Legislation and agencies

Primary and secondary legislation

What are the main statutes and regulations relating to employment?

Luxembourg employment law is primarily regulated by the Labour Code that came into force on 1 September 2006.

Protected employee categories

Is there any law prohibiting discrimination or harassment in employment? If so, what categories are regulated under the law?

The Law of 28 November 2006 (articles L251-1 to L254-1 of the Labour Code) prohibits any direct or indirect discrimination based on religion, convictions, disability, age, sexual orientation, real or supposed belonging to a nationality, race or ethnic origin. Harassment or encouragement to harassment are considered as discrimination.

The term ‘nationality’ was added into the Labour Code by the Law of 7 November 2017, completing the transposition of Directive 2014/54/EU of 16 April 2014 on measures to facilitate the exercise of the rights conferred to workers in the context of the free movement of workers. This law specifies that the principle of equal treatment based on nationality does not preclude the application of the legal provisions and conditions concerning the entry, stay and hiring of third-country nationals and stateless persons in the national territory, and of any treatment related to the legal status of the concerned third-country nationals and stateless persons (article L252-2(3) of the Labour Code).

The Law of 13 May 2008 (articles L241-1 to L245-8 of the Labour Code) also prohibits any direct or indirect discrimination based on gender in reference, notably, to gender reassignment, family situation or matrimonial situation. Harassment and sexual harassment as well as encouragement to harassment are considered as discrimination.

The prohibition of discrimination applies to all persons, public or private, physical or moral, as regards:

  • conditions of access to employment, non-wage-earning activities or work, including the selection criteria and the recruiting conditions, whatever the business sector is, and to all levels of professional hierarchy, including in terms of advancement;
  • access to all types and levels of professional orientation, professional training, improvement and training to change profession, including the acquiring of practical experience;
  • conditions of employment and work, including conditions of dismissal and remuneration; and
  • affiliation and commitment to a professional organisation (employees’ professional organisation or employers’ professional organisation) or to an organisation whose members practise a particular profession, including the benefits given by such types of organisations.

 

In addition, article 454 of the Criminal Code prohibits all discrimination on the grounds of origin, colour, sex, sexual orientation, family status, age, state of health, disability, moral, political or philosophical opinions, trade union activities, actual or supposed belonging to an ethnic group, a race or a particular religion, and belonging or not belonging to a group or a community. This article applies to natural persons as well as to members of a legal person. The latter may not be discriminated against because of the characteristics of its members.

The non-discrimination principle in an employment relationship is also notably provided by the following legislation:

  • article L122-10 of the Labour Code on employees with fixed-term employment contracts provides that they may not be discriminated against in comparison with employees having open-ended employment contracts, notably as regards their remuneration conditions; and
  • article L123-6 of the Labour Code as regards part-time workers, who may not be discriminated in comparison with full-time workers.

 

Finally, on 25 June 2009, the Luxembourg social partners reached an agreement on bullying and violence at work, which was declared a general obligation by a Grand-Ducal Regulation dated 15 December 2009. It is applicable to all companies established on Luxembourg territory since 16 January 2010. Pursuant to article 2 of this agreement, bullying occurs when a person who is dependent upon the enterprise commits unauthorised, repeated and deliberate actions towards a worker or a manager, with the aim or effect of:

  • infringing their rights or their dignity;
  • damaging their working conditions or jeopardising their professional career by creating an intimidating, hostile, degrading, humiliating or offensive environment; or
  • causing damage to their physical or mental health.

 

Acts can only be classified as bullying if they occur repeatedly. The agreement requires companies to introduce a transparent procedure for the prevention and management of bullying and violence at work.

Enforcement agencies

What are the primary government agencies or other entities responsible for the enforcement of employment statutes and regulations?

The Labour Inspectorate is mainly responsible for the enforcement of employment statutes and regulations.

Worker representation

Legal basis

Is there any legislation mandating or allowing the establishment of employees’ representatives in the workplace?

The Labour Code provides for the compulsory establishment of:

  • a staff delegation in companies regularly employing 15 workers or more, during the 12 months prior to the first day of the month of the posting of the announcement of elections; and
  • employees’ participation in the board of directors and supervising committee of a public limited company employing 1,000 workers or more over the past three years.

 

If several companies constitute an economic and social organisation (EES) as defined by the Labour Code, a delegation at the level of the EES may be set up at the request of at least two staff delegations, or at least 15 employees in some specific cases. This staff delegation is only tasked with exchanging information between the different staff delegations.

Luxembourg legislation does not prohibit employers from establishing a works council or workers’ committee in the workplace on a voluntarily basis, as long as the compulsory establishment of a staff delegation (and, if required, employees’ participation in the board of directors and supervising committee of a public limited company) is observed. In addition to the staff delegation, the Labour Code also provides for the establishment of special employees’ representatives in certain companies:

  • European Work Councils in companies employing 1,000 workers or more in European member states and at least 150 workers in two of these member states; and
  • employees’ participation in Societas Europaeas and in cooperative European companies.
Powers of representatives

What are their powers?

The staff delegation is vested with the general mission of protecting and defending the employees’ interests. To do so, the Labour Code provides that the staff delegation is vested with the following general attributions:

  • preventing and settling, with cooperation in mind, all individual and collective litigation that may arise between the employer and the salaried workers;
  • informing the employer about any claim, individual or collective;
  • seizing, whenever one of the above-mentioned litigations and claims could not be settled, the Labour Inspectorate for any complaint or observation as regards the application of legal, regulatory, administrative and conventional provisions concerning work and employment conditions, employees’ rights and employees’ protection during the practice of their profession;
  • ensuring compliance with equal treatment within the meaning of the Labour Code with regard to access to employment, vocational training and promotion as well as remuneration and working conditions;
  • being informed and consulted concerning the risks for security and health as well as the protection and prevention measures and activities concerning both the company in general and each type of work station or function, the protective equipment to be used and the evolution of the rate of absence; and
  • being informed and consulted with regard to the business life.

 

In companies with 150 employees or more, the employer shares its power of decision with the staff delegation on certain specific matters:

  • introduction or application of technical installations for the purpose of monitoring staff conduct and performance in the workplace;
  • introduction or modification of measures concerning the health and safety of staff as well as the prevention of occupational illnesses;
  • establishment or modification of the general criteria concerning the selection of persons with regard to recruitment, promotion, transfer, dismissal and, where applicable, priority criteria for early retirement;
  • establishment and implementation of collective programmes or undertakings regarding continuing vocational training (new competence);
  • establishment or modification of general criteria for the appraisal of the staff;
  • preparation or modification of the internal regulations in accordance with the collective agreement in force; and
  • rewarding of staff who, through their initiatives or suggestions for technical improvements, have made a particularly useful contribution to the business.

 

The employer is required to inform and consult with the staff delegation on technical, economic and financial issues as well as:

  • facilities and equipment,
  • manpower needs,
  • training requirements,
  • economic or financial decisions that may have a decisive impact on the business structure or employment level; and
  • the economic and financial development of the business.

Background information on applicants

Background checks

Are there any restrictions or prohibitions against background checks on applicants? Does it make a difference if an employer conducts its own checks or hires a third party?

The legislation does not specifically rule, restrict or prohibit background checks on applicants. However, background checks must comply with the general principles resulting from legislation on privacy, protection of personal data and discrimination. Hence, an employer or a third party may conduct background checks only if applicants are informed of the background checking process and its purposes as well as the rights relating to the processing of their personal data (eg, the right to access, rectify, request, erase). Further, the processing operations must be legitimate, operated loyally and proportionate to the objective sought (ie, limited to the data directly linked to and necessary for filling the vacant position). The processing of sensitive data such as religious beliefs, political opinions, sexual orientation or ethnicity is subject to very restrictive rules.

If an employer hires a third party, the employer’s and the third party’s responsibilities fall under article 82 of the EU General Data Protection Regulation (the GDPR). In particular, any controller (ie, the prospective employer) involved in processing is liable for any damage caused by processing that infringes the GDPR. A third-party processor is liable for the damage caused by processing only where it has not complied with specific processor-oriented obligations laid down by the GDPR, or where it has acted outside or contrary to the controller’s lawful instructions. In any event, according to article 28 of the GDPR, any processing carried out on behalf of the data controller must be subject to a written contract or legal instrument binding the third party to the employer and providing details to be respected by the processor according to the same article (including the nature and purpose of the processing, the type of personal data and categories of data subjects, obligations and rights of the controller).

Finally, the processing of criminal data (ie, convictions, judicial proceedings, etc) is prescribed by law and is strictly forbidden otherwise. Following the reform of the legislation on criminal records – in force as of 1 February 2017 except for specific activities where specific rules apply (eg, childcare workers) – the employer may request the applicant’s criminal record under the condition that the request is specified in the job advertisement and is justified by the specific needs of the position. The criminal records of an applicant cannot be kept longer than one month following the conclusion of the employment contract, whereas the criminal records of unsuccessful applicants must be destroyed immediately.

Medical examinations

Are there any restrictions or prohibitions against requiring a medical examination as a condition of employment?

Article L326-1 of the Labour Code requires the fulfilment of a medical examination to be carried out by the medical officer prior to any employment (for jobs with a risk factor and night workers) or within the two-month period following the beginning of the employment relationship.

In the event of secondment or posting of employees from a foreign country to Luxembourg, a medical certificate from the country of origin is also required (posted work information, a specific form to be provided to the Labour Inspectorate).

Drug and alcohol testing

Are there any restrictions or prohibitions against drug and alcohol testing of applicants?

There is no specific legislation on drug and alcohol testing in the context of employment. Consumption of drugs and alcohol is part of an individual’s private life.

On the other hand, the employer is responsible for health and security at work. The objective sought through drug and alcohol testing, therefore, must be balanced with individuals’ rights to privacy. According to case law, drug and alcohol testing shall not be systematically performed on all employees without regard for the nature of their position. Further, only employees in high-risk positions shall be subject to alcohol and drug testing with the aim to prevent security breaches.

There is no known judgment on similar testing of job applicants. By way of deduction, applicants shall not systematically be subjected to drug and alcohol testing and, if done, the testing must be limited to applicants in very specific positions with a high-risk profile. Consequently, before hiring an employee, the employer must inform the medical officer of all the risks inherent to the job to be filled. The employer might also ask the medical officer to carry out further special medical tests and examinations. The medical officer alone will eventually decide whether to carry out the requested examinations.

Alcohol or drug tests might be considered as medical examinations (eg, biological samples, such as urine tests), which can only be carried out by a physician, not by the employer.

Hiring of employees

Preference and discrimination

Are there any legal requirements to give preference in hiring to, or not to discriminate against, particular people or groups of people?

Article L562-3(2) of the Labour Code requires the full-time employment of at least one disabled person in companies of at least 25 employees, if the Employment Administration (ADEM) receives a job application from a disabled person who meets the abilities and requirements of the company.

In companies of at least 50 employees, disabled persons shall represent 2 per cent of the employees if the ADEM receives sufficient job applications from disabled persons who meet the abilities and requirements of the company. In the same circumstances, the proportion of disabled workers should be 4 per cent in companies employing at least 300 workers.

The non-discrimination legislation is also applicable to applicants and newly hired employees. Thus, it is prohibited to discriminate directly or indirectly against applicants and newly hired employees based on gender, family status, matrimonial situation, religion, convictions, disability, age, sex, sexual orientation, or real or supposed belonging to a race or ethnic origin.

In addition, according to article L242-3 of the Labour Code, an employer who wants to hire a person from the under-represented sex is allowed to notify or edit offers of employment favouring workers from the under-represented sex. To ensure full equality between men and women, the employer may provide for specific advantages aimed at facilitating the pursuance of a professional activity by the employees of the under-represented sex or to prevent or compensate the disadvantages occurring in the professional careers of these persons. To implement this, the employer must hold a written certificate from the Ministry of Equal Chances recognising the under-representation of the sex that the employer intends to favour.

Article L243-1 of the Labour Code underlines that positive discrimination actions may be implemented to favour persons from the under-represented sex or to prevent or compensate disadvantages in their professional careers. These positive discrimination actions may be provided within the frame of the recruitment process (before or after recruitment), as well as within a new work organisation, specific training actions, measures related to the change of employment, promotion actions, actions favouring the access of the under-represented sex to high-responsibility jobs and measures aiming at a better reconciliation of professional and private life. Such positive actions must fall within the frame of a company’s positive discrimination actions project.

Finally, article L241-4(2) of the Labour Code allows the keeping or the passing of specific measures aimed at preventing or compensating disadvantages on the grounds of the person’s family situation or matrimonial situation to guarantee equal treatment in practice.

Must there be a written employment contract? If yes, what essential terms are required to be evidenced in writing?

All employment contracts must be evidenced in writing and contain the following essential terms:

  • the identity of the parties;
  • the date of the beginning of the performance of the employment contract;
  • the place of employment (or if various places of employment, the principle that the employee will perform work in various places and more particularly abroad, as well as the employer’s address or headquarters);
  • the nature of the employment (description of the tasks if necessary);
  • the employee’s daily or weekly standard working hours;
  • the standard working schedule;
  • the employee’s remuneration and accessories (if any);
  • the length of paid holiday or the method for determining it;
  • the length of the notice period in the event of contract termination or the method for determining it;
  • the length of the probationary period (if any);
  • any complementary provisions;
  • any collective bargaining agreement governing the employee’s working conditions; and
  • any supplementary pension scheme.

 

In the absence of a written document, the employment contract may be proved by any other means of evidence by the employee.

To what extent are fixed-term employment contracts permissible?

Fixed-term employment contracts are permissible for the realisation of a definite and non-lasting task. They may not be concluded for filing a post resulting from the normal and permanent activity of the company.

In principle, such contracts may be renewed twice within a 24-month maximum period.

Probationary period

What is the maximum probationary period permitted by law?

The normal maximum probationary period is six months.

However, the maximum probationary period cannot exceed three months for employees who have a level of education inferior to the certificate of technical and professional capacity of the technical secondary school.

Finally, a probationary period of up to 12 months can be fixed if the concerned employee earns a monthly salary of at least €4,474.31. The probationary period initially determined in the employment contract cannot be extended for the same position.

Classification as contractor or employee

What are the primary factors that distinguish an independent contractor from an employee?

An employee may be distinguished from an independent contractor owing to his or her subordination link to the employer. An independent contractor is entirely free to act as he or she wishes for the realisation of his or her work, whereas an employee is not.

Temporary agency staffing

Is there any legislation governing temporary staffing through recruitment agencies?

Temporary work through agencies was introduced by a Law of 19 May 1994. This Law was then codified by the Law of 31 July 2006. Temporary work is now regulated by articles L131-1 to 131-21 of the Labour Code.

Two collective bargaining agreements covering the temporary sector have been signed by the social partners:

  • a collective bargaining agreement applicable to temporary agency workers; and
  • a collective bargaining agreement applicable to permanent workers of temporary work agencies.

 

These two collective bargaining agreements have been declared applicable to all temporary agency workers and to all permanent workers of temporary work agencies in Luxembourg through two Grand-Ducal Regulations of 10 June 2014, renewed by two new collective bargaining agreements concluded on 9 July 2018, and declared to be of general obligation by a Grand-Ducal Regulation of 9 November 2018.

Foreign workers

Visas

Are there any numerical limitations on short-term visas? Are visas available for employees transferring from one corporate entity in one jurisdiction to a related entity in another jurisdiction?

Third-country nationals who plan to enter Luxembourg territory must have a valid travel document (ie, passport) and, if required, a valid Schengen Visa (see Council Regulation (EC) No. 539/2001 of 15 March 2001 listing countries for which a visa is required). Third-country nationals who intend to stay in Luxembourg for a short period (ie, less than three months) do not need a special permit to do so, except if during the stay they intend to take up employment or work freelance, they need prior work authorisation accordingly.

Nevertheless, some activities, listed in article 35 of the amended Law of 29 August 2008 on the free movement of persons and immigration, are exempted from such prior authorisation of work if it is for less than three months per year.

The Uniform Schengen Visa stands for a permit of one of the member countries of the Schengen Area to transit or reside in the desired territory for a certain period of time up to the maximum of 90 days every six-month period starting from the date of entry. According to the purpose of travel, the Uniform Schengen Visa applies to all of the three categories, A, B and C.

The C category stands for a short-term visa that allows its holder to reside in a Schengen country for a certain period of time depending on the visa validity. Short-term visas are also valid for the other member states of the Schengen Agreement, unless otherwise specified on the visa.

When applying for a visa extension, the applicant must show that owing to force majeure or for humanitarian reasons or for serious personal reasons it is not possible for him or her to leave Luxembourg before the expiry of the visa or the authorised period of stay. As a rule, the visa can only be extended if the employee has stayed for less than 90 days in the Schengen area during the previous 180 days, and if the current visa has not expired.

A short-term visa does not allow its holder to work as an employee or as an independent. A work authorisation should be obtained in this regard. However, no work authorisation is required for third-country nationals who intend to carry out an intragroup provision of services (except the cases mentioned in article 35 of the amended Law of 29 August 2008 on the free movement of persons and immigration).

Spouses

Are spouses of authorised workers entitled to work?

The residence authorisation (allowing its holder to work) is not required for:

  • the spouse, whatever his or her nationality, of an EU citizen (including a Luxembourg citizen) or a citizen from one of the EEA countries or a citizen of Switzerland, who legally resides (with a temporary or permanent residence authorisation) in Luxembourg. Such spouse is allowed to work as an employee or as an independent (article 22 of the amended Law of 29 August 2008 on the free movement of persons and immigration); or
  • the spouse, whatever his or her nationality, of an EU citizen (including a Luxembourg citizen), a citizen from one of the EEA countries or a citizen of Switzerland, who legally resides in another member state but works in Luxembourg. Such spouse is exempted from a work permit.
General rules

What are the rules for employing foreign workers and what are the sanctions for employing a foreign worker that does not have a right to work in the jurisdiction?

Pursuant to the amended Law of 29 August 2008 on the free movement of persons and immigration, only one single document, referred to as a ‘residence authorisation’, serves the purposes of a work permit and a residence permit. The extent of the residence authorisation depends on the applicant. The law mainly distinguishes between four different types of applicants for work:

  • workers as employees;
  • highly qualified workers;
  • workers temporarily assigned in Luxembourg within an intra-company transfer; and
  • workers temporarily assigned to Luxembourg under the terms of a cross-border services agreement (posting of workers).

 

The Law of 8 March 2017, transposing Directive 2014/36/EU and Directive 2014/66/EU and modifying the amended Law of 29 August 2008, provides further cases giving the right to a residence permit:

  • workers holding a corporate mandate in addition to an employment contract;
  • investors;
  • seasonal workers;
  • third-national workers temporarily assigned in Luxembourg to ensure the continuation of their entity’s business (provided that the entity is duly registered as a certified entity in Luxembourg) in case of a major incident preventing the normal performance of the entity’s business in the country of origin; and
  • intra-corporate transfer (ICT) for managers, specialists and trainee employees. The Law of 8 March 2017 also distinguishes in this framework between a short (90 days within 180 days) and a long (more than 90 days) stay permit.

 

A residence permit as a worker is granted on request to the third-country national if the four following conditions are fulfilled (article 42 of the amended Law of 29 August 2008 on the free movement of persons and immigration):

  • it is not prejudicial to the priority of employment offered to some workers by EU regulations;
  • the economic interests of the Grand-Duchy of Luxembourg must be served;
  • the worker must have the required professional qualifications to carry out the activity; and
  • the worker must hold an employment contract for this position, which has been previously declared vacant at the Employment Administration (ADEM) by the employer.

 

One of the following conditions must also be fulfilled in the case of a worker holding an employment contract and a social mandate in the company, for which he or she could hold an establishment authorisation:

  • the company must belong to a group of companies that will be established in Luxembourg. The company must also perform an activity provided by the law governing access to craft trade, commercial and industrial occupations, as well as certain professions, provided that the group has performed this activity for at least 24 months abroad and is considered as a medium-sized or large enterprise within the meaning of the Regulation (EC) No. 651/2014, or this activity fulfils a specific condition; or
  • the company is established and truly active on Luxembourg territory.

 

A third national allowed to stay must also demonstrate that he or she has appropriate accommodation at his or her disposal.

Thus, the employer must first make a declaration of a vacant position to the ADEM to obtain, within three weeks, a certificate from the director of ADEM that states that no national has been hired and that the employer may hire the foreign worker. Then, the worker must submit his or her request for a residence authorisation from his or her home country (ie, before his or her entry into Luxembourg) and send it to the Ministry of Foreign Affairs and Immigration. In the event of acceptance, the Ministry of Foreign Affairs and Immigration will send a letter (temporary residence authorisation (AST)) to the worker in his or her home country stating that he or she will receive his or her final residence authorisation once in Luxembourg. The worker then has three months from the date of issue of the AST to enter Luxembourg.

The worker must also request a visa if needed in his or her country before entering Luxembourg. On entering Luxembourg, the worker must declare his or her arrival (ie, commune) to the town administration, stating where he or she will be residing within the three days following his or her arrival. Finally, the worker must present his or her declaration of arrival and the AST to the Ministry within the three-month period following the delivery of the AST to obtain his or her ‘final’ residence authorisation.

The permit always has a fixed term, which is determined following the category of permit, and is renewable upon request.

When an employer wishes to employ a group of workers subject to a residence authorisation allowing them to work, the employer may request a collective authorisation from the Ministry of Foreign Affairs and Immigration.

As regards highly qualified workers, a European Blue Card may be delivered to third-country workers with a higher education degree or at least five years of professional experience comparable to a higher education degree whose qualifications are needed for the position. The worker must receive a remuneration that equals at least one-and-a-half times the average gross annual remuneration to be published on an annual basis by Grand-Ducal Regulation (or 1.2 times in specific cases not yet determined by the government). The minimum gross annual remuneration for all qualified workers requesting a Blue Card has been €78,336 since 27 September 2019 (€62,668.80 for highly qualified workers in specific professions where the government has noticed a particular need to employ third-country nationals, since 27 September 2019 (mathematicians, actuaries and statisticians, systems analysts, software developers, web and multimedia developers, applications programmers, software and application developers and analysts, multimedia developers not listed elsewhere, database designers and administrators, systems administrators, computer network professionals, database and network professionals not classified elsewhere)).

The first residence authorisation for a highly qualified worker is valid for four years or for the length of the employment contract plus three months, provided that the length of the employment contract is less than four years, in the activities for which he or she received the European Blue Card, for any employer. It can be renewed upon request for four years or for the length of the employment contract plus three months, provided that the length of the employment contract is less than four years and for any employment contract that fulfils the conditions of higher professional qualifications.

As regards workers temporarily assigned (article 47 of the amended Law of 29 August 2008 on free movement of persons and immigration), also called ‘transfer of employee’, in Luxembourg within an ICT, a residence authorisation may be requested by the host company in Luxembourg for a third-country national temporarily transferred to Luxembourg. The host entity must:

  • provide evidence that the host entity and the undertaking established in a third country belong to the same undertaking or group of undertakings;
  • provide evidence of employment within the same undertaking or group of undertakings, from at least three up to 12 uninterrupted months immediately preceding the date of the ICT in the case of managers and specialists, and from at least three up to six uninterrupted months in the case of trainee employees;
  • present an employment contract and, if necessary, an assignment letter from the employer containing the following:
    • details of the duration of the transfer and the location of the host entity or entities;
    • evidence that the third-country national is taking a position as a manager, specialist or trainee employee in the host entity or entities in Luxembourg;
    • the remuneration as well as other conditions of employment granted during the ICT; and
    • evidence that the third-country national will be able to transfer back to an entity belonging to that undertaking or group of undertakings and established in a third country at the end of the ICT;
  • provide evidence that the third-country national has the professional qualifications and experience needed in the host entity to which he or she is to be transferred as manager or specialist or, in the case of a trainee employee, the university degree required;
  • where applicable, present documentation certifying that the third-country national fulfils the conditions laid down under which union citizens exercise the regulated profession to which the application relates; and
  • provide evidence of having, or, having applied for, sickness insurance.

 

This ICT must be submitted to the authorities of the member state where the first stay takes place. Where the first stay is not the longest, the application must be submitted to the authorities of the member state where the longest overall stay is to take place during the transfer. An ICT permit is valid for at least one year or the duration of the transfer to Luxembourg, whichever is shorter, and may be extended to a maximum of three years for managers and specialists and one year for trainee employees.

During the period of validity of an intra-corporate transferee permit, the holder enjoys at least the following rights:

  • the right to exercise the specific employment activity authorised under the permit in accordance with Luxembourg law in any host entity belonging to the undertaking or the group of undertakings in Luxembourg and to benefit from Luxembourg provisions of public order, including maximum working hours, minimum wage and minimum rest times applicable also during a secondment; and
  • the right to the recognition of diplomas, certificates and other professional qualifications.

 

These rights are valid for third-country nationals of non-EU member states in possession of a valid ICT residence permit issued by a first member state and exercising their right to mobility in the territory of Luxembourg.

As regards cross-border services agreement (article 48 of the amended Law of 29 August 2008 on the free movement of persons and immigration), also called ‘secondment of employee’, a residence authorisation may be issued to foreign citizens temporarily assigned to Luxembourg under the terms of a cross-border services agreement with companies established in non-EU member states, EEA states or Switzerland.

This residence authorisation is not needed for foreign workers temporarily assigned to Luxembourg under cross-border services agreements with companies established in EU member states, EEA states or Switzerland, as long as the assigned workers are authorised to work and stay in the country where their employer is established.

If the assignment exceeds a three-month period, the employee will automatically be granted a residence authorisation bearing the words ‘employee of a community service provider’, completed by the name and the corporate name of the service provider and the beneficiary of the service in Luxembourg.

To be subject to an authorisation of posting, the employee must be related to his or her home company performing the posting by an open-ended employment contract, provided that the start of this contract is previous to at least six months from the start of the posting in the territory of Luxemburg for which the authorisation is asked.

The authorisation of posting is granted for an effective duration expected for the accomplishment of the service provision. It may be extended in exceptional circumstances if the service provision could not be completed within the initial deadline.

As regards students and researchers, the Law of 1 August 2018 modifies the Law of 29 August 2008 on the free movement of people and immigration. The Law of 18 February 2013 on hosting au pairs transposed Directive 2016/801/EU on the conditions of entry and residence of third-country nationals for the purposes of research, studies, training voluntary service, pupil exchange schemes or educational projects and au pairing.

According to the Law, students or researchers covered by an EU programme or a multilateral programme including mobility measures benefit from a residence permit valid for at least two years (compared with one year without the programme), or for a period equivalent to the student’s course, or to that of the researcher’s hosting agreement or employment contract, if this period is shorter.

Further, such a student or researcher can benefit from easier mobility between member states without the need to ask for a new residence permit, as long as the first member state (ie, the state first issuing the residence permit to a third-country national in their capacity as a student or researcher), as well as Luxembourg’s Minister for Foreign Affairs, who can always object to this movement, are simply notified. This means that, in accordance with the conditions stipulated by the Law:

  • the holder of a valid ‘student’ residence permit issued by the first member state can stay in Luxembourg and complete part of his or her studies in a higher educational institution for a maximum of 360 days; and
  • the holder of a valid ‘researcher’ residence permit issued by the first member state can stay in Luxembourg and complete part of his or her research in any research organisation for a maximum of 180 days in any 360-day period (short-term mobility). He or she may also benefit from a mobility period of between 180 and 360 days (long-term mobility), but in this case, an application for a residence permit for long-term mobility is required.

 

Lastly, the student or researcher involved can benefit from a residence permit for the purposes of ‘finding work or setting up a business’ under the conditions stipulated by the Law. This permit allows the individual to stay in Luxembourg once he or she has successfully completed his or her higher education or research activities for a period of nine months, which cannot be renewed.

Concerning the withdrawal of the United Kingdom from the European Union on 31 January 2020 and the rules relating to workers in Luxembourg who are British nationals, the Law of 8 April 2019, which came into force on 1 February 2020, provides that a British national with a residence document issued before the withdrawal of the United Kingdom from the European Union, under articles 8, 11, 15 and 21 of the amended Law of 29 August 2008, is authorised to stay in Luxembourg for one year after the date of withdrawal. During this period, he or she has the right to perform a salaried or independent activity. The Law also provides that the British national must apply for the issue of a residence permit for one of the categories provided for by the amended Law of 29 August 2008 at the latest three months before one year has passed after the date of the United Kingdom’s withdrawal.

Thus, British employees working in Luxembourg when the United Kingdom withdrew from the European Union may continue to perform their paid activity after the withdrawal. They should not have specific authorisation in this regard. A company established in Luxembourg that wishes to hire a British employee following the withdrawal of the United Kingdom from the European Union has no specific steps to take. British nationals have the right to work in Luxembourg under the Withdrawal Agreement. They are not subject to labour market testing and do not need specific authorisation. This only applies to British employees who reside in Luxembourg before the end of the transition period (31 December 2020, although this may be extended once for a maximum of two years by a joint decision of the European Union and the United Kingdom before 1 July 2020).

British employees who arrive in Luxembourg after the end of the transition period are, in principle, considered to be nationals of third countries and are, therefore, subject to the conditions and procedures applicable for nationals of third countries.

Sanctions for employing a foreign worker who does not have a right to work in the jurisdiction

According to article L572-4 of the Labour Code, an employer who hires one or more illegally staying third-country nationals shall be punished by an administrative fine of €2,500 per illegally staying third-country national.

An employer may also be punished with imprisonment of between eight days and up to one year and a fine of €2,501 to €20,000 for each illegally staying third-country national worker, or to only one of these sanctions (article L572-5 of the Labour Code), if the employer hired an illegally staying third-country national in one of the following circumstances:

  • the infringement is persistently repeated;
  • the infringement concerns the simultaneous employment of a significant number of illegal third-country nationals;
  • the infringement is accompanied by particularly exploitative working conditions;
  • the infringement is committed by an employer who uses work or services from an illegally staying third-country national with the knowledge that he or she is a victim of trafficking in human beings; or
  • the infringement relates to the illegal employment of a minor.

 

In addition, article L572-6 of the Labour Code also provides for accessory criminal sanctions, such as:

  • the prohibition for up to three years to practise a social or professional activity that was directly or indirectly used to commit the breach; and
  • the temporary closure for a maximum of five years or the definitive closure of the company or the establishment used to commit the breach.

 

If the employer hires a worker without having notified a declaration of a vacant job to the National Employment Administration, he or she may be subject to a fine of €251 to €2,500.

Resident labour market test

Is a labour market test required as a precursor to a short or long-term visa?

Short and long-term visas are required only for third-country citizens.

For short-term visas (ie, less than three months), no labour market test is required because the short-term visa does not allow the holder to work in Luxembourg.

For a stay and work for more than three months, the employee must apply from his or her country of origin for an AST before entering Luxembourg. In this case, the employer must advertise the position at the Luxembourg employment office (ADEM) through a declaration of a vacancy of the job. The declaration must include the employer’s identity, the job description, the requested profile of the candidate, the work conditions and the offered salary, and be signed. The vacancy will be posted on the internal website of the ADEM for one month, to enable Luxembourgian citizens and other EU nationals to apply for the job. Luxembourgian citizens and EU nationals must be given priority.

An employer who has not been presented with a suitable candidate from ADEM within a reasonable delay following his or her declaration of a vacant position can request a certificate from the director of ADEM that will allow the employer to recruit a third-country national. In the case of a secondment, an additional procedure of notification must be followed with the Inspectorate of Labour and Mines. This procedure (declaration of vacancy and certificate) is not necessary for highly qualified workers, intra-group transferred workers and workers temporarily assigned in Luxembourg under the terms of a cross-border services agreement.

Then, once he or she has arrived in Luxembourg, the applicant must apply for his or her final residence authorisation at the Immigration Directorate of the Ministry of Foreign Affairs before arrival in Luxembourg. This final residence authorisation will be granted to him or her after declaration of arrival in Luxembourg.

Terms of employment

Working hours

Are there any restrictions or limitations on working hours and may an employee opt out of such restrictions or limitations?

Luxembourg legislation establishes the normal working hours at eight hours per day and 40 hours per week. An employee may not opt out of these limitations.

The maximum working time is 10 hours per day and 48 hours per week. An employee cannot opt out of these limitations. The employer may organise the working time of its employees through a reference period, provided that the average weekly hours over the reference period (four months maximum if there is no collective bargaining agreement) do not exceed 40 hours or any relevant collectively negotiated limit. In this situation, a work organisation plan must be drawn up five days at the latest before the start of the work planning, submitted for the opinion of the employees’ representatives (if any) and displayed at the workplace.

A work organisation plan may be replaced by flexible working time, which allows salaried workers to organise their daily working hours and time on an individual basis in accordance with their personal needs as long as they respect operational needs, co-workers’ justified needs and the maximum work time allowed (ie, 10 hours a day and 48 hours per week). Flexible working time must be drawn up by mutual consent with the staff delegation, if any, or with the employees.

Overtime pay

What categories of workers are entitled to overtime pay and how is it calculated?

All employees (except executive managers) are entitled to time off at the rate of one-and-a-half hours of paid free time for each worked hour of overtime. This time off may be replaced by a salary increase at the rate of 40 per cent of their working hour salary.

Overtime is work performed above eight hours per day and 40 hours per week, or above the average 40 hours per week of a reference period in the case of a work organisation plan or flexible working time. There are also special provisions relating to a reference period of up to one month (for flexible working time), in the case of a change of work planning, and for part-time workers (in the case of a work organisation plan).

Can employees contractually waive the right to overtime pay?

In principle, employees cannot contractually waive the right to future overtime pay. Such a clause would be declared as null and void by a tribunal in the case of litigation for being not favourable to the employee and contrary to public order. Nevertheless, there are some situations in which the employee may work more than eight hours per day and 40 hours per week without receiving overtime pay. This is the case when a work organisation plan or a flexible organisation regulation has been implemented within the company. Further, conditions for overtime pay do not apply to workers who are executive managers.

Vacation and holidays

Is there any legislation establishing the right to annual vacation and holidays?

The Law of 25 April 2019 increased the number of statutory paid leave days from 25 days a year to 26 days a year and created an additional statutory public holiday on 9 May, corresponding to Europe Day, from 1 January 2019. Thus, the Labour Code provides that all full-time employees in the private sector are entitled to 11 public holidays (1 January, Easter Monday, 1 May, 9 May corresponding to Europe Day (since 1 January 2019), Ascension Day, Whit Monday, 23 June for the birthday of the Grand-Duc (national day), the Assumption, All Saint’s Day, and 25 and 26 December) and to a standard period of annual leave of 26 working days, irrespective of the employees’ age, upon the condition of a continuous service.

Annual leave must usually be taken during the calendar year but can exceptionally be postponed until:

  • 31 March of the following year, if the justified needs of the business or the legitimate wishes of other employees did not allow the employee to take the annual leave during the calendar year; or
  • 31 December of the following year, if the annual leave could not be taken during the first year of employment of the employee, provided that the employee asked for this postponement.

 

Any annual leave that the employee is unable to take within the above-mentioned time frame, owing to an incapacity for work, maternity leave or full-time parental leave, will be further postponed to the end of the next reference period (31 March or 31 December).

Sick leave and sick pay

Is there any legislation establishing the right to sick leave or sick pay?

The health insurance regime provides that for work incapability owing to sickness or accident, loss of income is compensated by a monetary sickness indemnity.

The employer has to pay the first 77 days of sickness of its employees over an 18-month period (according to the Labour Code, the employer must pay the sick employee until the end of the month in which the 77th day of illness falls). The employer will be reimbursed by the Employers’ Mutual Insurance at the rate of 80 per cent of the wage declared to the Joint Social Security Centre (in some cases, 100 per cent).

The employee then receives indemnities directly from the Health Insurance Fund. The right to monetary indemnity is limited to a total of 78 weeks within a base period of 104 weeks. If that limit is reached, the employment contract automatically ceases.

Employees must inform their employer of their sickness, orally or in writing, on the first day of leave. In addition, at the latest on the third day of leave, employees must deliver a medical certificate to their employer certifying their inability to work and the foreseen duration of the leave. If these conditions are fulfilled, the employer may not terminate employment contracts nor appoint employees to a pre-dismissal meeting during a continuous period of 26 weeks starting on the first day of the incapacity to work.

Supported by a request from his or her doctor and in agreement with the employer, an employee can, under certain conditions, ask for a gradual return to work for therapeutic purposes, which can be granted by a prior decision of the Health Insurance Fund. During this period of gradual return to work, the employee will receive sick pay from the Health Insurance Fund. He or she will then be entirely covered and taken over by the Health Insurance Fund, although he or she will work part-time for the employer as part of a gradual return to work.

Leave of absence

In what circumstances may an employee take a leave of absence? What is the maximum duration of such leave and does an employee receive pay during the leave?

A right to unpaid leave is provided for by the Regulation of 30 March 2006 carrying the declaration of general obligation of an agreement on inter-professional social dialogue as regards the individual access to continuing vocational training. According to this Regulation, only employees with at least two years’ seniority may request that unpaid leave. The vocational training must be delivered by legally recognised institutions. During the unpaid leave period, the employment contract is suspended. The unpaid leave period is not taken into account when calculating the employees’ seniority. After the period of unpaid leave, the employer must propose the same job or an equivalent one to the employee.

The total unpaid leave period may not exceed two years for each employer for whom the employee has worked. The minimum duration of unpaid leave is four consecutive calendar weeks, and its maximum duration is six consecutive months.

Luxembourg legislation on labour law does not provide other unpaid leave, except through certain collective bargaining agreements, under specific conditions. Apart from collective agreements, such leave in the private sector is usually the result of a clause in the employment contract or an addendum to the contract of employment between the employer and the employee, in the manner determined by them.

Apart from those procedures, any leave of absence must be paid. However, the employee may not receive pay during leave that is not legally authorised or that has not been previously authorised by the employer.

Employees are, nonetheless, entitled to 26 paid leave days per year and to the following extraordinary paid leave days:

  • one day on the death of a relative of second degree of the employee or of his or her spouse or partner;
  • 10 days for the father for the birth of a child;
  • one day for each parent for marriage of a child;
  • two days for a house move over a three-year period of employment with the same employer, unless the employee has to move for professional reasons;
  • three days for the death of a spouse or partner or relative of first degree of the employee;
  • three days for the employee’s own wedding and one day for the employee’s declaration of partnership;
  • 10 days for hosting a child under 16 for adoption purposes, unless the employee already benefits from a welcoming leave; and
  • five days for the death of a minor child.

 

They may also benefit from special paid leave periods, such as maternity leave (eight weeks prior to the presumed date of confinement and 12 weeks after this date), parental leave, leave for individual training (80 days per professional career), linguistic leave to learn Luxemburgish (a maximum of 200 hours), sporting leave, leave for end-of-life care, cultural leave, social mandate leave (as members of a professional chamber or representative in social institutions or associate judge in labour tribunals), youth leave, leave for development cooperation purposes, leave for family reasons, political leave, reception leave, special leave for emergency service volunteers and parental representation leave.

Mandatory employee benefits

What employee benefits are prescribed by law?

Luxembourg law provides for a minimum monthly gross salary as of 1 January 2020:

Employee’s ageMonthly minimum wage (€)Hourly minimum wage (€)
18 years and over(qualified workers)2,570.3914,8578
18 years and over(non-qualified workers)2,141.9912,3815
17 to 18 years1,713.609,9052
15 to 17 years1,606.509,2861

 

The wages provided for by the law, collective labour agreements and employment contracts are index-linked according to the cost of living. The index currently stands at 834.76.

Part-time and fixed-term employees

Are there any special rules relating to part-time or fixed-term employees?

Part-time and fixed-term employees are subject to the same rules applicable to employees benefiting from indefinite employment contracts. Cases of resorting to fixed-term employment contracts are limited by law. 

Regarding fixed-term employment contracts, article L122-10 of the Labour Code obliges the employer to inform employees engaged for fixed-term employment contracts of any vacant permanent position in the company.

Part-time employees are, nonetheless, subject to restrictive rules as regards the pursuance of overtime working hours.

Public disclosures

Must employers publish information on pay or other details about employees or the general workforce?

Under Luxembourg law, there is no regulation requiring employers to publish information on pay or enabling access to such data to prove discrimination based on remuneration.

However, according to article 426 of the Social Security Code, in the context of the payment of the social contributions, employers must declare the monthly salaries of their employees to the Joint Social Security Centre.

Article L414-3(2) of the Labour Code provides an internal obligation for the employer to inform and consult the staff delegation and the equality delegate on ‘the situation, structure and likely evolution of employment within the company as well as possible anticipatory measures envisaged, particularly in the event of a threat to employment’ and to communicate to them in this framework: ‘sex-disaggregated statistics on . . . remuneration . . . of employees of the company every six months’.

The Law of 15 December 2016 introduced a new chapter on ‘remuneration equality between men and women’ in the Labour Code (articles L225-1 to L225-5). According to article L225-1, every employer shall ensure, for the same work or for work of equal value, equal salaries for men and women. Article L225-2 defines the notion of ‘salary’ as the ordinary basic or minimum wage and any other benefit, directly or indirectly paid, in cash or in kind by the employer to the employee for his or her work.

Moreover, in accordance with article L225-3 of the Labour Code, work is considered to be of equal value if the work requires that employees have a comparable body of professional knowledge recognised by means of a degree, diploma or professional practice, skills arising from acquired experience, responsibilities and physical or mental stress.

Further, the different components of the salary must be established according to the same standards for men and women.

The categories and criteria for classification and professional promotion, as well as all other bases for the calculation of salaries, in particular job evaluation systems, must be common to employees of both sexes.

Any clause mentioned, in particular, in an employment contract, a collective labour agreement or internal company rules that implies for one or more employees of one sex a salary lower than that of employees of the opposite sex for the same work or work of equal value, is null and void. The highest salary paid to these latter employees automatically replaces the one contained in the void provision.

Any infringement of these obligations may be punished with a fine of from €251 to €25,000. In the event of a recurrence of the offence within two years, the provided penalties can be carried out to twice their maximum.

Post-employment restrictive covenants

Validity and enforceability

To what extent are post-termination covenants not to compete, solicit or deal valid and enforceable?

The non-compete clause is applicable only if the annual salary of the concerned employee exceeds €56,906.17 (index 834.76) at the date of termination of the contract and must be:

  1. be in writing and included in the employment contract;
  2. be only applicable to employees running their own undertaking after the contract’s termination;
  3. be agreed by an employee who is at least 18 years old at the time of the signature of the agreement;
  4. refer to a professional sector and to professional activities that are similar to those performed in the former company;
  5. be limited to a 12-month period after the termination of the employment contract;
  6. be geographically limited within the Grand Duchy of Luxembourg; and
  7. be applicable only if the legal proceedings to terminate the employment contract have been respected by the employer.

 

If a court decides that points (2), (4), (5) and (6) have not been respected, the clause will still be valid but will not be enforceable as regards the elements that are contrary to the law. On the other hand, if the court decides that points (1) or (3) have not been respected or if the amount of the annual salary does not exceed €56,906.17 (index 834.76), the clause will be null and void. Finally, if a court decides that point (7) is not respected, the clause will not be applicable.

Luxembourg law does not specifically deal with non-solicitation clauses. Following article 1134 of the Civil Code, contracts must be executed in good faith. Case law admits that regarding non-compete clauses, this principle can continue after the termination of the contract. As an application of the principle of good faith, a non-solicitation clause could also be acknowledged.

Post-employment payments

Must an employer continue to pay the former employee while they are subject to post-employment restrictive covenants?

There is no legal requirement in this regard. In particular, the non-compete clause is not subject to a payment by the employer. However, additional payments may be negotiated as a counterpart to the restrictive covenants.

Liability for acts of employees

Extent of liability

In which circumstances may an employer be held liable for the acts or conduct of its employees?

Article L121-9 of the Labour Code provides that the employer is generally liable for the risks generated by its company’s activities. Employees are, however, liable for any damage owing to their voluntary acts or serious negligence.

Taxation of employees

Applicable taxes

What employment-related taxes are prescribed by law?

Luxembourg’s individual income tax rate is progressive and depends on individuals’ personal status. Its marginal tax rate varies from zero to 45 per cent (for 2020 incomes).

As regards social security services, the chargeable rates vary upon the type of insurance and the type of sector of activity. On average, the total chargeable rates are :

  • 6.1 per cent for sickness (3.05 per cent paid by the employee and 3.05 per cent by the employer);
  • 16 per cent for pension allowances (8 per cent paid by the employee and 8 per cent by the employer);
  • 1.4 per cent for dependence insurance (paid by the employee);
  • 0.675 to 1.125 per cent for accident insurance (paid by the employer);
  • 0.46 to 2.7 per cent for employers’ mutual insurance (paid by the employer); and
  • 0.11 per cent for health at the workplace (paid by the employer).

 

The state contributes towards family benefits.

Employee-created IP

Ownership rights

Is there any legislation addressing the parties’ rights with respect to employee inventions?

Intellectual property rights in Luxembourg are governed by the amended Law of 20 July 1992 on patents and the amended Law of 18 April 2001 on copyright, related rights and database. As regards patents, unless the employment contract states otherwise, the invention will belong to the employer if it is discovered by the employee in the course of an inventive mission corresponding to his or her actual tasks or in the course of research or studies explicitly delegated to him or her, or if the invention is devised by an employee in the course of his or her duties, or in the company’s particular field of activity, or through the knowledge or use of techniques or means specific to the company or data procured by it.

The employee must inform the employer of his or her invention, and the latter will acknowledge receipt. The employee and the employer must communicate to each other all useful information concerning the invention.

Any agreement between the employee and his or her employer concerning an employee's invention must, on pain of nullity, be established in writing.

The employee is entitled to a fair share of the profits earned by the company thanks to his or her invention, provided the invention entails considerable profits for the company. Although all other inventions belong to the employee, they may be transmitted.

With regard to copyrights, related rights and databases, the authors have financial rights, moral rights, related rights and computer rights. Economic and financial rights arising in connection with computer programs belong, unless stated otherwise, to the employer whereas the moral right stays attached to the employee. Nonetheless, the moral rights can be transferred from the employee to the employer.

Trade secrets and confidential information

Is there any legislation protecting trade secrets and other confidential business information?

Trade secrets and other confidential business information are protected by the Luxembourg legislation and, notably, by the Criminal Code.

Article 309 of the Criminal Code provides a special protection for trade secrets during the execution of the employment contract and within a two-year period after the expiry of the contract. It provides that:

Whoever, being or having been an employee, worker or apprentice of a commercial or industrial company, with the intent to compete with or harm his or her employer, or to obtain an illicit advantage, uses or discloses during the term of his or her contract or within two years after its expiration, trade or fabrication secrets of which he or she has been aware of by reason of his or her situation, shall be punished with imprisonment from three months to three years and a fine from €251 to €12,500.

Pursuant to article 309, section 2 of the Criminal Code, the same punishment applies to anyone who, having the knowledge of trade or fabrication secrets belonging to a person, through an employee, apprentice or worker acting in violation of the requirements of the preceding paragraph, or by an act contrary to law or morality, uses or discloses these secrets, either for the purpose of competition or with intent to harm the person to whom they belong to, or to obtain an illicit advantage.

Article 1134 of the Civil Code states that agreements must be executed in good faith. According to this legal provision, employees have a general obligation of loyalty during the execution of the employment contract. Article 1134 of the Civil Code could, thus, be invoked if an employee adopted an unfair behaviour during the employment contract that would have caused harm to the employer after the end of the employment contract. The court will, however, analyse whether damages are due for violation of article 1134 of the Civil Code.

In addition, violation of a trade secret may constitute a fault that causes harm to another person within the meaning of article 1382 of the Civil Code (extra-contractual responsibility).

Finally, Directive (EU) 2016/943 has been transposed in Luxembourg by the Law of 26 June 2019 on the protection of know-how and trade secrets against illicit obtention, use and disclosure. According to this law, in the event that the court finds that a trade secret has been unlawfully obtained, used or disclosed, it may, on the plaintiff's request, order the following measures:

  • the cessation or the prohibition of the use or disclosure of the trade secret;
  • a ban on producing, offering, placing on the market or using the infringing products, or the import, export or storage of the infringing products for these purposes;
  • the adoption of appropriate corrective measures with respect to the infringing goods; and
  • the destruction of all or part of any document, object, material, substance or electronic file that contains or materialises the trade secret or, as the case may be, the delivery to the plaintiff of all or part of these documents, objects, materials, substances or electronic files.

 

These measures can be taken without prejudice to any damages due to the holder of the trade secret because of the illicit obtention, use or disclosure of the trade secret. Moreover, the holder of the trade secret is also entitled to bring a claim against an offender, who knew or should have known that he or she was engaging in such an unlawful obtention, use or disclosure of a trade secret, to obtain damages for the harm suffered as a result of the unlawful obtention, use or disclosure.

Data protection

Rules and obligations

Is there any legislation protecting employee privacy or personnel data? If so, what are an employer’s obligations under the legislation?

Apart from international provisions, privacy is protected in Luxembourg by the Constitution and national laws.

According to article 11(3) of the Constitution, the state guarantees the right to protection of an individual’s private life, except where the law provides for exemptions.

According to article 28 of the Constitution, the secrecy of correspondence is inviolable.

Under the Law of 11 August 1982 on the protection of private life, everyone has a right to the protection of his or her private life. Consequently, nobody may open, read or listen to another person’s private correspondences or conversations, without his or her consent.

A law dated 1 August 2018 on the organisation of Luxembourg’s National Commission of Data Protection (the CNPD) and implementing the EU General Data Protection Regulation (the GDPR) has amended the regime governing surveillance in the workplace.

As of now, article L261-1 of the Labour Code allows the processing of personal data to monitor employees by the employer on one of the lawful bases recognised in the GDPR, namely:

  • consent of the data subject, if the processing is necessary for the performance of a contract;
  • compliance with legal obligation;
  • protection of the vital interests of the data subjects; or
  • performance of a task carried out in the public interest or in the exercise of official authority, or for the purposes of the legitimates interests pursued by the controller by a third party.

 

Before processing personal data to monitor employees’ activities, the employer must notify the following people about the processing:

  • the concerned person or persons (ie, the employees); and
  • the staff delegation or, failing that, the Inspectorate of Labour and Mines.

 

Further, if processing of data to monitor employees is implemented for a number of reasons, there is a co-decision system (ie, the employer must obtain the agreement of the staff delegation before implementing the monitoring system) that is set out in the provisions of the Labour Code. The reasons are:

  • health and safety (if the employer employs at least 150 employees);
  • monitoring the production or performance of the employee, when such a measure is the only way to determine the exact salary of the employee (if the employer employs at least 150 employees); and
  • organising work on a flexitime basis (regardless of the number of employees, in the absence of a staff delegation, the agreement of the employees is required).

 

When the employer plans to process data to monitor employees, the staff representatives or, failing this, the concerned employees, can, within 15 days after receiving the notification, submit a request to the Luxembourg’s CNPD for an opinion about whether the contemplated processing complies with the law. The Labour Code provides that the CNPD must give its opinion within one month following the request, and that the request has suspensive effect during this period.

If the employer has followed the above-mentioned process, the monitoring can be carried out, respecting the principles of the GDPR, in particular, the principle of proportionality.

In the case of processing data in violation of the principles mentioned above, the employer is subject to criminal sanctions. The Labour Code provides that the breach is punishable by imprisonment from eight days to one year or a criminal fine ranging from €251 to €125,000, or both, for a natural person. Legal entities face a fine ranging from €500 to €500,000. The court may also order the cessation of the unlawful processing under the penalty of a further fine, for which the maximum is set by the jurisdiction concerned.

Business transfers

Employee protections

Is there any legislation to protect employees in the event of a business transfer?

Articles L127-1 to L127-6 of the Labour Code protect employees in the event of a business transfer by securing their rights.

The rights and obligations arising from an employment contract or an employment relationship existing at the date of the transfer toward the transferor are transferred to the transferee.

All the employment contracts and employment relationships that have continued to exist until the date of the transfer between the transferor and the employees are automatically transferred to the transferee. The transferee does not have to conclude new employment contracts with the employees.

However, if the transfer involves a disadvantageous, substantial change of the employment contract for the employee, the possible termination of the employment contract will be considered as being at the employer’s initiative. In this context, the employment contract is terminated only if the employee refuses this substantial change in the employment contract and effectively terminated the employment contract. The employee will then be entitled to bring a legal claim against his or her employer. The dismissal will be qualified as unfair if justified by the transfer.

The transferee may still terminate an employment contract after the transfer (unless otherwise stated by a collective bargaining agreement) if it is justified on grounds related to the employee’s attitude, conduct or arising from the operating needs of the company.

Likewise, the transferor may terminate an employment contract prior to the transfer as long as it is based on grounds related to the employee’s attitude, conduct or arising from the operating needs of the company.

Nonetheless, in both cases, a termination solely based on the transfer itself is not considered as based on a lawful reason.

Termination of employment

Grounds for termination

May an employer dismiss an employee for any reason or must there be ‘cause’? How is cause defined under the applicable statute or regulation?

An employer may not dismiss an employee for any reason. The decision to dismiss an employee must be based on valid grounds. Indeed, a dismissal is regarded as unfair and contrary to social and economic reasons if it takes place in breach of law or if it is not founded on real and serious grounds related to the employee’s aptitude or conduct, or arising from the operating needs of the business, establishment or department.

Dismissals in breach of law are notably dismissals:

  • for legal strikes duly declared;
  • notified during the protection period of an employee who is on sick leave;
  • justified by the transfer of undertaking;
  • in response to a complaint of sex discrimination or harassment;
  • based on the employee’s refusal to accept part-time or full-time work;
  • based on the part-time worker’s refusal to accept overtime work under other conditions than provided for in the employment contract; and
  • based on the employee’s refusal to waive his or her right to early retirement indemnity.

 

In addition, in some special situations or to protect more vulnerable employees, the law expressly provides for the nullity of the dismissal (eg, dismissal of employees’ representatives, pregnant women, internal redeployed employees, disabled employees, victims or witnesses of sexual harassment, employees on maternity leave or parental leave, dismissal based on the wedding of a woman and dismissals prior to the conclusion of a social plan).

Notice

Must notice of termination be given prior to dismissal? May an employer provide pay in lieu of notice?

Notice of termination must be given prior to dismissal, except for dismissal for gross misconduct. The duration of the notice period depends on the length of service of the employee within the company.

In the case of employment for a period of less than five years, the notice period is two months. If the employee has been employed from five to nine years, the notice period extends to four months. In the case of employment for at least 10 years, the notice period is six months. These delays are reduced by half when it is the worker who terminates the employment contract.

The employer may not provide pay in lieu of notice. If the employer releases the employee from work during the notice period, it will have to continue to pay the monthly salary of the employee until the end of the notice period.

In which circumstances may an employer dismiss an employee without notice or payment in lieu of notice?

An employer may dismiss an employee without notice in the event of gross misconduct.

Severance pay

Is there any legislation establishing the right to severance pay upon termination of employment? How is severance pay calculated?

According to Luxembourg legislation, any dismissed employee or any employee who terminates his or her employment contract for serious misconduct by the employer, which has been recognised by a court’s decision, with at least five years of service is entitled to severance pay, except in the case of a dismissal for gross misconduct.

The amount is determined according to the length of service of the employee:

  • from five to nine years: one month of gross salary;
  • from 10 to 14 years: two months of gross salary;
  • from 15 to 19 years: three months of gross salary;
  • from 20 to 24 years: six months of gross salary;
  • from 25 to 29 years: nine months of gross salary; and
  • at least 30 years: 12 months of gross salary.

 

The seniority is assessed at the date of expiry of the employment contract (ie, the last day of the notice period in the case of a dismissal with notice even if the employee was released from work during this period).

The severance pay is calculated on the basis of the gross remunerations paid to the employee during the 12 months prior to the month of notice of the termination.

Procedure

Are there any procedural requirements for dismissing an employee?

In companies employing at least 150 workers, the employer must arrange a meeting with the concerned employee prior to any notice of dismissal. Further, the dismissal must be notified by registered letter or delivered by hand against acknowledgement of receipt.

For dismissals with a notice period, the duration of the notice period will depend on the employee’s length of service. The notice period starts on the 15th day of the month in which the termination was notified in cases where the notification is prior to this date, or the first day of the month following the one during which the termination was notified in cases where the notification is later than the 14th day of the month. The employee may request by registered letter the communication of the reasons for the dismissal within a one-month period from the notice of the dismissal. The employer must then provide the employee with the reasons for the dismissal in a very precise and detailed way, within one month of the receipt of the employee’s request by registered letter. Otherwise, the jurisdiction seized would declare the dismissal as unfair.

For dismissal with immediate effect (in the case of a gross misconduct), there is no notice period to comply with, and the dismissal letter must immediately specify in a very detailed and precise way the reasons for the dismissal.

Usually, individual dismissals are not submitted to special permissions. However, certain protected employees cannot be dismissed except in cases of gross misconduct and upon the prior authorisation of the labour court (eg, employees’ representatives, pregnant women and women on maternity leave).

Employee protections

In what circumstances are employees protected from dismissal?

Employees are generally protected against unfair and unjustified dismissal. Employees’ representatives, pregnant women, employees on maternity leave, discriminated or harassed employees, employees on sick leave and parental leave, and employees who have been internally redeployed also benefit from greater protection.

Mass terminations and collective dismissals

Are there special rules for mass terminations or collective dismissals?

In the case of collective dismissals (if the number of envisaged dismissals amounts to at least seven employees within a period of 30 days or at least 15 employees within a period of 90 days), article L166-2 of the Labour Code provides that a social plan must be negotiated with the staff delegation and the trade unions for the companies bound by a collective bargaining agreement. The Labour Inspectorate must be informed about the outcome of the negotiations.

If no agreement is reached within 15 days between the parties, the minutes of the negotiations signed by the parties must be communicated to the Labour Administration and to the Labour Inspectorate. In addition, the parties must submit their disagreement to the National Conciliation Office to reach an agreement. The result of these negotiations is communicated to the Labour Administration as well as to the Labour Inspectorate.

Any notice of termination sent to an employee before the signature of the social plan or before the signature of a statement of non-conciliation at the end of the conciliation procedure before the National Conciliation Office is considered as void.

Further, at any time, the Economic Committee may ask the social partners to start discussion to establish an Employment Safeguard Plan and, at the latest, when the employer has notified five dismissals for reasons not inherent to the person of the employee during a reference period of three months, or eight dismissals for reasons not inherent to the person of the employee during a reference period of six months.

Class and collective actions

Are class or collective actions allowed or may employees only assert labour and employment claims on an individual basis?

No class or collective actions are allowed under Luxembourg law (ie, employees and former employees cannot bring claims on behalf of other workers). The plaintiff must have a ‘personal interest’ when filing his or her claim before the courts.

In the field of discrimination, claims relating to discrimination grounds may, nonetheless, be filed before the courts by a non-profit organisation or a trade union in the name and on behalf of the employee under specific conditions.

Trade unions can also introduce legal actions regarding the application or interpretation of collective bargaining agreements in the name and on behalf of the employee under certain conditions.

Mandatory retirement age

Does the law in your jurisdiction allow employers to impose a mandatory retirement age? If so, at what age and under what limitations?

Pursuant to article L125-3 of the Labour Code, the employment contract automatically ends the day the employee is granted a retirement pension or, at the latest, when the employee reaches the age of 65 if the employee is entitled to a legal retirement pension. The pension is granted if the employee has contributed at least 120 months to the pension insurance.

If no retirement pension is granted to the employee before the age of 65, and if the employee is not entitled to a legal retirement pension at 65, the employment contract is not automatically terminated. In such a case, the employer should not dismiss the employee on the sole fact that the employee had reached a specific age. In the event of litigation, such dismissal would, in principle, be considered as discriminatory pursuant to article L251-1 of the Labour Code and as such unlawful.

Dispute resolution

Arbitration

May the parties agree to private arbitration of employment disputes?

In principle, arbitration clauses in employment contracts are forbidden. However, the parties may agree to private arbitration of employment disputes after the end of the employment contract.

The arbitration procedure is also provided for in the event that no agreement has been reached on collective disputes before the National Conciliation Office if the social partners (ie, the employer and the employee representatives) request an arbitrator.

Employee waiver of rights

May an employee agree to waive statutory and contractual rights to potential employment claims?

An employee may agree to waive statutory and contractual rights to potential claims only if the element that may lead to such a claim is born. In addition, a settlement agreement may always be signed between the parties if a dispute has arisen or may arise. In those cases, the employee will, in principle, waive any claim against his or her employer in exchange for concessions from the employer (eg, financial compensation).

An anticipated agreement signed before any dispute or in the absence of elements that may lead to a dispute would always be void.

Limitation period

What are the limitation periods for bringing employment claims?

The limitation periods for bringing employment claims depend on the type of claim involved. Thus, for example:

  • a lawsuit for the payment of the employee’s remuneration should be introduced within a three-year period from the due date;
  • upon dismissal, the employee may initiate a court claim for unfair dismissal within three months from the date of the notification of the dismissal or from the notification of the reasons for the dismissal (article L124-11 of the Labour Code); however, if the employee challenges in writing the reasons for his or her dismissal to his or her employer during this three-month period, the three-month period is validly interrupted, and a new period of one year starts from the date of the sending of this letter;
  • in the case of dismissal of a pregnant woman, the latter has 15 days to ask the judge, in summary judgment, to declare the nullity of the dismissal and to order her retention or, if necessary, her reinstatement in the company. The same rule applies to a dismissal with notice of an employee on parental leave; and
  • in the case of a staff delegate, the latter has:
    • one month following the prohibited dismissal to ask the judge, in summary judgment, to declare the nullity of the dismissal and to order his retention or, if necessary, his or her reinstatement in the company; or
    • three months from the date of the notification of the suspension to obtain damages for unfair dismissal and specific damages due to his or her special statute.

Update and trends

Key developments of the past year

Are there any emerging trends or hot topics in labour and employment regulation in your jurisdiction? Are there current proposals to change the legislation?

Changes to the right to leave for family reasons

Proposed Law No. 7436, submitted on 25 April 2019, plans to extend leave for family reasons to include grandparents.

Bill No. 7489, submitted on 19 October 2019, plans, among other things, to allow both parents to take leave for family reasons at the same time under certain conditions.

Extending parental leave and making it more flexible

Proposed Law No. 7434, submitted on 25 April 2019, plans to make the provisions relating to parental leave more flexible and to extend the granting of parental leave to include grandparents.

The main purpose of the Proposed Law is to set a maximum period that each parent can take as parental leave – more specifically, six months if they are employed full-time, 12 months if they work part-time, or even a number of days on a pro rata basis based on the actual time worked if less than half the normal maximum working time is worked.

The main other new points are as follows:

  • parental leave can be taken until the child reaches the age of 12;
  • the right to parental leave will no longer be lost when not taken consecutively with maternity or adoption leave; and
  • one of the parents will be able to transfer all or part of any parental leave not taken to the other parent or to a grandparent.
Workplace internships for school pupils and students

Bill No. 7265, submitted on 19 March 2018, plans to introduce a new chapter to the Labour Code on internships for school pupils and students.

Posting of workers in the framework of the provision of services

Bill No. 7516, submitted on 23 January 2020, transposing Directive (EU) 2018/957 of the European Parliament and of the Council of 28 June 2018, plans to extend the mandatory provisions that must be respected by member states posting employees in Luxembourg.

Exceptional measures in the context of the covid-19 crisis

The Grand-Ducal Regulation of 18 March 2020 declared a state of emergency in Luxembourg owing to the covid-19 pandemic. This has been extended for three months by the Law of 24 March 2020. In this context, several Grand-Ducal Regulations have been published to introduce a series of measures in the fight against covid-19, temporarily modifying the usual applicable rules of the Labour Code, including:

  • the adaptation of the short-time working system in the event of force majeure;
  • extraordinary leave for family reasons reimbursed by the national health fund;
  • the responsibility of the National Health Fund, not the employer, for the payment of salary during employees’ incapacity to work;
  • the possibility of extending the maximum working hours to 12 hours per day and 60 hours per week for the activities authorised by the Grand-Ducal Regulation of 18 March 2020;
  • the possibility for employers of businesses carrying out essential activities mentioned in the Grand-Ducal Regulation of 18 March 2020, to cancel or deny paid leave during the pandemic;
  • the suspension of probationary periods, consultation periods in mass redundancies, the term of protection for sick employees and the timelines for mandatory medical examinations for medical and social care workers; and
  • the possibility of Belgium, German and French foreign workers to work from home in their own jurisdictions and to remain subject to Luxembourg rules regarding the taxation of their remuneration.

 

For further information, please refer to the official government website.