Consequences of reclassifying fixed-term contract as permanent contract
Redundancies to improve company's profitability
Teleworking agreement
Consequences of reclassifying fixed-term contract as permanent contract
In an October 29 2015 decision(1) the Eighth Chamber of the Labour Court of Appeal held that in the case of reclassification of a fixed-term contract as a permanent contract, the rupture of the working relationship resulting from expiry of the fixed-term contract was attributable to the employer. According to the court, when the employer has not respected the rules relating to termination of the permanent contract with immediate effect (ie, sending a detailed letter of termination with immediate effect), the dismissal is unfair. In this context, the employee could claim compensation in lieu of notice and damages.
Redundancies to improve company's profitability
In a January 14 2016 decision(2) the Third Chamber of the Labour Court of Appeal confirmed that employers can freely decide on the measures to take to safeguard the interests of the company; in this context, it has "very diverse means of taking action, including the reduction of salary costs".
The court stated:
"there is no obligation for the employer to take measures to reduce other costs before reducing salary costs. The employer is also entitled to take action on salary costs not only when the economic survival of the company depends upon it, but also when this reduction enables the employer to increase the company's economic profitability."
The agreement of February 21 2006 relating to the legal structure for teleworking was extended for three years with retroactive effect on March 18 2015. It has been declared a general obligation for the entire period covered by means of the Grand Ducal Regulation of March 15 2016.(3)
The original provisions of the agreement remain unchanged. However, the agreement will now be renewed automatically for an indefinite period at the date of its expiry, unless express notice of termination is given by one of the parties.
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 acessed at www.castegnaro.lu.
Endnotes
(1) Labour Court of Appeal, October 29 2015, Case 40996.
(2) Labour Court of Appeal, January 14 2016, Case 40823.
(3) Grand Ducal Regulation of March 15 2016 (Memorial A 45 of March 23 2016).