Guy Castegnaro Ariane Claverie July 19 2017 Court rules on validity conditions of disciplinary penalties provided for by collective bargaining agreements Castegnaro | Employment & Immigration - Luxembourg Guy Castegnaro, Ariane Claverie Employment & Immigration FactsCase lawDecisionIn a March 30 2017 judgment the Court of Appeal clarified the validity conditions of disciplinary penalties provided for by collective bargaining agreements.(1)FactsThe case concerned an employee who had been notified of his "demotion to a lower pay classification", as provided for in Article 16.2(7) of the Collective Agreement for Communal Workers of Municipalities of the South. The employee – who had been demoted from Group 6, Tier 273 to Group 3, Tier 206 – applied to the courts to have his demotion annulled on the ground that only the law can validly impose disciplinary penalties on employees under the constitutional principle of lawful punishment.Case lawIn an earlier decision, the Court of Appeal ruled that the disciplinary penalty of a wage reduction has a sound legal basis if it is provided for in a collective agreement or employment contract, as the law permits a derogation from its provisions if this is more favourable to the employee.(2)However, a question also arose as to the wording of the penalties. In June 2016 the Court of Appeal stated that in order to comply with the principle of lawful punishment, a disciplinary penalty provided for by a collective agreement must be "determined in such a way as to enable the person concerned to predict, with a sufficient degree of certainty, the nature and degree of the sanction likely to be imposed". This is the point on which the Court of Appeal ruled in its March 30 2017 judgment.DecisionThe court considered that the wording "demotion to a lower pay classification" was too vague to allow the employee to predict the penalty's severity.Contrary to the language of the seven other penalties provided for in the same collective agreement, the wording of this penalty did not specify:the determining criteria for the choice of wage category in which the employee may be placed;the lower limit of demotion, even though its influence on wages may vary significantly depending on the category to which the employee is demoted;the duration of the application of the penalty; ora possible period after which the employee will recover his or her right to a promotion or advancement according to his or her seniority.In light of these circumstances, the Court of Appeal found that the evaluability of the penalty was deficient and that its wording failed to meet the precision requirements of the lawful punishment principle. It therefore confirmed the annulment of the penalty imposed on the employee.For 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 Appeal, March 30 2017, 42278.(2) Court of Appeal, June 30 2016, 42278.