By Dorothée David

Firm: Castegnaro

This article sets out the main changes in employment law in Luxembourg in 2017.

Law on minimum social wage and adapted wages, salaries and pensions (1 January 2017)

The Law of 15 December 2016 increased the minimum social wage from 1 January 2017. In addition, an adjustment of the sliding wage scale (the mechanism by which wages in Luxembourg are adapted to the cost of living) was triggered with the consumer price index for December 2016. This resulted in an increase of 2.5% of wages, salaries and pensions as of 1 January 2017.

As of 1 January 2017, the new minimum monthly social wage (applying the index of 794.54) is:

  • EUR 1,998.59 gross for an unqualified employee;
  • EUR 2,398.30 gross for a qualified employee.

Law on immigration (8 March 2017)

The main purpose of this Law is to transpose two Directives into Luxembourg law: Directive 2014/36/EU establishing the conditions of entry and stay for third-country nationals for the purposes of employment as seasonal workers, and Directive 2014/66/EU on intra-corporate transfers.

The Law provides that a residence permit can now be requested specifically for third-country seasonal national workers. It also introduces a residence permit for intra-corporate temporary transferees intended for third-country national managers, experts and trainees involved in temporary intra-corporate transfers. This new permit is referred to as an ‘ICT’ or ‘mobile ICT’ depending on whether it is designed for short or long-term movement. It replaces the residence permit for a transferred employee, although any permits that have already been issued will remain valid until their expiry date.

The other main provisions of the Law include:

  • the introduction of a new business continuity mechanism, allowing authorised organisations to carry on their activities in Luxembourg in the event of a major incident preventing them from carrying out their business in a third country;
  • the creation of a new ‘investor’ residence permit;

the increase from 2 to 4 years for the validity of the “EU blue card” work permit for highly qualified workers;

  • the possibility for someone with a residence permit (regardless of category) to request family reunification for their spouse or legally recognised partner and minor dependent children, without having to wait until they have been in Luxembourg for twelve months.

Law concerning the posting of employees (14 March 2017)

This Law implements law Directive 2014/67/EU on posted workers into national law, inserting the following key changes into the Labour Code:

  • Company responsibility in subcontracting chains, through the establishment of a mechanism for the joint and several liability of all companies involved;
  • The introduction of an electronic platform for posting arrangements, following administrative practices already in place;
  • New documents to be produced by the posting company, to ensure posted employees receive payment of wages due in relation to hours actually worked;
  • administrative collaboration at national level, associating the Directorate of Immigration, the Department of Public Works, the Public Roads Administration and the Administration of Public Buildings with supervisory roles falling within the competence of the Labour and Mines Inspectorate (‘ITM’);
  • The introduction of effective redress mechanisms enabling posted employees to lodge complaints or initiate legal proceedings before the Luxembourg courts, directly or through trade unions (with their agreement), even if the employee has left Luxembourg territory in the meantime;
  • The introduction of administrative penalties for infringements of the provisions on posting employees, where offenses are punishable by an administrative fine of between EUR 1,000 and EUR 5,000 per seconded employee, but the total amount of the fine cannot exceed EUR 50,000;
  • The introduction of rules governing the cross-border enforcement of administrative penalties and fines between the Grand Duchy of Luxembourg and another Member State;
  • The introduction of the possibility for the ITM to close a site for serious breaches of labour law.

Law introducing a system to combat long-term unemployment (20 July 2017)

The Law includes the main following provisions:

New form of aid to hire the long-term unemployed

  • Aid provided to create new jobs (‘emploi d’insertion’) with open-ended employment contracts. The number of new jobs for each year is set by the budget law and limited to 150 for 2017.
  • Aimed at unemployed people aged 30 or above, registered with the ADEM (employment office), who have been out of work for at least 12 months.
  • Employers affected: the government, municipalities and municipal unions, public bodies, companies with a social impact (‘sociétés d’impact sociétal’) whose share capital is 100% impact shares (‘parts d’impact’), foundations and not-for-profit organisations.
  • Refund of salary costs actually incurred by the employer, capped at 150% of the minimum social wage for unqualified employees, on a sliding scale of 100% for the first year of the contract, 80% for the second and 60% for the third; refund of 100% of salary costs, capped, if the unemployed person hired is at least 50 years old, until an old-age pension is awarded.
  • Refund suspended if the employee resigns or is dismissed after the end of the trial period.

Changes to the aid system for hiring ‘older’ unemployed people

  • New conditions for awarding the aid, including in particular a declaration to the ADEM in advance about any vacancy and exclusion from the refund scheme if a partner or relative (up to second degree) of the unemployed person benefiting from the scheme owns the majority of the employer’s share capital.
  • Refund of social security contributions for the employment of older unemployed people now limited to the employer’s share of these contributions.
  • Minimum age of beneficiaries raised from 30 to 45 years old.
  • Duration of the aid payment period limited to 2 years for unemployed people aged between 45 and 49, and up until the day on which an old-age pension is awarded for unemployed people aged 50 or above.

The law specifies that the aid provided to help employ older unemployed people and the aid provided to employ the long-term unemployed cannot be combined.

Opening up of professional training internships to unemployed people aged between 30 and 44

  • Broadening of a scheme that until now has been exclusively for unemployed people aged 45 or above, or who are concerned by an external reclassification.
  • Extension of the right to full unemployment benefits for a period equal to the actual duration of the professional training internship, when this internship does not result in the unemployed person being hired by the company.

Reduction in duration of compensated temporary occupations (‘occupations temporaires indemnisées’ or ‘OTI’) ,

  • Maximum duration reduced from 12 to 6 months, including renewals.
  • Only possible for the sponsor to benefit from a single OTI for the same position over a period of 12 months, with certain exceptions.

Law on co-funding for continuing professional training (29 August 2017)

The main changes include the following:

  • Compulsory continuing training stipulated by law for regulated professions is now excluded from the co-funding system. Training that is made compulsory by the company internally or by collective agreement remains eligible for government financial aid.
  • The benefit of co-funding is only available to employees of companies legally based in Luxembourg (permanent and fixed-term contract employees), excluding anyone working as a subcontractor, non-salaried company managers and job seekers.
  • Any application for co-funding must be submitted via a single standard form, regardless of the total amount invested in the training, including certain mandatory details, failing which the application will be ineligible. These include: type of external, internal or ‘e-learning’ training organisation, financial breakdown with supporting documents or documents certified as true copies by an auditor and assessment scores from the staff representative committee or joint works council, as applicable.
  • The possibility of opting for an income tax bonus instead of government financial aid has been removed.
  • The level of government financial aid has been reduced from 20% to 15% of the cost of the investment in training during the trading year. The investment in training eligible for co-funding is itself capped on the following sliding scale:

  • The co-funding rate stays at 35% of the wage cost for beneficiaries of specific co-funding, namely unqualified employees with fewer than 10 years’ service and employees over the age of 45.
  • Co-funding for adapting to specific workstations is limited to 80 hours per participant per year (compared with 173 hours before the Law), only for unqualified employees or employees whose qualifications do not relate to their work.
  • The costs of membership of a training organisation are now only eligible on the basis of a collective agreement or an inter-trade agreement.
  • Certain training costs incurred by companies are no longer eligible for co-funding, including in particular the cost of hiring premises and the training materials used, administrative and monitoring costs. However, the costs of applying for the co-funding are covered by the government, up to a total of EUR 500.

The National Institute for the Development of Continuing Professional Training has specified that the new provisions of the Law will be taken into account within the context of decisions on applications for co-funding for the trading year 2018.

Law reforming care insurance (29 August 2017)

The main lines of the reform of the care (non-medical assistance) insurance are as follows:

  • Revision of the procedure and tools for assessment and determination of dependence;
  • Evaluation of certain services in relation to their purpose, their efficiency and their frequency, but also with regard to the objectives defined in the context of long-term care insurance;
  • Definition of a normative framework for the financing of benefits;
  • Establishment of a transparent and effective quality control policy.

The methods of determining care needs and the term and limits of care coverage are set out in several Grand-Ducal regulations published on December 13, 2017.

Law on early retirement (30 November 2017)

The law repeals pre-retirement-solidarity (‘pré-retraite solidarité’). However, it may continue to apply in undertakings whose collective agreement concluded before 1 July 2018 provides for pre-retirement solidarity, as well as in companies covered by a pre-retirement-solidarity agreement signed before 1 July 2018 with a Minister with employment related functions, for a maximum period of two years from the signature of this agreement.

To compensate for the abolition of pre-retirement-solidarity, the conditions for opening early retirement schemes for shift employees and night workers and for early retirement are made less burdensome.

For all early retirement schemes (pre-retirement adjustment, early retirement for shift work, gradual early retirement), the law provides, in particular, that a minimum affiliation of five years with the applicant company must exist at the time of the application for admission to early retirement, and that the insured can now choose between an early retirement pension and one of the pre-retirement-schemes up to age 63. The law also includes the following novel elements:

  • Calculation of the indemnity of early retirement on the basis of the annual average of the base salary and the variable part of the income;
  • Taking into account one twelfth of the average bonuses paid for the last three years;
  • Temporary re-employment aid paid by ADEM (the employment office), as well as compensation for loss of wages for part-time work, unemployment benefit due to inclement weather and accidental or technical unemployment are now also included in the reference wage on which the pre-retirement allowance is based.
  • Taking into account wage losses suffered by employees affected by partial unemployment, unemployment due to bad weather or accidental or technical unemployment;
  • Taking into account re-employment aid until the end of 48 months;
  • Monthly statements to be submitted no later than 6 months following the month concerned.

Regulations relating to the delegation of personnel (15 December 2017)

A Grand-Ducal Regulation amends article L. 416-1 of the Labour Code by specifying the content and form of the agenda of the constituent meeting of the staff delegation. It also provides for the need to send signed meeting minutes to the employer and the ITM within 5 days at the latest.

A second Regulation amends article L. 412-2 of the Labour Code providing that the percentage of the annual total payroll for the assumption of an expert's financial responsibility is limited to 0.10%.

Law on leave for personal reasons, postnatal leave and leave for family reasons (15 December 2017)

This Law came into force on 1 January 2018. It changes the rules for certain kinds of leave to improve the balance between family life and work life, whilst also taking into account current social realities.

Extraordinary leave for personal reasons: for this kind of leave, the Law specifies that the word ‘child’ refers to any child born within or outside marriage or adopted.

Paternity leave and adoption leave, unlike other kinds of leave, can be split, and must be taken within two months of the birth or arrival of the child respectively. Nevertheless, if the employer does not agree to this due to the needs of the business, the leave must be taken in one go, immediately after the birth or arrival of the child. In practical terms, the employee must inform the employer in writing, giving two months’ notice, of the expected dates on which he would like to take his leave. If this notice is not given, the leave may be reduced to two days by the employer. The government will pay for this leave from the third day onwards. The employer must submit its request for a refund for salaries paid to the Minister responsible for employment within five months of the birth or arrival of the child, failing which the request will not be considered. The salary taken into consideration for this refund is limited to five times the minimum social wage for unqualified employees.

Post-natal and adoption leave: the length of these kinds of leave is extended from 8 to 12 weeks. The additional month of leave for breastfeeding women has been integrated into the core maternity leave period, which is now of eight weeks before the birth and 12 weeks after the birth.

Leave for family reasons: the Law specifies that for this kind of leave, a ‘dependent child’ is understood to be any child born within or outside the marriage or adopted who, when ill, requires the physical presence of one parent. The number of days of leave now depends on the age of the child:

  • 12 days per child aged 0-3, to be taken over 4 years;
  • 18 days per child aged 4-12, to be taken over 9 years;
  • 5 days per child aged 13-17 (compared to 15 before the Law) if the child is hospitalised, to be taken over 5 years.

Signature of the Collective Bargaining Agreement for bank employees 2017

The addendum to the Collective Bargaining Agreement for bank employees 2014-2016 for the year 2017 was signed on 22 June 2017 by the ABBL (the Luxembourg Bankers’ Association) and trade union representatives ALEBA, OGB-L and LCGB-SESF.

The signatories of the Addendum agreed to extend the application of all the provisions of the collective agreement for bank employees 2014-2016 to 2017, without any exceptions or exclusions.

The Addendum also includes an addition to article 23 of the Collective bargaining agreement 2014-2016 with a point E, entitled “Remuneration for 2017”, regarding:

  • basic remuneration;
  • the payment of the “June bonus” (‘prime de juin’);
  • the payment of a single signing bonus of EUR 400 gross, paid by July 2017 to any employee working as of 1 June 2017 whose contract has not been revoked on this date, on a pro rata basis according to their working hours.

Collective Employment Agreement for employees in the care and support sector and the social sector (‘CCT SAS’)

A new CCT SAS for the period from 1 October 2017 to 31 December 2019 was agreed between COPAS, EFJ, EGCA, EGMJ (representative bodies in the care sector), on the one hand, and the trade unions OGB-L and LCGB on the other on 27 August 2017. The Council of Ministers approved the declaration of general obligation for the new CCT SAS on 18 October 2017.

The amendment to the collective labour agreement and the new collective labour agreement for Employees in the Sector of Aid and Care and the Social Sector (valid for the period from 1 October 2017 to 31 December 2019) have been declared generally binding by a Grand-Ducal Regulation of 28 October 2017.

Law amending the general status of municipal officials (28 July 2017)

The purpose of the law is to implement the provisions and mechanisms resulting from the reform of the general statute of state officials (implemented by the laws of 25 March 2015) at a communal level.

The law also clarifies the distribution of responsibilities for the appointment of a communal officer, a communal employee or a communal employee, as well as minor amendments concerning the regulation of the right to strike in the communal sector.

Two Grand-Ducal Execution Regulations have also been published and entered into force on 1 September 2017:

  • The Grand-Ducal Regulation of 28 July 2017 determining the regime and allowances of municipal employees,
  • The Grand-Ducal Regulation of 28 July 2017 setting the salary system and the conditions and procedures for advancement for municipal officials.

Tax reform for meal vouchers and company cars (1 January 2017)

A law of 23 December 2016 relating to the 2017 tax reform has changed the rules for the taxation of benefits in kind (meal vouchers and company cars), as of 1 January 2017.

Meal vouchers

The permitted face value of meal vouchers has increased from EUR 8.40 to EUR 10.80. The value of the payment in kind of EUR 2.80 remains unchanged, meaning the amount of tax exemption per voucher has increased to a maximum of EUR 8.00.

Company cars

The flat 1.5% rate of taxation for company cars was replaced by a scale of rates related to CO2 emissions and/or the engine power, to encourage employers and employees to choose more environmentally friendly vehicles. For cars covered by a contract still in force on 1 January 2017, the benefit in kind continues to be calculated at the 1.5% rate until the end of the contract term.

New Collective employment agreement in the Hospital Sector (1 July 2017)

A new collective employment agreement (the ‘CCT FHL’) was made obligatory for all employees of Luxembourg hospitals on 15 November 2017. The new CTC FHL applies public sector career progression and salary conditions to the hospital sector, introducing a revised career model, which came into effect on 1 October 2017.

CTC FHL also provides for the start of discussions on improving the organisation of working time and its management, with conclusions to be reached by 30 June 2018 at the latest.

The new CTC FHL is valid from 1 July 2017 to 30 June 2020.