Castegnaro is a niche employment law firm based in Luxembourg city. One of the biggest employment law firms in Luxembourg, Castegnaro now numbers 12 lawyers entirely dedicated to labour law, as regards both counsel and litigation. Charged by the Luxembourg government to participate in the establishment of the Luxembourg Labour Code, Castegnaro's lawyers are also active commentators and writers in the field. They participate in numerous conferences on employment topics and teach employment law as well as social security law.Show more
Employment & Benefits
The Law of July 20 2017, which modified the Labour Code by introducing a new system to combat long-term unemployment, recently came into force. The law has introduced a new form of aid to promote the employment of the long-term unemployed and amended the aid system for hiring older unemployed persons. It has also extended the availability of the professional training internship and reduced the duration of compensated temporary occupations.
The Ministry of the Civil Service and Administrative Reform recently submitted Bill 7171, which defines the terms and conditions of so-called 'time savings accounts' for civil service officials, among other things. A time savings account is a tool whereby officials can accumulate free time and save it to use at a later date of their choice. Doing so will allow officials to achieve a better balance between their private and professional lives, within the limits of statutory conditions.
The legislature recently amended Article L211-29 of the Labour Code, which concerns special records of employee working hours. The new record-keeping requirements will ensure that foreign employers seconding employees to Luxembourg and employers based in Luxembourg are treated equally. In addition, a new article was recently added to the code, which imposes new obligations on clients and instructing parties entering into contracts with service providers.
A new law amending the Labour Code and Article 3 of the law laying down measures to safeguard employment, price stability and business competitiveness recently entered into force. Key changes introduced by the law include the strengthening of company responsibility in subcontracting chains, the introduction of an electronic platform for posting arrangements and the introduction of effective redress mechanisms to enable posted employees to lodge complaints or initiate legal proceedings.
The Court of Appeal recently ruled on the distinction between the obligation of an employee bound by a non-compete clause in his or her employment contract and the duty of loyalty inherent in any employment contract. The court clarified that the general principle of executing an employment contract in good faith means that an employee should not "develop a business that might be in competition with the employer during the course of the employment contract".
Court rules on validity conditions of disciplinary penalties provided for by collective bargaining agreementsLuxembourg | July 19 2017
The Court of Appeal recently clarified the validity conditions of disciplinary penalties provided for by collective bargaining agreements. Taking into account an earlier decision, the court found that the evaluability of the penalty was deficient and that its wording failed to meet the precision requirements of the lawful punishment principle. The court therefore confirmed the annulment of the penalty imposed on the employee.
Despite a clear improvement in the employment market, some job seekers – particularly the long-term unemployed – have not benefited from this positive trend. To mitigate this inequality, Bill 7149 was recently submitted to the Chamber of Deputies. It introduces an option for employers to receive support from the Employment Fund when entering into open-ended employment contracts with job seekers who are registered and have been unemployed for at least one year.
The minister of labour, employment and the social and solidarity economy recently tabled Bill 7138 before the Chamber of Deputies, amending the amended Law on the Establishment of Professional Chambers with an Elective Basis 1924 and the Labour Code. The bill is intended to reschedule the next Chamber of Employees elections to prevent them from clashing with the legislative elections.
In a recent case, an employee sought payment of overtime, which the employer had rejected on the grounds that the employee had been a senior manager at the time. In its ruling, the Court of Appeal referred to Article L162-8 of the Labour Code, which defines the conditions that must be fulfilled for an employee to be considered a senior executive. The court stated that when an employee disputes being a senior executive, the burden of proof lies with the employer.
Ministers issue response regarding employment of 'fake' senior executives in banking and other financial industriesLuxembourg | March 29 2017
Senior executives in the banking and other financial industries are exempted from benefiting from the collective agreement applicable to these industries. Union representatives challenged the practice of employing so-called 'fake' senior executives and in December 2016 a parliamentary question was submitted on this matter. The minister for labour, employment and the social and solidarity economy and the minister for finance recently issued a joint response to this question.
A new law was recently enacted in response to the 2013 government programme which stipulated that the "inequality of pay between women and men will be abolished by the power of the law". Employers must now ensure that they meet their obligation to pay men and women equally, taking into account the notion of 'equal work'. A breach of this obligation is a criminal offence and punishable by a fine of between €251 and €25,000, which may be doubled if the offence is recommitted within two years.
The sliding wage scale index for salaries recently increased from 775.17 points to 794.54 points. As a result, the new minimum monthly wage, which was increased by the Law of December 15 2016 modifying Article L 222-9 of the Labour Code, has been revalued.
Bill 7016 concerning the Organisation of Working Time and relating to the Amendment of the Labour Code was recently submitted to the Chamber of Deputies. The bill aims to provide companies with greater flexibility regarding the organisation of working time, protect employee health and safety and amend collective bargaining agreement negotiations.
The Grand Ducal Regulation of September 27 2016 set the instalment rates at which employment income, pensions and annuities can be seized or transferred in accordance with Article 4 of the Modified Law of November 11 1970. The regulation, which revoked the Grand Ducal Regulation of June 26 2002, came into force on December 1 2016.
Two new laws regarding criminal record certificates were recently published in Memorial A. The law of July 23 2016 stipulates when an employer can request a criminal record certificate during the recruitment process or the course of an employment relationship. Further, the Grand Ducal regulation of July 23 2016 defines the list of authorities and legal persons that can request copies of Sections 2 and 3 of an individual's criminal record certificate under public law.
Diversity in the workplace is a matter of soft law in Luxembourg as no legal framework exists in this regard. Instead, diversity has been fostered through the establishment of the Diversity Charter Letzebuerg – which aims to encourage employers to foster diversity through concrete actions that exceed their legal obligations – and the introduction of several general provisions to national legislation.
Under Luxembourg's employment law regime, a 'company practice' is a practice that is habitually performed within a company and takes the form of a benefit awarded to employees in addition to what they are entitled to by law or under a collective agreement or employment contract. The Esch-sur-Alzette Employment Tribunal has reiterated that to terminate such practice, employers must explicitly do so by informing employees of the termination sufficiently in advance.
Under the Labour Code, an employee who is unfairly dismissed with immediate effect is entitled to severance pay and compensation in lieu of notice, whereas an employee who resigns as a result of his or her employer's gross misconduct is not. The Constitutional Court recently considered whether this disparity breaches the equal treatment principle established under the Constitution.
In June 2016 the ministerial regulation defining the average annual gross salary in accordance with a 2008 grand ducal regulation came into effect. The minimum salary thresholds for highly skilled workers and workers in Groups 1 and 2 of the International Standard Classification of Occupations have both been increased.
Under the Labour Code, employers with 150 or more employees must conduct pre-dismissal interviews and – in certain instances – give notice to the employee in the eight days following the interview. However, in a recent case the Labour Court of Appeal held that an employer's issuance of a notice of dismissal nine days after the interview did not constitute a formal irregularity and render the dismissal unlawful.
In a case of internal redeployment resulting in a decrease in earnings, the Employment Fund will pay the redeployed employee compensation for the loss in average monthly pension contributions. The Third Chamber of the Labour Court of Appeal recently considered whether this compensation must be taken into account when calculating severance pay in cases of redundancy with notice.
Recent employment law developments include Labour Court of Appeal cases on the consequences of reclassifying a fixed-term contract as a permanent contract and the right of employers to make redundancies to improve their profitability, as well as the extension of the agreement relating to the legal structure for teleworking.
The Law of December 18 2015, which amends the Labour Code and several other employment laws, introduces several provisions affecting unemployment benefits and extends other measures. Among other things, the previous provisions regarding jobseeker training courses have been replaced by new provisions relating to professional training courses and contracts to get people back into work.
Bill 6935 on parental leave reform was recently submitted to the Chamber of Deputies. Among other things, the reform aims to promote harmony between family life and professional life and increase the number of parents using parental leave. It expands the age range during which parents are entitled to parental leave, sets new durations for parental leave and introduces divisible leave for full-time workers.
The Court of Appeal recently ruled on the legitimacy of a dismissal with notice for excessive personal internet use during working hours. After considering the employer's in-house rules prohibiting personal internet access and whether the employer's check of which websites employees were using breached data protection provisions, the court ruled that the dismissal was justified.
The Court of Appeal has refused to allow an employer to prove an employee's drunkenness in the workplace using recordings from the company's surveillance cameras. The employer, a restaurant manager, had dismissed the employee with immediate effect for drinking excessive amounts of alcohol in the workplace after the restaurant had closed, among other reasons.
In principle, a probation clause cannot be renewed. However, even though this prohibition seems perfectly clear, its application in practice still gives rise to disputes. The Court of Appeal recently ruled on the validity of a probation clause inserted into a new employment contract, where the employee had been engaged by a company belonging to the same group as her previous employer, but to perform different duties.
Although employees are subject to the authority of their employer while in the workplace and during working hours, they continue to enjoy a right to privacy and confidentiality with regard to electronic communications. The Court of Appeal recently reiterated the penalties that employers may face for violating this right. The case highlights the importance of the distinction between personal and professional emails.
Many companies use fixed-term employment contracts for projects relating to their permanent activities. A fixed-term contract can be concluded only for the performance of a precise and non-permanent task. The Court of Appeal recently provided guidance on how to draft clauses which specify the employee's role in a fixed-term contract in order to avoid reclassification as an indefinite employment contract.
Employees must generally refrain from competing with their employer due to a general obligation of good faith in the execution of the employment contract. However, to what extent can an employer prevent a former employee from pursuing competitive activities? A recent Court of Appeal case addressed the issue of non-compete clauses which extend beyond the legal limits in return for financial compensation.
The issue of alcohol in the workplace is often addressed too late – that is, only when the employee is dismissed. How can employers internally manage alcohol-related situations before matters reach this stage? Several actions should be considered in addressing this question.
Employers can easily terminate employment contracts during trial periods where the employee is not incapacitated due to illness. However, the situation becomes more complex and requires explanation where the employee becomes incapable of working. In essence, the employer's capacity to terminate the employment contract of an ill employee during his or her trial period is limited.
This week, Castegnaro explores the primary issues to consider before implementing a bring your own device (BYOD) model in the workplace. Luxembourg companies – especially those in the financial sector – must carry out in-depth risk assessment, and BYOD policies must comply with minimum standard requirements to ensure data protection.
When an employer wishes to modify a substantial clause of an employment contract to the detriment of the employee, the latter's consent is required in principle. However, even without the employee's express consent to the modification, the employer can nonetheless impose new working conditions by following a specific procedure. Failure to follow this procedure properly can attract significant risks for the employer.
Does an employer have the right to charge its employee where the latter has damaged a company vehicle? This question arose in a recent case in which an employer deducted the amount of the insurance deductible from its employee's wages after having noticed damages to the company vehicle following its return by the employee. The case is a reminder that an employee's financial liability is limited by three main restrictions.
In principle, employers have the right to take disciplinary action against employees who breach their contractual obligations. The penalty of dismissal is referred to in the Labour Code and the issuance of warnings is recognised by courts and tribunals. However, other disciplinary penalties can also be contained in employment contracts, internal rules or collective bargaining agreements, which can raise questions as to their legal validity.
In practice, the difference between work carried out by employees under a service contract and the same work carried out under an employee sub-lease can be thin. In both cases, employees are sent by their employer to work for a third party. However, while the provision of services is not problematic, the sub-leasing of employees is strictly regulated by the Labour Code.
As the ultimate authority over its own work organisation, an employer has the power to change the employment contracts of employees without their consent, even if the change targets a substantial clause of the contract and is unfavourable to the employee. However, employers should consider the particular risks involved in substantially changing the contracts of staff delegates, who are afforded special protection.
The slowdown in business activity due to the current economic crisis has seen a growing number of redundancies, both collective and individual. As a result, employers must be careful when providing employees with reasons for their termination. The economic grounds must be described accurately; otherwise, the dismissal may be deemed unfair, regardless of the reality of economic difficulties.
A pregnant worker is protected against dismissal from the moment when her pregnancy is medically diagnosed until 12 weeks after the birth. If she is notified of the termination of her employment before she has informed the employer of her pregnancy, the dismissal is null and void. However, recent rulings have questioned whether an action to nullify the dismissal is the sole remedy available to a pregnant worker.
The legal requirement to conduct a preliminary interview before terminating an employement contract is intended to prevent hasty and unconsidered dismissals by providing for a dialogue between employer and employee. However, the requirement does not apply in all cases, and employers must be aware of the factors that trigger it.
Luxembourg has no specific legislation on the impact of outsourcing on employees. As such, companies that enter into agreements involving the outsourcing of employees must be aware of the labour law implication, ensuring that they know their position on issues such as redeployment, dismissal and consultation and notification.
The Luxembourg courts have recently considered the issue of whether a company in economic difficulties must comply with an occupational redeployment procedure within the company - or its wider corporate group - before dismissing an employee as part of a downsizing programme.
The Administrative Court has clarified the conditions on which an employment contract can be concluded between a limited liability company and its managing director. An individual can fulfil the two functions simultaneously, provided that the employment contract refers to tasks and duties which are performed by the employee, and that the latter is bound by a relationship of subordination to the company.
Employers may be tempted to sidestep the legal requirements arising from the end of an employment relationship by opting for dismissal with notice, immediately followed by a settlement agreement, rather than dismissal with immediate effect or termination by mutual agreement. However, using backdated documents in such arrangements may constitute forgery, as the criminal section of the Court of Appeal recently held.
The system of time savings accounts has existed for several years, particularly in the banking sector. Draft legislation on such schemes in the public and private sectors will soon provide the first legal framework for permanent employees who wish to save time for future paid leave or absence.
A new law entitles public sector employees and workers that form civil partnerships to the same rights to extraordinary leave as that given to married couples, whether they are Luxembourg residents or cross-border workers. This new legislation forms part of the government's objective of implementing equal treatment between persons bound by a civil partnership and married couples.
The Luxembourg Labour Court has provided a useful reminder that sexual harassment, where the facts are substantiated, may constitute gross misconduct justifying the immediate termination of a staff representative's contract. The court held that the gross misconduct of a staff representative does not need to be greater than that of a colleague who does not have this status in order for the employer to take action.
The Labour Court has ruled that the dismissal with immediate effect of a security guard for aggressive and violent behaviour towards colleagues in the workplace was justified, despite the fact that the employee had over 10 years' service. It was likely that such behaviour from the plaintiff, in a role that required him to maintain his composure, would permanently and irreversibly weaken an employer's confidence in its employee.
It appears that an employer can require an employee who is unfit for work to submit to an assessment by a doctor of the employer's choice, as such assessments seem to have been accepted in case law. Can an employee refuse to undergo such an assessment? If he or she refuses, what recourse does the employer have?
It is discriminatory and unlawful to dismiss an employee on the grounds of his or her health. However, when an employee's health has significant repercussions on the employment relationship, his or her employer can terminate the contract on certain conditions, as a recent case demonstrates.
Sexual harassment in the workplace is prohibited by the Labour Code and in some cases it is severely punished by criminal law. But is an employer entitled to dismiss an employee who is guilty of sexual harassment on the grounds of gross misconduct?
Court rulings relating to unpaid leave are rare. However, the Esch-sur-Alzette Labour Court has recently clarified a question arising from such time away from work: if an employment contract is suspended during a period of unpaid leave, can an employer dismiss an employee who has breached contractual provisions against unfair competition during this period?
The Court of Appeal has held that an employee who was terminated with immediate effect after being seen consuming alcoholic drinks at 7:00 am while on long-term sick leave was unfairly dismissed. The court found that although such activity could constitute legitimate grounds for dismissal with immediate effect, the employee's seniority and past conduct made his immediate dismissal for a single incident unfair.
An agreement between Luxembourg's social partners fills a legal gap by providing a definition of 'bullying' in the context of the private-sector workplace. It also requires employers to introduce a procedure for the prevention and management of bullying and violence at work. A new bill is intended to help victims of workplace bullying to seek legal recourse, putting them on the same footing as victims of sexual harassment.
The government has passed a bill that aims to alleviate the impact of the economic downturn on young people. In particular, changes to the employment initiation contract provide additional training and support for young graduates. The bill also modifies the employment support contract to offer further training for less skilled people.
In order to promote lifelong learning in companies implementing partial unemployment, a new regulation provides for increased state reimbursement of employees' salaries for periods devoted to professional training. The new regulation provides that the percentage salary reimbursed by the state will increase from 80% to 90% on certain conditions.
A recent agreement has implemented the framework agreement on harassment and violence at work that was concluded by the European social partners. It is the first Luxembourg labour regulation to provide a general definition of the term 'moral harassment' that is not limited to harassment based on discrimination.
The National Commission for Data Protection has drafted guidance on the complex issue of cybermonitoring in the workplace. The guidance, which was prepared in response to numerous authorization and information requests received by the commission, seeks to strike a balance between the employer's legitimate interests and the employee's right to privacy at work.
Where an employer ceases business as a result of bankruptcy, employment contracts are terminated immediately, but what is the position in the event of a winding-up? The Labour Court has sought to clarify the position of an employee on parental leave, a staff delegate and a pregnant employee who enjoyed legal protection against dismissal at the time when their employer was wound up.
A High Court decision confirms an employee's position under Article L121-6(3) of the Labour Code in respect of remuneration for an employee who has been absent from work through illness. It also underlines an employee's obligation to submit a medical certificate by the required date.
In the event of a dispute over a salary payment, an employer must be able to show proof of payment to the employee. A High Court case has confirmed that the mere fact of accepting a payslip does not constitute proof that the employee received the payment, unless the payslip contains the words 'received the above amount', immediately followed by the employee's signature.
The law on the single employment status came into force on January 1 2009, although the provisions governing the setting up of new institutions or the election of staff delegations have been enforceable since May 15 2008. The law modifies the Labour Code and the Social Insurances Code and ends the inequitable distinction between blue and white-collar workers.
In completing the long-awaited implementation of the EU Sexual Harassment Directive, a new law introduces, among other things, the directive's clear definitions of what constitutes 'direct' and 'indirect' discrimination. More controversially, it allows certain organizations to bring a discrimination case on the victim's behalf, opening the door to discrimination class actions.
Changes in modern working practices have prompted a fundamental reform of the Labour Inspectorate and its approach to employment and occupational health and safety issues. Among other things, the reorganized inspectorate will exercise new powers of intervention and will be more proactive in assisting undertakings and promoting mediation of employment issues.
After long and difficult negotiations, the government has finally introduced a bill to remove differences in status, salary and social benefits between blue-collar and white-collar workers. At present, this longstanding and discriminatory distinction influences a wide range of factors, especially severance pay, overtime and representation.
The Administrative Court has clarified the scope of the co-determination obligation for companies with over 1,000 employees. Traditionally, the courts had found that groups of public limited companies were excluded from the co-determination requirement. The Administrative Court has put an end to this interpretation by holding that the notion of a 'social and economic unit' applies to the Labour Code.
The Luxembourg government has recently published its contribution to the debate opened by the European Commission's green paper entitled "Modernizing labour law to meet the challenges of the 21st century". This debate aims to determine how to modernize labour law to support the Lisbon Strategy's objective of achieving sustainable growth with more and better jobs.
May the illegal monitoring of employees in the workplace be used as lawful evidence of an employee's misconduct and justify dismissal? According to two recent Superior Court of Justice decisions, in principle the answer is yes. However, in light of the Mister Minit Case, the debate is still open.
The Tripartite Law, which promotes the maintenance of employment, has recently been approved and published. Most of the provisions of the law came into force on the date of publication. This update reviews the most significant innovations introduced by the law.
The first Labour Code of Luxembourg has recently entered into force. Before the entry into force of the code, the employment legislation was organized in a set of laws, grand-ducal regulations and ministerial orders. The codification will facilitate the accessibility and intelligibility of the legislation, increase legal certainty and improve the legibility of the provisions.
The Luxembourg social partners (the Union of Luxembourg Enterprises and the trade unions OGB-L and LCGB) have signed a cross-industry agreement on the legal aspects of teleworking. This landmark agreement represents the first set of regulations on teleworking in Luxembourg. It is the first EU agreement to be implemented by the social partners themselves, both at EU and national level.