Introduction

The Law of 8 April 2018 modifying various provisions of the Labour Code came into force on 15 April 2018.(1) Among other provisions, the law has modified Article L121-6(3) of the Labour Code, which concerns salary payments in the event of illness.

Following the amendments, employers must abide by the following rules to ensure that employees who are on sick leave receive the full pay to which they are entitled.

New rules

If employees who get sick are in possession of their working schedule until at least the end of the calendar month covering the sick leave, the employer must pay:

  • their basic salary for the month in question;
  • all standard bonuses and additional existing payments; and
  • any increase in salary that the employee would have been entitled to if they had worked their expected working hours for the period during which they were unable to work.

If employees who get sick are not in possession of their work schedule until at least the end of the calendar month covering the sick leave, the employer must pay a daily allowance equal to the average daily salary for the six months immediately preceding the period of illness. Alternatively, the employer must pay a daily allowance equal to the average daily salary for the 12 months immediately preceding the period of illness where the employee's salary is:

  • paid according to performance or on a piece-work basis;
  • calculated as a percentage of the company turnover; or
  • subject to significant variations.

Further, if employees have been at the company for less than six or 12 months, respectively, the reference period must be reduced to the length of time that they have actually been at the company.

Calculating daily allowance

The formula for calculating an employee's daily allowance is: average daily salary = (gross monthly salary/173)(2) x the number of hours worked per day.

The calculation must consider permanent salary increases introduced by law or the applicable collective agreement or employment contract during the reference period or period of illness. Non-periodic benefits, bonuses (including performance bonuses), incidental expenses incurred during the course of work and overtime hours are excluded from the allowance.

Periods of leave, sick leave, short-time working, inability to work due to bad weather or accidental or involuntary technical unemployment during the six or 12-month reference period should be taken into account in the calculation of the daily allowance in principle, subject to other future clarifications by law.

Comment

Following the issuance of the new rules, the majority of case law in this regard has become redundant. According to such case law, employers had to consider overtime and overnight hours – as well as hours worked on bank holidays and Sundays – if employees had regularly or structurally performed such hours over an undefined period of several months before they were unable to work. This had to be established in the event of a dispute.

Now, employers must prove whether employees received their work schedule before falling ill. If so, employees must be paid as though they had worked according to the pre-defined timetable on the days on which they were ill. If not, they will receive a daily allowance corresponding to the average daily salary for the previous six months (if applicable), which will not take into account any overtime worked during this period.

For further information on this topic please contact Guy Castegnaro or Ariane Claverie at Castegnaro by telephone (+352 26 86 82 1) or email (guy.castegnaro@castegnaro.lu or ariane.claverie@castegnaro.lu). The Castegnaro website can be accessed at www.castegnaro.lu.

Endnotes

(1) Law of 8 April 2018 modifying various provisions of the Labour Code.

(2) 173 or the normal number of hours of work per month as stipulated in the applicable collective agreement or employment contract.

This article was first published by the International Law Office, a premium online legal update service for major companies and law firms worldwide. Register for a free subscription.