practice area articles
By Annie Elfassi, Solène Benet, Sabrina Martin and Patrick Ries
Back to International Employment Law
KEY DEVELOPMENTS FOR 2020
Right to disconnect
The Luxembourg Court of Appeal has recently held that employees have a right to disconnect during any period of paid leave. This is the first time that such a right has been recognised by a Luxembourg Court.
The case that led to this decision concerned a restaurant manager on annual leave, who had been contacted by his supervisor regarding minor problems in the restaurant. The employee first reacted by stating that the supervisor should contact someone else but when the supervisor insisted, the employee replied in a harsher manner. His 'aggressive' reaction was then used as one of the grounds to dismiss him. The Court of Appeal held, however, that the employee's reaction ought to be placed in its proper context. Since the employee was on annual leave and had the right to disconnect during that time, his reaction could not be deemed 'aggressive' and could not justify his dismissal.
It should be noted that there are no legislative provisions enshrining the right to disconnect during paid leave as yet. However, the Government has stated in its coalition agreement that it intends to legislate on the subject.
Increase of minimum salary and paid annual leave
A Bill reforming the Labour Code recently came into force and has increased the minimum salary by 0.9% retroactively as of 1 January 2019. The minimum monthly salary was later increased again to 2,141.99 EUR gross as of 1 January 2020, due to the automatic indexation of salaries.
In addition, a further Bill reforming the Labour Code has been implemented, which increased the minimum number of paid holidays per year to 26 (formerly 25) and added a new bank holiday on 9 May (Europe-Day). These modifications were deemed effective as of 1 January 2019.
New rules on dismissal of employees on sick-leave
In accordance with a new law reforming the Labour Code and the Social Security Code, the employment of an employee on sick leave will now automatically be terminated once the employee's salary has been paid by the National Health Fund for more than 78 weeks (formerly 52 weeks) within a period of 104 weeks. This change was enacted after pressure from civil society and unions.
In addition, the new law provides that:
- An employee on sick leave may commence a phased return to work with the consent of their employer, even while their salary is still being paid by the National Health Fund; and
- To reduce the financial impact of employees on sick leave, employer will only need to pay an employee on sick leave for 77 days during a period of 78 weeks (formerly 52 weeks) before the National Health Fund starts to pay the employee's salary (up to a capped amount).
KEY DEVELOPMENTS FOR 2019
Stock-options and warrant schemes
The Luxembourg tax authorities released a new circular letter which sets out amendments in relation to tax treatments of transferable options. Options granted to employees on or after 1 January 2018 will be taxed at 30% of the value of the underlying shares.
Warrant schemes may be only be offered to employees who are considered to be senior executives (cadres supérieurs) within the meaning of the definition provided for in the Labour code and under certain additional conditions. Senior executives are considered to have a salary that is significantly higher than that of non-executive employees, taking into account the time required for the performance of their duties and the real power they have for effective management.
Amendments to the law on supplementary pension schemes
A Bill reforming the law of 8 June 1999 on supplementary pension schemes came into force on 21 August 2018. The law has modified the existing rules applicable to supplementary pension schemes, including those applicable in case of a transfer of an undertaking. The main amendments are the following:
- supplementary pension schemes: supplementary pension schemes are now open to independent workers and changes to a scheme are now expressly allowed if mutually agreed between the members and the employer;
- time-frame for vesting pension rights: the total length of time may no longer exceed 3 years of service. Employees hired after 20 May 2018 will benefit from the pension rights after 3 years and employees hired before 21 May 2018 will benefit from the pension rights after 10 years;
- tax: no inequalities between internal and external pension schemes with respect to the tax treatment.
- access to information: the right of access to information has been adapted to comply with the Mobility Directive requirements which provide for a wider obligation to provide information;
- transfers: the transfer of employees’ rights has been strengthened; and
- departures: there is an allocation of vested rights.
New rules on the appointment of staff representatives
Grand-ducal regulation dated 21 September 1979 on the electoral process for the appointment of staff representatives has been repealed by the new grand-ducal regulation dated 11 September 2018, which came into force on 22 September 2018. The main changes are as follows:
- for staff delegations which are renewed in full between 1 February and 31 March every five calendar years, the Labour and Mines Inspectorate must, at least two months before the date on which the elections are due, send the companies concerned a registered letter informing them of their identification code. This identification code can be used by the companies in order to access the government interactive platform for appointing staff representatives;
- when elections are organized outside the above-mentioned period, the identification code is sent to the companies concerned within fifteen days of their request;
- there is no longer any difference made between the electoral lists of blue collar workers, white collar workers and young workers;
- the employer can now advertise the lists of candidates electronically; and
- a copy of the report regarding the electoral process and the vote results drawn up by the main polling station and by the additional polling stations, if this is applicable, must be sent to the trade union which presented a list.
KEY DEVELOPMENTS FOR 2018
The GDPR – Reform of Data Protection Rules
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) will enter into force on 25 May 2018.
The new legal framework will establish a single set of data protection rules within the European Union and will replace Directive 95/46/EC and the Luxembourg law on data protection of 2002.
It is of importance that companies’ decision-makers be able to assess the effect of the new provisions and be prepared to implement policies within their organization.
Introduction of Significant Changes to Luxembourg Labour Code - Equal Pay
A new Chapter V relating to equal pay between men and women has been introduced in the Labour code under which employers are obliged to ensure equal pay between women and men for performing work of the same function or of equal value.
If a company breaches equal pay provisions, the following sanctions shall apply:
- nullity of the provision(s) which is/are in breach of the principle on equal pay between women and men;
- automatic substitution of the more higher salary; and
- fines in the range of EUR 251.- and EUR 25,000 - which may be doubled in the case of reoffending within 2 years.
Criminal Record Check
As of 1 February 2017, employers’ right to request a criminal record check are strictly limited to the recruitment process
The potential employer will only be able to request a criminal record excerpt in writing and shall justify the reasons for such a request in view of the role requirements. The requirement to provide a criminal record excerpt should be indicated in the job offer.
A criminal record excerpt obtained in the recruitment phase can only be kept for one month starting from the signature of the contract. If the candidate is not hired, the excerpt must be destroyed.
During the course of employment: The employer will only be able to request a new criminal record excerpt if the employer is permitted by law to request a criminal record excerpt or, the employee’s post will change and the new role required a new verification of character.