By : Guy Castegnaro

Firm : Castegnaro

Luxembourg has introduced a system of time banking for private sector employees, intended to enhance flexible working and improve work-life balance.

On 12 April 2019 the Law introducing the ‘time savings account’ (TSA) was published. It entered into force on 28 April 2019.

The aim of introducing TSAs is to enhance flexibility in the management of work time, both for employers and employees, particularly in the area of reconciling work and family life.

The establishment of TSAs

A TSA can be established by an organisation for its employees working under employment contracts as soon as they have completed two years of service. A TSA can be established by a collective bargaining agreement or sectoral or national agreement resulting from social inter-professional dialogue.

In all cases, the TSA is optional and an employee cannot be required to use it.

Banking credit in a TSA

A TSA is individual and is denominated in hours of work. The account can be credited, on the employee’s written request, by:

  • additional leave days granted above the 26-day legal holiday allowance;
  • additional leave days generated by the use of a reference period longer than a month as part of a work organisation plan, as well as any excess balance of hours resulting from these reference periods or from use of a flexible schedule;
  • overtime;
  • compensatory rest days resulting from Sunday work;
  • compensatory rest days if an official public holiday falls on a Sunday;
  • a maximum of five days’ leave the employee was not able to take during the calendar year as a result of illness, maternity leave or parental leave with aim of this leave being taken after 31 March of the following year.

The maximum time credit in a TSA is 1800 hours.

Use of a TSA

Use of hours banked in the TSA is granted by the employer on the employee’s written request. In principle, banked time can be used according to the employee wishes, if this does not conflict with work requirements or other employees requested time off (with good reason). In any event, if an employee asks to use his or her TSA hours, the leave period must be scheduled at least one month in advance, unless the social partners have agreed a different time period depending on the duration of the leave requested.

If the employee falls ill while using leave accumulated in the TSA, days of sickness corroborated by a medical certificate are not considered to be days of leave debited from the TSA and are re-credited. The same principle applies to other types of ‘extraordinary’ leave (paternity leave, relocation leave, etc.).

Protection for employees

When an employee is using the leave accumulated in the TSA, he or she will be considered to be on paid leave and the employer is required to keep the absent employee’s position open, or if this is impossible, ensure they can return to a similar position appropriate to their qualifications and with a salary that is at least equivalent.

Liquidating a TSA

In the following circumstances, the TSA will be closed and the balance in leave days at the time of closure will be transferred to the employee in the form of a compensatory payment:

  • the business ceases trading as a result of death, physical inability, or declaration of bankruptcy of the employer;
  • automatic termination of the employment contract on the day the employee becomes entitled to an old-age pension or at the latest when the employee turns 65;
  • automatic termination of the employment contract in the circumstances set out in article L.125-4 of the Labour Code (detailed provisions relating to entitlement to invalidity benefit, maximum paid sick leave, the treatment of disabled workers and workers who are redeployed);
  • termination of the employment contract on the initiative of one of the parties to it, or by mutual agreement;
  • on the death of the employee.

Employer’s obligations

Employers are required to put in place a system that sets out the correct and detailed administration of the TSA. They must ensure that employees can always consult their TSA balance and that they can, through the production of a monthly statement, ensure that the TSA is being credited is in accordance with their initial wishes.

Finally, in terms of information and consultation, the employee delegation will be responsible for monitoring the establishment and correct administration of the TSA.

In the event of the employer’s bankruptcy

The debts that result from liquidation of the TSA are guaranteed up to a ceiling equal to double the social minimum salary and are raised to the status of super creditors.