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The employment relationship

Country specific laws
What laws and regulations govern the employment relationship?

Most employment-related provisions are found in the Labour Code. Other laws and regulations governing the employment relationship include:

  • Grand Ducal regulations implementing provisions of special laws;
  • collective bargaining agreements and agreements resulting from multi-industrial social dialogues;
  • case law; and
  • customs and practices which may be relied on in specific cases.

Who do these cover, including categories of worker?

They generally cover all employees, including senior executives. Further, they include employees hired permanently, for a fixed term and on a part-time basis.

Are there specific rules regarding employee/contractor classification?

Employment relationships are essentially characterised through a legal link of subordination between the employer and employee. The employee must perform his or her duties under the authority and instruction of his or her employer. The employment relationship relies on:

  • the provision and performance of effective work or services;
  • compensation granted for the performance of work;
  • the subordination of the employee to the employer; and
  • the employer’s powers of direction and control over the employee.

Luxembourg courts follow a specific test for independent contractor and employee classification, which focuses on whether there is a link of subordination and the degree of control exercised by the employer over the employee.

Must an employment contract be in writing?

Employment contracts must be executed in writing and signed no later than the date on which work commences.

Are any terms implied into employment contracts?

Employment contracts must contain the following minimum requirements:

  • the names of the parties;
  • the employee’s start date;
  • the place of performance of work;
  • the employee’s function;
  • the employee’s daily or weekly standard hours;
  • the employee’s working schedule;
  • the employee’s remuneration, including any benefits;
  • paid holidays;
  • the length of the employee’s notice period upon termination;
  • the length of the employee’s probationary period, if any;
  • any supplementary provisions;
  • reference to the collective agreement, if any; and
  • reference to the pension scheme, if any.

Additional implied terms should be inserted in employment contracts for part-time and fixed-term employment.

Are mandatory arbitration/dispute resolution agreements enforceable?

Yes – subject to general principles required for arbitration and dispute resolution, and any exceptions and exclusions thereto.

How can employers make changes to existing employment agreements?

Any substantial amendment to an employment contract which is detrimental to the employee will be deemed as a substantial modification to the terms and conditions of employment. Under Luxembourg law, employers may impose essential modifications to the detriment of an employee due to real and serious reasons. The procedure to be followed is similar to that relating to dismissals (eg, in terms of notification, notice periods, requests for grounds and the obligation to communicate the reasons for the substantial amendment).

Non-substantial amendments to an employment contract can be implemented through a written amendment to the existing employment contract and must be signed by both parties.

Foreign workers
Is a distinction drawn between local and foreign workers?

No distinction is made between local and foreign workers, as long as the foreign worker is authorised to work within Luxembourg. Pursuant to new immigration legislation, work permits and residence permits have been merged; hence, foreign workers need obtain only one document.

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