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Practice Area Articles

Luxembourg

February 05, 2024

By Paul Hastings Professional

KEY DEVELOPMENTS FOR 2024

Introduction of a “right to disconnect”

The Law of 28 June 2023 introduced the “right to disconnect”. The new law provides that companies in which employees use digital tools for professional purposes must define a system to ensure that the right to disconnect is respected outside working hours. This system must be adapted to the particular situation, specifics and issues of the company or sector in question and must cover, where applicable: (i) practical arrangements and technical measures for disconnecting from digital tools; (ii) awareness-raising and training measures; and (iii) compensation arrangements for exceptional cases where the right to disconnect cannot be respected. This system may be defined by means of a collective bargaining agreement or a subordinate agreement. In the absence of a collective bargaining agreement or any subordinate agreement, the system must be defined at a company level, taking into account any possible powers wielded by the staff delegation. Employers whose employees use digital tools for professional purposes which fail to implement the scheme by 30 June 2026 are liable to an administrative fine of between €251 and €25,000 imposed by the Labour Inspectorate.

New legal framework for workplace moral harassment

The Law of 29 March 2023 reinforced the framework for moral harassment under Luxembourg law and provided for increased obligations for employers to prevent harassment. Furthermore, the Law provides for the possibility for an employee who is the victim of moral harassment or the staff delegate to refer the case to the Labour Inspectorate. On any such referral, the Labour Inspectorate is obliged to carry out an investigation and draw up a report containing recommendations. Employers have the obligation to take appropriate measures to put an end to acts of moral harassment and prevent occurrence of any further such acts. Non-compliance can result in administrative fines. The employee who is the victim of moral harassment cannot suffer any retaliation or termination because of their complaint against moral harassment. Any dismissal in violation of this protection can be declared null and void, resulting in the reintegration of the employee.

Upcoming election of staff delegates

The staff delegate elections will take place on 12 March 2024. Any company (regardless of its legal form or the nature of its activities) which, during the 12 months preceding the first day of the month in which the elections are held (i.e., from 1 March 2023 to 29 February 2024), have at least 15 employees is obliged to organize the staff delegate elections.

With thanks to Kris De Schutter and Celine Meersman of Loyens & Loeff for their invaluable collaboration on this update.

KEY DEVELOPMENTS FOR 2023

Introduction of a (“right to disconnect”)

At present there is no right to disconnect provided by the Luxembourg Labour Code. A draft has been submitted to the parliament for consideration of a law concerning amendments to the Labour Code to introduce a right to disconnect. The new draft law envisages establishing a company-level framework in order to ensure that employees are able to disconnect after their working hours. The framework would need to include practical and technological measures as well as training and provisions on exceptions. It is also foreseen that general provisions on the right to disconnect will be required in any future collective bargaining agreements. The draft law is currently still under consideration and the various interested parties (e.g. organisations representing employers and employees) are providing comments on the draft text.

Should the draft law be voted on by the parliament, it is anticipated that the right to disconnect will result in additional burdens for employers, notably in establishing the company-level framework and ensuring that working practices are adapted to ensure that employees are able to benefit from their right to disconnect (unless an exception is applicable)

New legal framework for workplace moral harassment

Currently in Luxembourg, there is no legal framework concerning workplace moral harassment / workplace bullying. A draft law currently being considered by the parliament sets out the constitutive elements of moral harassment, creates an obligation to define a specific regime against moral harassment, requires the employer to take clear measures if moral harassment/bullying is reported and introduces the possibility for victims to resign with immediate effect due to the serious wrongdoing by the employer (if the employer fails to fulfil their legal obligations). Once the draft law is enacted, employers will need to adapt internal policies and complaints processes to ensure compliance with the new requirements. In practice, many diligent employers already ensure that investigations are duly undertaken in the case of moral harassment and the draft law is anticipated to formalise current best practices.

Additional minimal requirements for employment contracts

With respect to Directive 2019/1152 on transparent and predictable working conditions in the European Union, a draft law amending the Labour Code has been presented to the parliament. The draft law amends and reinforces the minimum requirements for employment agreements and the minimum information rights for employees. Going forward, new contracts will need to comply with the new minimum requirements and existing employees can ask their employer to provide a statement setting out the new minimum information points.

Given that the draft law is likely to pass through the legislative steps relatively quickly, it is advisable for employers to already take steps to amend their standard templates and prepare a draft statement with the specified information.

With thanks to Emilia Fronczak of Loyens & Loeff for her invaluable collaboration on this update.

KEY DEVELOPMENTS FOR 2022

Focus on protecting employees from harassment in the workplace

Since 21 June 2019, the International Labour Organization has adopted the "Violence and Harassment Convention", reminding Member States that they have the responsibility to promote an environment of zero tolerance to violence at work. In Luxembourg, the only measure covering harassment and violence at the workplace, better known by the term "mobbing", is an agreement signed by the Luxembourg trade unions and employer representation in 2007. However, this agreement only sets out guidelines for the prevention and management of harassment and violence at work.

Employees who are victims of mobbing at the workplace are obliged to base their action for damages on Article 1134 of the Civil Code under which agreements must be performed in good faith by the parties. There are no specific legal provisions to protect employees who are victims of harassment.

The Chamber of Employees has published a report indicating that two out of ten employees are victims of mobbing at work, which places Luxembourg as one of the countries with one of the highest harassment rates. Social actors therefore expressed the need to implement preventive measures against harassment at the workplace.

On 21 July 2021, the Ministry of Labor introduced a bill to the Parliament which aims to amend the Labor Code and to implement provisions on protection against moral harassment at the workplace.

The bill proposes the following:

definition of the constitutive elements characterizing mobbing;
an obligation for companies to define a specific regime ensuring protection against mobbing, which should take into account the particular situation of a company or of a given sector;
implication of the staff delegation in the process of preparing internal procedures or information to employees in respect thereof;
establishment of clear measures to be taken by the employer if harassment is reported;
right for the victims to refer the matter to the Labor Inspectorate if the employer fails to react upon a reported act of harassment; and
right for the victims to terminate the employment contract without notice for the employer’s gross misconduct.

The bill was sent to the Council of State for an opinion on 22 July 2021 and is still under review. On 7 October 2021, an Opinion issued by the Chamber for Civil Servants and Public Employees stated that some provisions of the bill could be incorporated into another bill, concerning the creation of the Center for the security, health, and work life quality in the public service. That bill was introduced on 8 September 2017 and is still in progress. The Chamber for Civil Servants and Public Employees also made comments on a few provisions of the bill concerning the definition of moral harassment (new Art. L. 246-2 of the Labor Code), the duty of the employer regarding moral harassment (new Art. L. 246-3), and the sanction for persons who do not respect the provisions of the law (new Art. L. 246-7).

On 19 October 2021, an Opinion issued by the Chamber for Employees acknowledged the attempt of consecrating in the Labor Code a legal regime protecting employees against moral harassment in the workplace, although it noted that such bill was introduced without consultation with the social partners in advance. The Chamber for the Employees also stated that the bill should mention the possibility for a victim of harassment to seek help from an occupational health doctor.

Employers should continue to monitor the process of this bill in preparation for any changes to existing policies and/or procedures that may be required.

Introduction of right to disconnect

The globalization and spread of Internet usage has led to the daily use of IT tools at work. These tools allow employers to maintain constant contact with their employees. Although Luxembourg labor law imposes rules on working hours, a legal vacuum exists with respect to the right of employees to cut the permanent link to work. As a result, a debate exists as to whether employees should benefit from the right not to be contacted by their colleagues and employer for professional purposes outside of working hours.

In September 2020, during discussions between trade unions and companies on the introduction of telework, the need to establish in employment law a “right to disconnect” was raised. On 30 April 2021, the Economic and Social Council issued an opinion and proposed to introduce a new article L. 312-9 in the Labor Code relating to the right to disconnect. On 28 September 2021, a bill was eventually submitted to the Parliament by the Ministry of Labor which aims to amend the Labor Code in order to introduce provisions on the “right to disconnect”.

The bill proposes the following :

an obligation for companies to define a specific regime ensuring the right to disconnect, which should take into account the particular situation of a company or of a given sector;
implementation of any relevant rules by a collective bargaining agreement or at company level;
implementation at company level requires implication of the staff delegation or circulation of information to employees;
administrative fines by the Labour Inspectorate ranging from 251 to 25,000 euros, in the event of non-compliance; and
period of 3 years after the bill comes into force to implement the scheme.

The bill was referred to the Labor Committee on 7 October 2021 and an Opinion issued by the Chamber for Employees endorsed the bill a few days later. The Chamber also calls for a 1 year delay before the provisions regarding the administrative sanctions (Arts. L. 312-9 and L. 312-10) are enforced so that the companies have time to comply with such provisions.

Employers should continue to monitor this development and make appropriate changes to ensure compliance with this new right to disconnect.

KEY DEVELOPMENTS FOR 2021

Collective bargaining agreement on remote working

The two main unions and employers' representatives entered into a new collective bargaining agreement on remote working on 20 October 2020. The new agreement which was reached in the context of changing work conditions due to the COVID-19 pandemic, clarifies the rules on remote working and provides for more flexible and less onerous conditions.

It distinguishes between occasional and regular remote working. Remote working is defined as being "occasional" if it is performed in reaction to unforeseen circumstances or if it does not exceed 10% of the annual working time. A written agreement is only required for regular remote working, it being noted that remote working shall always be mutually agreed between the employer and their employee. In the case of regular remote working, the employer needs to provide the relevant equipment and needs to bear the costs resulting from the remote working.

It is expected that the agreement will be declared to be generally applicable to all employees by means of a Grand-Ducal Regulation. A major challenge for remote working in the Luxembourg market could however not be addressed by the collective bargaining agreement. This challenge results from the fact that nearly half of the labour force of Luxembourg is composed of workers who commute from the neighbouring countries (Belgium, France and Germany), which leads to problems concerning taxation and social security payments. During the COVID-19 pandemic, Luxembourg and its neighbours have exceptionally negotiated exemptions from the rules that would ordinarily apply, but it seems doubtful that these flexible solutions will continue to be applied after the end of the pandemic.

New rules for posted workers

Luxembourg has implemented Directive (EU) 2018/957 of 28 June 2018 which amended the Posted Workers Directive of 1996 via a law of 15 December 2020. The aim of the reform is to strike a new balance between the freedom to provide services and the protection of posted workers, bringing about social convergence in the EU. The principle governing the rules on posted workers is that the posted worker, i.e. a worker who normally works in another State than the Member State to which they are posted, remains bound by their employment contract and subject to the labour law of the State in which they normally work, except for certain provisions of the Member State to which they are posted (including minimum wage and holiday requirements, regulations on working hours, health, and safety and non-discrimination) which apply immediately to the posted worker's employment relationship. If the regulations of the Member State are less favourable than the rules of the State of origin of the posted worker, the rules of the State of origin will continue to apply.

In addition to several minor changes and enhanced notification and information requirements the reform of the Posted Workers Directive contains two major changes. First, workers posted in a Member State by temporary work agencies are now also covered by the rules governing posted workers. Second, after 12 months of posting (a period which may be increased to a maximum of 18 months via a motivated notification to the Labour Inspectorate), Luxembourg law will apply in its entirety to the employment relationship of the posted worker. The rules contain an anti-avoidance clause since the periods of subsequent postings of different workers for the same assignment are added together for the purpose of the 12/18 month threshold.

The reform has maintained a de minimis exemption for workers in the case of initial assembly or installation of goods where this is an integral part of a contract for the supply of goods and necessary for taking the use of the goods supplied which is carried out by skilled or specialist workers for a period which does not exceed eight days.

Increase of the minimum wage, but no indexation

As of 1 January 2021, the minimum wage in Luxembourg has been increased, as follows:

standard adult rate—€12. 7279 per hour corresponding to €2,201.93 per month (full time); and
skilled adult rate—€15. 2735 per hour corresponding to €2,642.32 per month (full time).

It is noted that according to the Luxembourg National Institute of Statistics and Economic studies no mandatory increase of salaries (salary indexation due to cost of living rises) is expected for the year 2021 in view of the current economic situation.

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.

With thanks to Sabrina Martin, Patrick Ries, Annie Elfassi, Solène Benet, Anke Istace, Kris De Schutter, Farah Sophia Jeraj and Emilia Fronczak of Loyens & Loeff for their invaluable collaboration on this update.