory allowances or the specific benefit, the Labour Code now provides for a prison sentence of either one to six months, a fine of €500 to €5,000 or both. Attempted fraud is punishable by imprisonment from eight days to three months or a fine of €251 to €2,000.

New agreement on the legal teleworking regime

On 20 October 2020, a new agreement on the legal teleworking regime was signed between the social partners the UEL (the Luxembourg employers' association), the OGBL (the independent Luxembourg trade union confederation) and the LCBG (the Luxembourg confederation of Christian trade unions).

Under the agreement, employees and employers may freely choose how to organise remote working, subject to the applicable provisions, when the employee is hired or at any point during the course of employment. Employees who choose to telework must be treated equally to employees working onsite for the business. Where an employee refuses to telework, the employer may not take action to dismiss the employee on the basis of that refusal alone.

With respect to regular teleworking, the employer must provide the employee with the equipment needed for the job at its own expense. However, this obligation does not apply to occasional teleworking, which is a new concept introduced by this agreement, defined as telework that represents less than 10 per cent of the normal annual working time of the teleworker, or telework in response to unforeseen events.

The agreement does not cover secondment, the transport sector (generally speaking, except for administrative positions), sales representatives, co-working spaces, smart working (occasional work via smartphone or laptop outside of the usual workplace), and all services provided to clients outside of the business.

The agreement was declared generally binding (i.e., applicable to all employers) on 22 January 2021.

New law implementing EU Directive 2018/957 on secondment

The law of 15 December 2020 amending the Labour Code with a view to transposing Directive (EU) 2018/957 of the European Parliament and of the Council of 28 June 2018 amending Directive 96/71/EC concerning the posting of workers carried out in the framework of the provision of services entered into force on 22 December 2020.

The purpose of this law is to adapt and extend provisions relating to employees seconded to Luxembourg from a company established abroad, in accordance with the latest European directive on this subject. The law broadens the compulsory applicable provisions and further specifies those that are applicable to long-term secondments (i.e., over 12 months). In addition, the law indicates that the provisions on secondments are also applicable to temporary work agencies established abroad when they second employees to Luxembourg. New provisions regulating the accommodation conditions of employees who are away from their usual place of work as well as provision of allowances or reimbursement of expenses to cover travel accommodation or food expenses incurred by employees as a result of their secondments have also been included in the Labour Code. The powers (control and sanctions with respect to the above-mentioned requirements) and the scope of information and documents that can be requested by the Luxembourg employment authorities have also been expanded. Finally, the law states that its provisions are not applicable to the road transport sector.

ii Significant case law

The Court of Appeal of Luxembourg City maintained its position that a new trial period can be included in a subsequent employment contract when there is a genuine contractual break between the two contracts. Also, the Luxembourg Court of Appeal reiterated the exception of the legal protection of staff representative in the event of closure of the undertaking.

Court of Appeal of Luxembourg, Decision No. 50/20 – III – TRAV of 28 May 2020, Docket No. CAL-2019-00591

This decision recalls that, in accordance with Article L.121-5(3) of the Labour Code, the trial period cannot be renewed and therefore:

a trial clause in a second contract which is merely a continuation of a previous employment relationship is therefore not valid; in other words, when the employer relies on the same employee under successive contracts, a new trial period is in principle not valid if these contracts are close together in time.2

In this case, an employee was hired twice by the same employer: the first time under a permanent contract with a trial period of three months, ending with the employee's dismissal outside of the trial period the following year and, the second time, three years later under a new permanent contract for the same position, again with a trial period of three months. The company finally terminated this second employment contract during the trial period.

The Labour Court of Luxembourg ruled in favour of the company and considered that the dismissal had taken place during a valid trial period.

The employee appealed this decision and contested the validity of the trial period, claiming arrears of wages and various indemnities arising from the termination of the employment contract.

The Court of Appeal specified that:

if there has been a genuine contractual break, an effective and real interruption of several months, the two hirings being independent of each other, the employer is allowed to arrange for a new trial period, even if the employee is rehired for the same activity.3

In this case, 'the second commitment having taken place one year later, the insertion by the employer of a trial period clause in the second employment contract is therefore valid'.4

Court of Appeal of Luxembourg, Order No. 66/20 – VII – Travail of 11 June 2020, Docket No. CAL-2020-00122

Here the Court recalled that:

there is an exception to the legal protection of the staff representative from dismissal in the event of closure of the undertaking in which the representative was elected. Consequently, the reasons that led the employer to dismiss the employee are not to be taken into consideration as they have no bearing on the nullity of the dismissal.5

In the present case, a dismissed employee had summoned her former employer before the president of the labour court in order to have her dismissal with notice during her term of office as staff representative declared null and void, to have her employment contract maintained and, if applicable, to order her reinstatement in accordance with Article L.415-10(2) of the Labour Code, which protects staff representatives against dismissal. The president of the labour court recalled that the mission of the staff representative is to defend and represent the interests of all the employees of the undertaking and that the purpose of this mission disappears with the closure of the entire undertaking, which was the case here. The president further specified that, pursuant to Article L.415-10(3) of the Labour Code, the mandate of employee representatives ends with the closure of the company branch, and that, in this context, the specific legal protection of employee representatives in the event of dismissal also ceases.

The Court of Appeal reaffirmed the application of Article L.415-10 (3) of the Labour Code to the closure of a company branch and specified that the closure of an undertaking

is understood to be a total and definitive closure. It must not involve the closure of a department, sector of activity or establishment of the company. However, it is not required that the employer who operates several undertakings and who has therefore elected several staff delegations cease all activities. The closure of a single undertaking is sufficient to fall within the scope of Article L.415-10(3) of the Labour Code (as far as the delegates of that undertaking are concerned).6

Consequently, the Court confirmed the order of the judge of first instance and declared the employee's claims unfounded.

Outlook and conclusions

Because of the covid-19 pandemic, we expect to see a growing number of disputes arising between employers and employees. In practice, employers tend to avoid court proceedings unless there is a matter of principle at stake. Hence, many labour law cases are resolved by way of a settlement, particularly as a lawsuit may damage the reputation of both the employee and the employer, and sensitive information or sensitive incidents are likely to be debated in public hearings. In particular, in the event of dismissals, employers generally tend to favour settlements. Hence, we may expect to see more extrajudicial resolution of disputes in the coming months.

Otherwise, given the fact that Luxembourg is a stable country in which labour law is not over-regulated, no major upheavals are expected, either in procedure or litigation activity.

Footnotes

1 Philippe Schmit is a partner at Arendt & Medernach.

2 Court of Appeal of Luxembourg, Decision No. 50/20 – III – TRAV of 28 May 2020, Docket No. CAL-2019-00591, page 6.

3 Court of Appeal of Luxembourg, Decision No. 50/20 – III – TRAV of 28 May 2020, Docket No. CAL-2019-00591, page 6.

4 Court of Appeal of Luxembourg, Decision No. 50/20 – III – TRAV of 28 May 2020, Docket No. CAL-2019-00591, page 6.

5 Court of Appeal of Luxembourg, Order No. 66/20 – VII – Travail of 11 June 2020, Docket No. CAL-2020-00122, page 7.

6 Court of Appeal of Luxembourg, Order No. 66/20 – VII – Travail of 11 June 2020, Docket No. CAL-2020-00122, page 7.

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