Guy Castegnaro Ariane Claverie August 8 2018 When is overtime triggered for part-time employees? Castegnaro | Employment & Immigration - Luxembourg Guy Castegnaro, Ariane Claverie Employment & Immigration Applicable legal rulesCourt of Cassation decisionApplication of decision to collective agreement of building cleaning companiesCommentUnder the Labour Code, part-time employees may exceed the daily and weekly work limits set out in their employment contracts without necessarily qualifying for overtime. However, certain conditions apply. In a 22 March 2018 judgment, the Court of Cassation considered the legal rules which apply in this regard.(1)Applicable legal rules An employee is considered to work part time when their weekly working hours, as agreed with their employer, are less than the normal working hours applicable under the Labour law or the relevant collective working agreement.(2)A part-time employee may legally exceed the daily and weekly limits fixed in their contract, without this being considered additional working hours, provided that:the employee's average weekly working hours, calculated over a reference period of four consecutive weeks, does not exceed the normal weekly working hours fixed in their employment contract (Article L123-1(2) of the Labour Code, as applicable at the material time (ie, before the law of 23 December 2016));(3) andunless otherwise provided in the employment contract, the employee's actual daily and weekly working hours do not exceed:20% of the normal daily and weekly working hours fixed in the contract; andin any event, the duration of the normal working hours of a full-time employee (ie, 40 hours per week (Section L123-1(3) of the Labour Code)).Time worked by a part-time employee in excess of these limits will constitute additional working hours and must be remunerated as such (Article L123-5 of the Labour Code).Court of Cassation decisionArticles L123-1(2) and (3) of the Labour Code, which authorise part-time employees to work in excess of the hours agreed in their contract without triggering overtime, are cumulative conditions. In order for the employer to avoid paying overtime:the additional hours worked by part-time employees cannot exceed 20% of their contractual working hours. In the absence of an amount agreed in the contract by the parties, the actual duration of work cannot exceed 40 hours per week; andthe actual average weekly working hours cannot exceed, over a four-week reference period, the normal weekly working hours fixed in the employment contract.Application of decision to collective agreement of building cleaning companies Section 7.5 of the collective agreement for building cleaning companies provides as follows:The normal times fixed to the employment contract of workers employed part-time, with the agreement of the worker, be increased by 50% compared to the number of hours fixed by the employment contract, without being able to exceed the maximum of forty hours per week according to the needs of the company without having to pay overtime. In the case at hand, a part-time employee worked in excess of the 20 hours per week stipulated in her contract. It was understood that this increase would not give rise to the payment of overtime as long as it did not exceed 50% of her contractual working hours. The employer believed that pursuant to Article 7.5 of the collective agreement, which was reproduced verbatim in the employee's contract:it could increase the employee's hours by 50% without having to pay her an increased salary; andwithout the application of a reference period, only hours worked in excess of the conventional 50% limit were to be considered overtime.The High Court disapproved this reasoning, as it did not comply with the applicable rules. In order for the employer to avoid paying overtime, it was insufficient that the employee had not exceeded her contractual working hours by more than 50%. It was also necessary for her not to work, on average, more than 20 hours per week (the normal weekly working hours fixed in her contract) over four consecutive weeks.As the two cumulative conditions were not fulfilled, the Court of Cassation ruled that the hours worked by the employee in excess of the 20 hours per week fixed in her contract, over a period of four consecutive weeks, constituted additional hours and had to be paid as such, "notwithstanding any stipulation to the contrary of the employment contract or a collective agreement ".CommentArticles L123-1(2) and (3) of the Labour Code expressly state that a part-time employment contract may validly provide for an increase in working hours of more than 20% (within the maximum limit of 40 hours per week).Conversely, neither an employment contract nor a collective agreement can be less favourable than the law by providing that the contractual working hours of a part-time employee may be increased without guaranteeing the payment of overtime if this increase causes the employee to exceed – on average, over an applicable reference period – their contractual working hours.To authorise the opposite would leave room for abusive situations in which a part-time employee is required to work 40 hours per week (the maximum limit allowed) without receiving an increased salary or compensatory rest time. In such cases, the part-time contract would be deprived of its substance, as the employee hired on a part-time basis would have the same working conditions as a full-time employee.Thus, in order for there to be a level of flexibility with regard to part-time employees without triggering overtime, an employer must ensure that the hours worked by a part-time employee beyond their contractual working hours:do not exceed the percentage stipulated in the contract (in the absence of contractual provisions to the contrary, the limit of 20% of the contractual working hours applies); andare calculated so that, over the relevant reference period, the employee's average effective working hours do not exceed those fixed in the contract.Notably, the Court of Cassation's reasoning remains the same after the entry into force of the law of 23 December 2016, which replaced the term "reference period of four consecutive weeks" with a "legal reference period" of up to four months.(4)The below table is an example of an employee whose contract provides for a working week of 20 hours per week that can be increased by 50%, with an applicable reference period of four weeks:Week oneWeek twoWeek threeWeek fourTotal hoursOvertime20 hours30 hours20 hours10 hours80 hours20 hours per week on averageNone20 hours30 hours30 hours20 hours100 hours20 hours per week on average, plus 20 hours20 hoursFor further information on this topic please contact Guy Castegnaro or Ariane Claverie at Castegnaro by telephone (+352 26 86 82 1) or email ([email protected] or [email protected]). The Castegnaro website can be accessed at www.castegnaro.lu.Endnotes(1) Court of Cassation, 22 March 2018, Register Number 3,925, Register 27/2018.(2) Article L123-1 (1) of the Labour Code.(3) Law of 23 December 2016 on the organisation of working time and amending the Labour Code, published in Mémorial A 271, which notably replaced the term "reference period of four consecutive weeks " with the words "legal period of reference" within Article L123-1 (2) of the Labour Code.(4) Articles L211-6(2) and L123-1(2) of the Labour Code, as amended by the Law of 23 December 2016.