Legislation

Law Against the Employment of Illegal Aliens Passed

On December 21, 2012, the Luxembourg Parliament enacted a law against the employment of individuals illegally present in Luxembourg. (The new law follows the European Directive 2009/52/EC providing for minimum standards on sanctions and measures against employers of illegally staying third country nationals.) The law amends the Luxembourg Labor Code and the Luxembourg Criminal Code. It defines and prohibits the illegal employment (travail clandestin) and the employment of third country nationals present illegally in the country and imposes possible criminal and administrative sanctions upon violating employers.

Bill of Law No° 6545 Seeks to Reform Social Dialogue in Luxembourg Undertakings

A bill was introduced into the Luxembourg Parliament on February 25, 2013 seeking to improve the dialogue between employees and employers in Luxembourg undertakings. The bill aims to reform the existing legislation which was introduced 30 years ago and is no longer consistent with the current business and economical reality. The bill seeks to simplify the modalities of the social dialogue between the employees and the employer and to reinforce staff delegation as the main method of employee representation and negotiation with employers by extending its role, rights, powers and protection. The bill also proposes to abolish the works council (comité mixte), the delegation of young staff and to introduce a delegation at the level of each establishment composing an undertaking (établissement) as well as at the level of the economic and social entity which is composed by several undertakings (entité économique et sociale).

EU Infringement Procedure Against Luxembourg Concerning Fixed-Term Work

On April 25, 2013, the European Commission summoned Luxembourg to amend its legislation on fixed-term contracts in order to fully meet the requirements of the June 28, 1999 European Directive 1999/70/EC concerning the framework agreement on fixed-term work. Indeed, teachers from the University of Luxembourg as well as staff working in the entertainment industry are out of the scope of the legislation currently in force in Luxembourg and do not benefit from the EU Directive’s protection against abusive renewals of fixed-term contracts. Furthermore, although the EU Directive requires employers to inform fixed-term employees of vacancies in their undertakings, the Luxembourg legislation provides only for an indirect communication through works councils which is particularly problematic in smaller undertakings where there is no works council. Luxembourg was given two months to present the necessary amendments to the current legislation to the European Commission, failing which the Commission could decide to initiate actions against Luxembourg before the Court of Justice of the European Union.

New Collective Insurance Agreement

On January 7, 2013, a grand ducal regulation dated December 12, 2012 was published in the Luxembourg official gazette (Mémorial) giving general binding effect to the collective insurance agreement concluded between the trade unions and the Luxembourg insurance companies association (Association des Compagnies d’Assurances or ACA) for the period from January 1, 2012 to 31 December 31, 2014.

Bill of Law No° 6555 on Internal and External Reclassification

On March 14, 2013, a bill amending the Luxembourg Labor Code and the Luxembourg Code of Social Security on internal and external reclassification was submitted to the Luxembourg Parliament for consideration. The procedure of reclassification concerns employees who are no longer able to occupy their current position within the undertaking. They will be directed to another position within (internal reclassification) or outside the undertaking via the Luxembourg Employment Agency (external reclassification). The main changes to the current legislation will be to accelerate the reclassification procedure, to create a specific status of “employee under external reclassification” to improve employee protection and to provide sanctions for employers that breach these rules.

Court Decisions

Employment of Sports Player or Coach

According to article L.121-1 of the Luxembourg Labor Code, persons exercising as a coach or athlete in execution of a contract entered into with an approved association or an affiliated club are not considered to be employees if this activity is not exercised as a principal and on a regular basis and the annual remuneration is below a pre-determined threshold. The Luxembourg Court of Appeals affirmed this rule in a January 10, 2013 decision and stated that the burden of proof shall be on the party denying the “employment agreement” qualification.

Exemption from Work During the Notice Period

On March 7, 2013, the Luxembourg Court of Appeals stated that the requirement of a written document exempting an employee from work during his notice period (in compliance with article L.124-9 of the Luxembourg Labor Code) is intended to provide the employee with proof of such an exemption and to protect him against the charge of unauthorized absence. However, the absence of such a written exemption does not in itself constitute proof of absence of any exemption.

Special Prescription for Salary Claims

In a March 21, 2013 decision, the Luxembourg Superior Court of Justice stated that periodicity is not a condition for the application of the special 3 year prescription applicable to salary. The main criteria is the salary nature of the claim which, given the very broad definition of salary under article L.221-1 of the Luxembourg Labor Code, may also include a claim for a one-time payment (for instance compensation for a license loss).