With the extensive use of teleworking due to the spread of COVID-19, the various social partners in Luxembourg agreed to modernise the existing legal regime for teleworking and signed a new inter-professional convention on the legal regime for teleworking on 20 October 2020. This new convention has been declared of general obligation by a Grand-Ducal Regulation of 22 January 2021, with effect as of 2 February 2021, meaning that the convention is binding on all employers in Luxembourg.
The new convention now applies to both occasional and regular telework, and introduces for the first time a definition of occasional telework. It also simplifies the conditions for the implementation of regular telework, by reducing the mandatory mentions to be included in the agreement between the employer and the employee, and by providing that the agreement may result not only from an individual agreement, but also from a collective bargaining agreement or an agreement at company level. The convention also defines the employer’s obligations with respect to equal treatment, work equipment, trainings, work organisation, etc.
In addition to this legal framework, the Luxembourg Financial Supervisory Authority (Commission de Surveillance du Secteur Financier, CSSF) has issued circular No 21/769 on teleworking, which will apply to all supervised entities of the financial sector. The circular will in principle come into force on 30 September 2021, but this may be delayed depending on the evolution of the COVID-19 pandemic.
This circular defines the governance and security requirements the supervised entities must comply with when implementing and using telework solutions under normal general working conditions (ie, not under pandemic-related situations).
On 1 November 2020, the Law of 24 July 2020 on the internal and external reclassification system came into force. This law aims in particular at optimising the procedures in place for professional reclassification and at improving the financial situation of people undergoing professional reclassification.
The Law of 15 December 2020 amending the Labour Code in order to transpose the European Union directive for posted workers entered into force on 22 December 2020. This law extends the core Luxembourg employment rules concerning mobility that now apply also to employees posted to Luxembourg – for example: accommodation provided by the employers to workers who are far from their usual place of work; allowances or reimbursements of travel, accommodation and food; and equal treatment in terms of remuneration.
Furthermore, when employees are posted to Luxembourg for more than 12 months, or 18 months if extended, all Luxembourg employment rules must apply.
Numerous derogatory measures have been implemented to cope with the unprecedented COVID-19 crisis – many of which have impacted the employment landscape.
Leave for Family Reasons in the Context of the Pandemic
The leave for family reasons in the context of the pandemic enables parents to benefit from an extended leave to look after their child(ren) in certain special circumstances.
This leave applies to all employees, self-employed professionals and or apprentices, who are registered with the Luxembourg social security scheme, regardless of whether they have the possibility to work from home or not, and who have a child who is:
The age limit of 13 years is not applicable when the child receives special additional allowance for disabled children from the CAE (Caisse pour l’avenir des enfants).
Leave for family reasons can only be taken by one parent at the same time. Additionally, an employee who is placed on short-time work, or whose partner or spouse is partially unemployed, is not entitled to leave for family reasons.
The leave for family reasons has been extended up to (and including) 14 September 2021.
This special leave is assimilated to a sick leave period, meaning that employees cannot be dismissed during their leave for family reasons except for serious misconduct with immediate effect.
Leave for Family Support in the Context of the Pandemic
The leave for family support in the context of the pandemic enables employees (from both private and public sector) and self-employed professionals to look after an elderly person or a disabled adult following the closure of a daycare structure or a training or employment structure.
The following conditions must be met:
The leave may be divided among members of a household, but they may not take the leave at the same time.
The leave for family support can be requested up to and including 25 November 2021 and shall end if the daycare structure or the training or employment structure notifies the Minister that it has resumed all or part of its activities and that there is a place available in the approved service for the person concerned.
This special leave is assimilated to a sick leave period, meaning that employees cannot be dismissed during their leave except for serious misconduct with immediate effect.
For the companies obliged to close during the state of emergency and for the ones entitled to and using partial unemployment scheme, the trial period in the contracts with their employees were suspended from the day of the governmental decision to close the company and its activities or from the day the concerned employee was admitted to partial unemployment measure. The suspension lasted until the end of the state of emergency (ie, 24 June 2020).
Working contracts covered by this measure were fixed-term contract, apprenticeship, interim contracts, and open-ended contracts.
Teleworking and Cross-border Employees
Temporary derogations from taxation and social security registration rules of cross-border employees teleworking in their country of residence have been agreed with the neighbouring countries (Germany, France and Belgium).
It has been agreed that the days spent in the country of residence instead of Luxembourg, since March 2020 due to the COVID-19 restrictions and recommendations, would not count in the maximum number of days employees are allowed to work in their home country before (i) becoming liable to personal income tax in that country and (ii) having to be registered with the social security system of that country.
These temporary derogations are still in force.
Special and temporary arrangements for short-time working (chômage partiel) temporary measures have been put in place since the beginning of the pandemic.
The short-time working scheme in the event of force majeure related to the pandemic was in place until the end of the state of emergency, 24 June 2020. Companies forced to close during this period were directly entitled to benefit from this scheme without any condition. Other companies had to justify a negative impact of the pandemic.
After the end of the state of emergency, in view of a gradual return to normal, the conditions to obtain compensation were continuously evolving. This phase was considered to be an economic recovery period and lasted until 30 June 2021.
During the economic recovery phase, companies which applied to benefit from the short-time working scheme had to fulfil different conditions, such as limitation of dismissals (eg, prohibition of dismissal for economic reasons, or limits on dismissals calculated as a percentage of active workforce). During this phase the number of working hours eligible for compensation due to partial unemployment were also subject to a cap.
Eligible companies were reimbursed by the Employment Fund for inactive hours of their employees. Reimbursement was limited to 80% of the normal salary of the employee and did not exceed 250% of the minimum social wage for an unqualified employee.
As of 1 July 2021, the general rules regarding partial unemployment are back in force.
Health and Safety Measures
The Grand-Ducal Regulation of 17 April 2020 introduced a general framework for health and safety measures related to the pandemic.
This Regulation introduced measures such as the obligation for the companies to take appropriate measures to protect the health and safety of their employees, or to avoid and mitigate risks. It also introduced an obligation to assess any unavoidable risk related to the health and safety of employees and to limit, to the extent possible, the number of employees exposed, or likely to be exposed, to the risks and to inform them of such risks and how to mitigate them.
In order to comply with these measures, employers have to fit out workstations and workplaces with specific health and security measures, such as information panels and disinfectants. The employers shall also ensure that employees maintain appropriate physical distance or wear face masks.
Employees’ Salary during Sick Leave
From April to June 2020, the CNS (Caisse nationale de Santé) assumed the payment of the salary of the employees on sick leave as of the first day of sickness.
The law of 13 May 2008 abolished the distinction between blue-collar workers (ouvriers) and white-collar workers (employés privés), by introducing a single status applicable to all private sector workers, as of 1 January 2009.
Currently, the only known difference between private sector employees is between employees and senior executives (cadres supérieurs).
To qualify as a senior executive, four cumulative criteria must be met – namely, the employee shall:
Senior executives are not subject to the provisions of collective bargaining agreements (unless otherwise expressly mentioned) and do not benefit from overtime pay. On the contrary, employees benefit from overtime pay and are subject to the provisions of collective bargaining agreements.
An employee can be hired by way of either a permanent or a fixed-term employment agreement, which may be full-time or part-time.
In principle, an employment contract is for an indefinite duration, meaning that a term has not been agreed by the parties. Employment contracts must be drawn up in writing, at the latest when the employee enters into service, in duplicate and shall contain at least:
Fixed-term contracts can only be used in exceptional circumstances for the execution of a specific and temporary task – examples include: replacing an employee who is absent due to sick leave, maternity leave etc; in the case of specific and temporary work due to a temporary and exceptional increase in business activity or in the case of business start-ups or expansion; occasional and one-off tasks which fall outside of the ordinary activities of the company, etc.
In addition to the mandatory formalities and clauses required for any employment contract, fixed-term employment contracts must also state the specific tasks for which the contract has been concluded and the reason justifying its fixed term, plus:
In principle, the Labour Code states that employee’s normal working time should not exceed eight hours per day and 40 hours per week. An applicable collective bargaining agreement may provide for lower limits.
Flexibility of Working Time
The employer may determine a reference period during which employees may work beyond the above-mentioned limits, without this qualifying as overtime, by implementing:
In any case, working time cannot exceed ten hours per day or 48 hours per week.
Part-time contracts must be in writing and contain the following terms:
Overtime work means any work performed, at the employer's request or permission, beyond the daily and weekly limits of normal working hours, as set either by law or by the parties to the employment contract (if these limits are lower).
In principle, the number of hours of overtime may not exceed two hours per day. The working time of an employee, including overtime, may in no case exceed ten hours per day and 48 hours per week.
The use of overtime is limited to the following exceptional cases:
In the first three cases, the provision of overtime is subject to prior notification or authorisation by the Labour Inspectorate (Inspection du Travail et des Mines).
Overtime must be compensated by paid time off, at the rate of one hour plus half-an-hour of paid time off for each hour of overtime worked, or credited at the same rate to a time-saving account, the terms of which may be laid down in the applicable collective agreement or any other agreement between the social partners concluded at the appropriate level.
If an employee working on a full-time basis refuses to work overtime, this may constitute a ground for dismissal (unlike employees working on a part-time basis).
In principle, the salary is freely determined by both parties at the time of signing the employment contract.
Minimum Social Wage
Nevertheless, every employer must respect the minimum social wage applicable according to the employee's qualification. As of 1 January 2021, the applicable minimum social wage for an unskilled employee is EUR2,201.93 gross. For a qualified employee, this amount is increased by 20%. For a teenage worker, this amount is reduced by 20–25%.
Indexation of Wages
The minimum social wage may be adjusted in line with changes in the average level of earnings, if law so provides. In such a case, the employer must increase the wages of employees receiving the social minimum wage to adjust it to the new rate.
All wages (including the minimum wage) are also subject to automatic and mandatory indexation. When the consumer price index rises or falls by 2.5% in the previous six months, wages are in principle adjusted by the same percentage. The consumer price index is published monthly by the National Institute for Statistics and Economic Studies (STATEC). The employer must, if necessary, increase the wages of all employees by 2.5%.
13th Month's Pay or Bonus
In principle, private sector employers are not obliged to pay their employees a 13th month's pay or a bonus, unless this is expressly provided for by an employment contract, collective bargaining agreement or company agreement.
Annual Paid Leave
All employees, including apprentices, regardless of their type of contract, are entitled to paid annual leave. Each employee is entitled to at least 26 working days of paid leave per year. The employer must continue to pay the employee during the period of paid annual leave.
Maternity leave is granted to women mainly to protect their health during and after the pregnancy, as well as that of their child. In order to benefit from maternity leave, a pregnant woman must inform her employer by submitting a medical certificate attesting pregnancy and the expected date of delivery.
Maternity leave is divided into two phases:
Each parent is entitled to six months of parental leave for each of their children after the birth or the adoption of a child. Parental leave is not transferable between the two parents.
To benefit from parental leave, the employee must have been affiliated without interruption for at least 12 months with the Luxembourg social security system.
The parent can request:
During the period of parental leave, the employment contract is suspended, either fully (full-time parental leave) or partially (part-time parental leave). The employer does not pay any salary, or only pays the salary corresponding to the part-time work. For the rest, the employee receives a replacement income, depending on the average of his or her current salary, the lower limit currently being, for full-time leave, EUR2,121.99 with the upper limit being EUR3,569.99.
The employee has special protection against dismissal which does not, however, cover dismissal with immediate effect. Length of service continues to accrue, but the employee does not accrue holiday rights.
During the period of parental leave, the employer is obliged to keep the employee's position and to reinstate him or her, or, if this is not possible, to offer him or her a similar job corresponding to his or her qualifications. In any case, the salary must remain equivalent.
At the end of the parental leave, the employee must normally return to his or her employment immediately.
If the employee does not report to work, this is a valid reason for dismissal with immediate effect.
When adopting one or more children under 12 years old, one of the spouses may benefit from a 12-week adoption leave to take care of the child(ren).
For certain events in an employee's private life, labour law provides for additional special leaves, namely:
Special leaves are exhaustively listed by the Labour Code. However, some collective bargaining agreements grant employees other leaves for personal reasons or tolerances for being away from the office – for example, to visit a doctor or to carry out administrative procedures (eg, judicial summons).
These extraordinary leaves must be taken at the time of the event and cannot be carried over.
The employer may insert a confidentiality clause in the employment contract and thus oblige the employee, both during the employment relationship and after its termination, to an obligation of confidentiality. Such a clause is only valid if it is proportionate and drafted in a limited and precise manner.
The obligation not to disparage arises from the obligation to perform an employment contract in good faith. Disparagement of the employer is likely to constitute serious misconduct and justify the dismissal of the employee.
The principle is that the employer bears the risks caused by the company's activity. Employees can only be held liable towards their employer in case they have committed an intentional fault or a gross negligence.
A non-compete clause is defined by the Labour Code as a clause by which the employee agrees to refrain, for the time following their departure from the company, from running a competing personal business, as an individual entrepreneur, whose activities are similar to those performed by the former employer.
In order to be valid, a non-compete clause must comply with the following conditions:
Furthermore, the scope of the non-compete clause must be limited as follows:
Recent case law has ruled that extended non-compete clauses may be valid, provided that appropriate financial compensation is provided and that the clause is not manifestly excessive. In addition, the employer has to demonstrate the existence of an interest to be protected and which justifies an extended non-compete clause, such as outflow of know-how, diversion of customers, etc.
The judge has the power to assess in concretothe enforceability of a non-compete clause and to reduce its scope in case it is disproportionate.
The non-compete clause is not enforceable if the employer has wrongly terminated the employment contract with immediate effect or if, upon termination, the employee has not been granted the legal notice period.
The inclusion of a non-solicitation clause in an employment contract is common practice, although this type of clause is not regulated by the Labour Code.
A non-solicitation clause may be defined as a clause by which an employee agrees to refrain, for a specific time following their departure from the company, from soliciting or inducing the company’s customers to terminate professional relationship with the company, or its employees to leave the company.
Unlike non-compete clauses, the validity of non-solicitation clauses is not subject to compliance with specific conditions. Non-solicitations clauses are generally enforceable as long as they are reasonable (ie, not disproportionate, ambiguous or overly broad) and comply with general principles of civil law. For example, non-solicitation obligations shall not be perpetual and shall therefore be limited in time (although the Labour Code does not provide for a maximum time limit).
If a judge were to decide that a non-solicitation clause is disproportionate or ambiguous, they could either set aside the clause in its entirety or simply sever its parts.
The European Union Regulation No 2016/679 (the “GDPR”) is applicable in Luxembourg and complemented by the law of 1 August 2018. The GDPR provisions and principles also apply to employment relationships.
Data processing can only occur in compliance with the following principles:
The legal basis for processing are:
The Luxembourg Data Protection Authority (Commission nationale pour la protection des données, the CNPD) and the European Data Protection Board (the EDPB) issue recommendations and opinions regarding data processing, while the Court of Justice of the European Union (the CJUE) provides interpretation of the GDPR.
Citizens of European Union and European Economic Area countries, as well as Switzerland, have the right to work and reside in Luxembourg without any work permit.
Third-country nationals must apply for a temporary authorisation to stay before entering Luxembourg and must then apply for a residence permit for salaried workers after their arrival.
Prior to recruiting a third-country national, employers must make a declaration of a vacant position to the Luxembourg employment agency (Agence pour le Développement de l’Emploi, ADEM), so that the employment agency can check whether the open position can be filled by a registered job-seeker. If the employer has not been presented with a suitable candidate within three weeks, they can request a certificate from the employment agency that will allow them to recruit a third-country national.
Residence permits are issued for one year for a specific sector and profession. The permit is renewable. As of the first renewal, the permit is renewable for a maximum duration of three years in which case they are extended for any profession and sector. After five years of lawful and uninterrupted stay on the territory of Luxembourg, third-country nationals may submit an application for a long-term residence permit.
With respect to highly qualified workers, the employer must still make a declaration of a vacant position to the employment agency, but the employment agency will not perform the labour market test. Highly qualified workers receive a renewable European Blue Card permit which is valid for four years or for the duration of the employment contract plus three months, if shorter.
Following the United Kingdom’s withdrawal from the European Union, and the end of the transition period on 31 December 2020, British citizens must now follow the same procedure as that applicable to third-country nationals. This means that they must hold a residence permit to stay and work in Luxembourg, unless they have residency rights under the Withdrawal Agreement signed between the UK and the EU.
Citizens of European Union or European Economic Area countries, as well as Switzerland, wishing to stay more than 90 days in Luxembourg must make a declaration of arrival, within eight days of arrival in Luxembourg, at the administration of the commune where they intend to establish residence.
They must also register at their commune of residence within three months of arrival in Luxembourg.
Third-country nationals must follow the following steps:
Role of Unions
The purpose of unions is the defence of professional interests and collective representation of their members as well as improvement of their living and working conditions.
In order to fulfil this mission, the unions initiate social dialogue with the employers; in case of deep disagreement, they can call for strikes. They are involved in negotiations of collective bargaining agreements which they are entitled to sign.
Unions must be independent from employers. This independence is reflected by an organisational autonomy and financial self-sufficiency.
Unions take part in the legislative process by drafting legal opinions.
Status of Unions
Unions don’t have a legal personality except if organised in a non-profit organisation (Association sans but lucratif, ASBL). Without legal personality, they are not entitled to bring legal actions for their members.
In Luxembourg, the employee delegation (delegation du personnel) is the major organisation representing employees.
It becomes mandatory when a company – irrespective of its activity or legal form – has 15 employees or more (specific rules govern the counting of part-time employees). Employers of the public sector are subject to the same obligation if they employ workers to whom the Labour Code provisions apply.
Members of the employee delegation (representatives) are elected by the employees and the number of staff representatives varies depending on the number of employees within the company. The type of electoral system also differs depending on the number of employees:
The staff delegation is informed on topics such as health and security risks and implemented protective measures, absenteeism, economic and financial situation of the company, including its current and future activities, evolution of its structure, salaries and investments, etc.
Staff delegation is consulted with regard to improvement of working conditions and social situation of the employees, preparation or modification of internal regulations, professional training, work protection and accident prevention, complementary pension schemes, working time, etc.
Collective bargaining agreements are negotiated between the unions and one or more employers or employers’ organisations, establishing a legal framework that will apply uniformly to all the categories of employees (excluding the senior executives unless indicated otherwise) in the sector of the activity concerned.
The law distinguishes between two types of collective bargaining agreements:
Collective bargaining agreements define the working conditions that apply to employees, including at least:
Any collective agreement must necessarily provide for:
Once the collective bargaining agreement comes into force, it is valid for at least six months and a maximum of three years. It can be renegotiated and renewed.
Termination of employment agreements must always be motivated and the reasons for dismissal must be precise, real and serious.
The termination must always be notified either by registered letter with an acknowledgment of receipt, or by delivering the letter in person to the employee who must acknowledge receipt of it on the duplicate of the letter.
If the company employs at least 150 employees, the employer will first have to summon the employee to a preliminary interview.
Dismissal with Notice
A dismissal with notice may be based either on reasons inherent to the employee’s person (eg, behavioural problems or insufficient performance) or on reasons non-inherent to the employee’s person (ie, the company’s operational requirements).
In the context of a dismissal with notice, the reasons for dismissal are not provided by the employer in the letter of dismissal. The employer will nevertheless have to explain in writing the reasons for dismissal, if the employee asks them to do so, by registered letter with an acknowledgment of receipt, in the month following the dismissal’s notification. In such a case, the employer has a one-month deadline to send the reasons for dismissal to the employee by registered letter with an acknowledgment of receipt.
Regarding dismissals for reasons non inherent to the employee’s person, the employer shall also notify the termination to the “comité de conjuncture” when the company employs more than 15 people.
Dismissal with Immediate Effect
A dismissal with immediate effect for serious misconduct may only be based on reasons inherent to the employee’s person.
The employer shall dismiss the employee within one month following the date on which the employer became aware of the serious misconduct.
The employer must indicate the grounds for dismissal directly in the letter of dismissal.
Regarding collective redundancies, a specific procedure applies when an employer wishes to dismiss at least seven employees in a 30-day period or 15 employees in a 90-day period, for reasons non-inherent to the employees’ person. This procedure contains four main steps in which the employer shall:
Only employment contracts of an indefinite duration can be terminated with notice. Fixed-term employment contracts can only be terminated before their term with immediate effect for serious misconduct.
The duration of the notice period depends on the employee’s length of service at the time the dismissal is notified. If the length is:
The duration of the notice period must be indicated in the dismissal letter. The notice period can only start:
Employer can ask the employee not to work during the notice period but will have to pay the employee’s salary during this period.
Severance Pay (Indemnité de Depart)
At the end of the notice period, if the employee has a length of service exceeding five years within the company, the employer must pay the employee a severance indemnity, on top of the notice period. The amount depends on the employee’s length of service:
However, if the firm has less than 20 employees the employer can chose to replace the severance pay with an extended notice period. In such case, the severance pay is not due.
A dismissal with immediate effect is limited to cases where the employee has committed an act of serious misconduct that renders the employment relationship definitively and immediately impossible (eg, unjustified absence, serious insults towards other employees or physical aggression). The employee is not entitled to any notice period or severance pay.
With respect to the procedure to be followed, please see 7.1 Grounds for Termination.
Termination agreements are permissible for both permanent and fixed-term employment agreements, at any stage of the contract. To be enforceable, such a termination agreement must be drawn up in writing in duplicate signed by both the employer and the employee.
In such case, the employee loses their right to severance and unemployment compensation. However, the employee is entitled to a pro-rated 13th month's pay, if applicable and to any other benefit of the contract which are part of the salary, and to an indemnity for accrued but untaken holidays.
Certain categories of employees deserve special protection against dismissal. The main categories of protected employees are staff representatives, employees on sick leave, maternity leave, or parental leave. There is currently no uniform scheme, and each category of protected employees benefits from its own rules. Therefore, all protected employees are not protected against the same kind of dismissals.
Staff representatives are protected from both dismissal with notice and with immediate effect, from the day their mandate starts and for six months after the end of their mandate. If an employee is nevertheless dismissed, they can take legal action:
Despite this strong protection, employers are not completely powerless in the event of serious misconduct and can still initiate a procedure to terminate the employment contract. This procedure starts with the lay off (mise à pied) of the employee, which must be motivated with sufficient precision, followed with a request to terminate the employment contract submitted to the Labour Court. If the serious misconduct is proven, the judge will pronounce the termination of the employment contract. On the other hand, if the employer fails to prove the serious misconduct then the employee will return to work and will be able to seek damages.
Candidates for staff delegation are also protected against dismissal from the date they present their candidacy and during a period of three months.
Grounds for a Wrongful Dismissal Claim
Wrongful dismissal is defined as a dismissal that is contrary to the law or not based on real and serious grounds relating to the employee's ability or conduct or based on the needs of the company's operation. The cases in which dismissal will be declared wrongful are very broad because such a classification is made based on an assessment of each particular situation.
For example, where the employer has not provided the reasons in the form and time (one month as of the request) required by law, it is irrefutably presumed that the dismissal is wrongful. It is settled case law that insufficiently precise motivation is equivalent to a lack of motivation, so that the dismissal will be declared wrongful. In addition, the dismissal will be wrongful if the employer does not prove the reasons for the dismissal.
Procedure for a Wrongful Dismissal Claim
Employees claiming wrongful dismissal must bring an action before the Labour Courts within three months of being notified of the dismissal, or of receiving the employer's reasons for the dismissal. If within the same time limit the employee sends a written letter to the company disputing the reasons for dismissal, a new period of one year for bringing a legal action before the Labour Court will begin to run from the date of the written objection.
The employer has the burden of proving the real and serious nature of the reasons for dismissal.
Consequences of a Dismissal Declared Wrongful
Wrongful dismissal is resolved in damages. Thus, when the Court concludes that the dismissal was wrongful, it will order the employer to pay damages to the employee to compensate for the moral and material prejudice suffered.
Grounds for Anti-discrimination Claims
Direct and indirect discrimination are prohibited on grounds of sex, family situation, marital status, religion or beliefs, sexual orientation, disability, age, race or ethnicity and nationality.
The law defines direct discrimination as a situation in which a person is treated less favourably than another is, has been or would be treated in a comparable situation, on the basis of one of the above criteria.
Indirect discrimination occurs when an apparently neutral provision, criterion or practice is liable to place certain categories of persons at a particular disadvantage, unless that provision, criterion or practice is objectively justified by a legitimate aim and the means of achieving that aim are appropriate and necessary.
Any clause in an employment contract, collective bargaining agreement or policy that breaches the legal principle of equal treatment is null and void.
The Burden of Proof
The employee's legal action is simplified by the fact that the burden of proof is lightened. The employee has to provide evidence that allows the existence of direct or indirect discrimination to be presumed; it will then be up to the opposing party (generally the employer) to prove that no discrimination has been committed.
Applicable Relief and Damages to the Victim of Discrimination
Only in the case of gender-based pay discrimination – ie, where men or women are disadvantaged in terms of pay – does the law provide as a sanction that the employer is obliged to increase the pay of the disadvantaged group to the level of the advantaged group.
For all other cases of discrimination, the only sanction provided for by the law is the nullity of the illicit clause or decision taken by the employer.
In the case of past discrimination, the employee may claim damages from the employer for the financial loss suffered as a result of being disadvantaged. In addition, an indemnity may be paid to compensate the non-pecuniary damage suffered by the employee who has suffered psychologically because of having been treated differently due to a personal characteristic.
Labour Courts have exclusive jurisdiction in all disputes between employers and employees arising out of employment contracts, apprenticeship contracts and supplementary pension schemes.
In total, there are three Labour Courts: one in Luxembourg City, one in Esch-sur-Alzette and one in Diekirch. Their jurisdiction is determined by the employee’s place of work (at the time of the legal action or at the time the employment contract was terminated). In the event it is not possible to determine the employee’s place of work – eg, if the work is carried out all over the country – the Labour Court of Luxembourg City will have jurisdiction.
Bringing a Legal Action Before the Labour Court
An action is brought before the Labour Court by means of a written application (requête) to be filed with the court registry in as many copies as there are parties involved. The application must specify at least the surnames, first names, job titles and domicile of the parties, the subject of the application and a statement of the facts.
The parties do not necessarily need to be represented by a lawyer before the Labour Court. They may also appear in person or be assisted or represented by:
If a party chooses to be represented by a person other than a lawyer, this representative must give the Court a proxy.
The parties are summoned to a hearing by the Labour Court and the case is pleaded orally. A judgment is then rendered.
Lodging an Appeal
An appeal before the Court of Appeal of Luxembourg may be lodged within 40 days from the notification of the judgment. The proceedings are made in writing, meaning that the parties must be represented by an attorney-at-law and that the parties will exchange written briefs with their legal arguments. After the exchange of the briefs, the parties are summoned to a hearing where the case is pleaded orally. The Court of Appeal then renders a decision within a few weeks.
Class action claims are not available in Luxembourg. However, there are two specific cases in which unions or certain accredited associations may act against the employer to defend collective interests:
Neither the Labour Code, nor the New Code of Civil Procedure (Nouveau Code de procédure civile, the NCPC) contain an explicit prohibition of arbitration clauses in employment agreements. Article 1224 NCPC states that parties may enter into arbitration agreements regarding “the rights of which they have free disposal”. Such rights are traditionally seen to include all rights derived from a contract.
However, in a seminal case of 1962 the Court of Appeal held that arbitration clauses are void in employment agreements, since any dispute resulting from an employment agreement was of the exclusive jurisdiction of the Labour Courts (Court of Appeal, 31 October 1962, Pasicrisie 19, p 28). This is an application of a more general principle of Luxembourg law developed in later cases according to which contracts that are regulated by the legislator in order to protect a “weaker” party cannot be submitted to arbitration.
After criticism of this solution, the Court of Appeal has taken a more liberal stance in recent years. In a decision of 9 February 2000 (Pasicrisie 31, p 301) concerning a residential lease agreement (where the tenant is also protected as the weaker party by the law) it held that while arbitration clauses could not be included into such contracts, the parties were at liberty to enter into an arbitration agreement once the dispute had arisen. This solution was justified by the fact that the protected “weaker” party was unable to dispose of its rights before the event (ie, when their rights were theoretical) but could dispose of them once they have come into existence. The solution seems to be applicable to employment agreements.
To summarise, Luxembourg law does not currently allow for arbitration clauses in employment contracts. If such a clause is included in an employment contract, it will be void and thus unenforceable.
By contrast, the parties could in theory enter into an enforceable arbitration agreement once a dispute has arisen (eg, after a dismissal), even though such agreement would be highly unusual in practice.
Finally, it should be noted that there is a draft bill of law, currently being debated in the Luxembourg Parliament, which aims at reforming arbitration law and which would (in its current state) clarify the question to the extent that, if the reform occurs, the NCPC will foresee an explicit prohibition of arbitration regarding employment agreements, even for arbitration agreements entered into after the dispute has arisen.
Under Luxembourg law, the principle is that each party shall bear their own legal fees. However, on demand, the judge may grant a procedural indemnity (indemnité de procédure) to the prevailing party, if the judge considers that it would be manifestly unfair to leave the costs not included in the “costs and expenses” (frais et dépens) on the prevailing party. This procedural indemnity is generally symbolic and only covers a small portion of the attorney’s fees.
With respect to costs and expenses (ie, external costs such as bailiff costs), they are generally borne by the losing party.
Evolution of the Legal and Regulatory Framework for Telework in Luxembourg
In 2019, 11.6% of working people residing in Luxembourg declared that they were teleworking from home at least one day a week, placing Luxembourg in third position of the European countries where telework was most widespread (source: Eurostat). As of mid-March 2020, 69% of working people (excluding those benefiting from short-time working and leave for family reasons) switched to telework during the pandemic-related lockdown, and this generally outside the existing legal framework (source: Statec). The COVID-19 health crisis has therefore accelerated the government's revisions of the legal and regulatory framework for telework.
Based on the opinion issued by the Economic and Social Council on 11 September 2020 on teleworking in Luxembourg, on 20 October 2020 the social partners (LCGB, OGBL and UEL) signed a new cross-industry agreement governing teleworking (“New Agreement”) to replace the framework agreement of 21 February 2006 applicable in this area (“2006 Agreement”). Declared generally binding by the Grand-Ducal regulation of 22 January 2021, the New Agreement is applicable since 2 February 2021 to all companies established on the national territory.
On 9 April 2021, the Luxembourg financial markets' supervisory authority, the Commission de Surveillance du Secteur Financier (CSSF), published CSSF Circular 21/769 on governance and security requirements for supervised entities (as defined below) to perform tasks or activities through telework (“Circular 21/769”). Therefore, save for exceptional circumstances, as from 30 September 2021, employers in the financial sector will have to ensure compliance with Circular 21/769 in addition to the New Agreement.
Thus, in a timely and pragmatic way, the New Agreement and Circular 21/769 provide several clarifications on how telework should be implemented by employers and carried out in Luxembourg from 2021.
Scope of the New Agreement and Circular 21/769
As with the 2006 Agreement, the New Agreement applies to employees covered by the Labour Code, with the exception of those who have public law status or similar. Nevertheless, the New Agreement specifies that the following are excluded from its scope of application:
Of more limited application, Circular 21/769 applies under general working conditions but does not apply in case of a pandemic (for example, COVID-19) or in other exceptional circumstances similarly impacting general working conditions. Furthermore, the text focuses on financial sector regulatory requirements, while contractual relations between supervised entities (as defined below) and their employees remain outside of its scope. However, it applies to all employees of all entities supervised by the CSSF (supervised entities), including persons contracted to them by a third-party employer.
Circular 21/769 introduces telework-related governance and security requirements for a wide range of professionals in the Luxembourg financial sector, including credit institutions, alternative investment funds managers licensed under the law of 12 July 2013, investment funds, authorised securitisation undertakings, payment and electronic money institutions, as well as any other entity supervised by the CSSF.
More specifically, it applies to all supervised entities, including their branches in Luxembourg or abroad, to the extent that telework is authorised in the countries where the branches are established and they comply with national regulations, to Luxembourg branches of entities originating from outside the European Economic Area (EEA) and/or to Luxembourg branches of entities originating from a member state of the EEA, which may also use telework in accordance with the requirements provided for in Circular 21/769, as long as teleworking is authorised in their home country and they comply with all national rules and regulations applicable in the home member state.
Definition of telework
The New Agreement slightly modifies the definition of telework in the 2006 Agreement to provide that it is a “form of organising or carrying out the work, usually using information and communication technologies (ICT), so that work, which would normally have been carried out on the employer’s premises, is performed outside these premises”.
Reference is no longer made to the employee’s home, so that the employee can telework from any other place outside the employer’s premises. The New Agreement also no longer mentions the three cumulative criteria for determining a telework relationship, but clarifies what is to be considered as "regular" telework and "occasional" telework.
Telework shall be considered occasional when (i) it is carried out to cope with unforeseen events, or (ii) it represents less than 10% on average of the teleworker’s normal annual working time. In any other cases, telework is regular. It is also specified that the reference period is the calendar year.
In a much more precise way, Circular 21/769 defines “telework” on the basis of the following cumulative criteria:
On the contrary, other forms of remote access by supervised entities staff (while on business trips – eg, client relationship managers, when attending conferences or professional training), connections from the employer’s premises to systems not hosted in the employer’s premises and work carried out by supervised entities staff in a location other than the employer’s premises, in the context of the activation of a disaster recovery plan or business continuity plan do not qualify as telework.
Telework on a voluntary basis
In both Circular 21/769 and the New Agreement, telework must by definition be voluntary, but neither text establishes a “right to telework”.
As was also the case in the 2006 Agreement, the New Agreement maintains the principle that both the employer and the employee are free to choose the telework formula, while adding that this choice takes into account, where appropriate, the provisions in force at the level of the sector or company concerned, as soon as the employee takes up his or her duties or at a later date.
Thus, according to the New Agreement, at the time of hiring, Luxembourg employers may offer a position that is wholly or partly remote (this can be indicated in the job offer) and the employee is free to accept or not. During the performance of the contract, a change to a teleworking formula can only be implemented by mutual agreement
Consistently, it is reaffirmed that the employee's refusal of a telework offer made by his or her employer does not in itself constitute a ground for terminating his or her employment contract. Nor can this refusal justify the employer's use of Article L. 121-7 of the Labour Code concerning the unilateral modification of an essential element of the employment contract to the employee's disadvantage in order to impose this form of work.
Role of the staff delegation and specific telework regime
The New Agreement provides for regular information to the staff delegation on the number of teleworkers and its evolution within the company. The arrangements for the transmission of this information shall be agreed within the company concerned.
According to the New Agreement, a specific telework regime, adapted to the particular situation of the company or sector, can be defined by means of a collective agreement or a subordinate agreement or in accordance with the expertise of the staff delegation. This optional tool can be used to indicate, for example, the categories of employees excluded from telework, the authorised places or types of places, the rules on safety and health at work, the rules on the protection of personal data and the contact persons for telework.
The introduction and modification of the optional telework agreement shall be done, in companies with less than 150 employees, after informing and consulting the staff delegation. In companies with at least 150 employees, the obligation is greater because this require a mutual agreement between the employer and the staff delegation (“co-décision”).
Unlike the New Agreement, Circular 21/769 requires the adoption by the board of directors or any other body representing the supervised entity of a telework policy, which must set the framework and the limits under which telework may be allowed.
This policy shall clearly define:
The telework policy must be reviewed annually based on an updated risk analysis and the operational and management objectives of the entity. No approval by the CCSFF is required in order to implement, maintain or extend telework solutions for staff in a supervised entity. Nevertheless, as the CSSF monitors compliance with Circular 21/769, any supervised entity must ensure that it keeps evidence to monitor compliance with the telework policy.
Written agreement between employee and employer
The New Agreement recognises telework without the need for an amendment to the employment contract. Individual agreements are no longer necessary if agreements have been concluded at the collective level.
For regular telework, a written agreement between the employer and the employee must mention:
For occasional telework, a written confirmation is sufficient as proof (eg, a text message or an email). Although the content of this written confirmation is not fixed by the New Agreement, it is recommended to include certain information such as
The New Agreement maintains that employers are required to provide their teleworkers with appropriate technical support and be responsible for any cost related to the damage or loss of equipment and data used by the teleworker. An exception is explicitly provided for when the damage is caused by a wilful act or gross negligence of the employee. On the other hand, teleworkers must immediately inform their employer in the event of equipment failure or malfunction.
However – and this is one of the main innovations introduced by the New Agreement – a distinction must be made between regular and occasional telework. In the case of regular telework, employers must provide the technical support and bear the costs directly linked to telework, in particular costs relating to communications (eg, by paying a monthly lump sum to employees); in the case of occasional telework, employers have no obligation to provide the technical equipment and to cover the costs related to telework.
In practice, it has been observed that in case of regular telework, many employers in all sectors of activity offer a monthly allowance of between EUR10 and EUR30.
On this specific point, the New Agreement contains two provisions relating to overtime and the right to disconnect. The terms and conditions relating to overtime are to be agreed between the parties and must be aligned as far as possible with internal procedures. Overtime shall remain an exception. In addition, the New Agreement provides that any provisions relating to the right to disconnect also apply to the teleworkers. This is the first time that this right to disconnect has been mentioned in Luxembourg law.
Circular 21/769 requires careful governance, adequate internal and external organisation and security of information when implementing telework. These requirements can inter alia be summarised as follows.
Teleworker’s privacy, data protection, equality of treatment, health and safety regulations
In order to respect the employee’s privacy, inspection visits by the employer, the health and safety delegate or the health and safety authorities to the teleworker’s accommodation (and limited to the place where the work equipment provided was located) are no longer permitted under the New Agreement. However, the employee remains entitled to request an inspection visit by the company’s external or internal occupational health and safety service, the company’s safety officer (“travailleur désigné”) or the Inspectorate of Labour and Mines (ITM).
The New Agreement further maintains the same obligations regarding data protection, equality of treatment and health and safety regulations as in the 2006 Agreement.
More generally, Circular 21/769 states that the use of telework by supervised entities may not contravene any legal provisions that are part of the mandatory public policy provisions and must, in particular, comply with the provisions of the Luxembourg Labour Code.
In conclusion, in the light of the above, it would seem that one of the challenges for employers this coming year will be to determine as soon as possible what type of telework to implement in their company, and then to implement or adapt their employees' employment contracts or internal policy.