The law of 8 April 2018 has just made a few changes to the Luxembourg labour law.

The objectives of the legislator, within the law, are as follows (bill 7086, explanatory statement):

• better protect the rights of employees;
• improve the efficiency of the employment measures by fostering integration in the labour market including some of the most vulnerable categories of unemployed workers
• ensure wider knowledge of the labour market development, thus allowing the implementation of better targeted policies

The main reforms initiated in the framework of this bill relate to the following points:

1. Equal treatment for an employee who resigns for serious misconduct on the part of the employer and for the employee unfairly dismissed for serious misconduct
2. New conditions for access to temporary reemployment assistance and in case of reemployment after a professionalisation internship
3. New regulations for the full salary continuation of the sick or injured employee

1. Equal treatment for an employee who resigns for serious misconduct on the part of the employer and for the employee unfairly dismissed for serious misconduct

This amendment is consequential to two decisions of the Luxembourg Constitutional Court. The Constitutional Court indeed came to the conclusion that article L.124-6 of the Labour Code made a difference between an employee who resigned for serious misconduct on the part of their employer and the employee who was dismissed for serious misconduct and for whom that dismissal was declared abusive by the courts.

Indeed, prior to the reform, the Labour Code did not stipulate that the employee resigning for serious misconduct on the part of the employer, when that resignation was recognized as justified by the misconduct on the part of the employer, was entitled to receive compensation in lieu of notice and severance pay.

The same employee will now also be entitled to request from the President of the Labour Court authorization to receive on a provisional basis allowance for full unemployment, until a decision has been taken on the appropriateness of their resignation.

Example:

An employee with seniority of 6 years resigns with immediate effect for non-payment of wages by their employer.

A judicial claim is issued by the employee and the Labour court considers that the resignation by the employee for serious misconduct on the part by the employer is justified.

Before the reform: the employee was entitled to compensation for the material and moral damage caused by the fault of the employer.

After the reform: the employee is entitled to compensation for the material and moral damage caused by the fault of the employer as well as compensation in lieu of notice (4 months’ salary) and severance pay (1 month’s salary).

In addition to this reform relating to the resigning employee’s situation, there are also 2 other points to add:

• The employer’s obligation to reimburse the unemployment benefits received by the employee for the time period(s) covered by the wages or allowances the employer is liable to pay in accordance with the judgment or ruling.
• Non-invocability against the State of a potential transaction between the employee and the employer in order to avoid a judicial procedure. It was indeed common for the employee and the employer to conclude a transaction together whereas the Employment Fund was not reimbursed for the unemployment benefits paid to the employee.

In this case, following the reform, if a withdrawal from the employee occurs and if it results from a transaction concluded between the employer and the employee, each of them will be required to reimburse to the State half of the unemployment benefits that the employee will have been authorised to receive provisionally.

2. New conditions for access to temporary reemployment aid and in case of reemployment after a professionalisation internship

As a reminder, the purpose of the granted aid is to encourage the employees being subject to dismissal on economic grounds or under the immediate threat of being  subject to such dismissal to accept a lower-paying job.

However, it was found that the possibility of having recourse to that aid had resulted in certain abuses by taking the form of a wage subsidy.

The direct consequence is that, after expiry of the payment period for reemployment aid, the wages actually paid by the employer were still far from reaching the wages including the reemployment aid.

Therefore, people had often only the choice between accepting wages which corresponded neither to their skills nor to the quality of the work performed, and leaving the job.

To avoid such situations, the reform of reemployment aid consists in getting the employer to pay ‘realistic’ wages which, if lower than the wages earned previously, however has to take into account the experience and skills of the employee benefiting from the reemployment aid whose goal is to reduce the difference which can exist between the remunerations in question.

As the aid is granted for 48 months, that period of time should bring closer the new wages paid by the employer to the wages earned previously. Yet this is not possible if the difference is too important, hence the need to limit the amount paid as reemployment aid to half of the wages paid by the new employer (article 541-10 (3) of the Labour Code).

Another reform deals with the reimbursement by the State of a part of the wages after a professionalisation internship.

Indeed, the law of 20 July 2017 amending the Labour Code had extended the benefit of the professionalisation internship to job seekers between 30 and 45.

This having been said, that reform had also allowed the very same persons’ employers to benefit from financial assistance in case of employment resulting from a professionalisation internship.

The reform limits that aid (minimum reimbursement of 50% of the wages for 12 months) for job seekers who are at least 45 years old and who will get hired on the basis of an open-ended contract as the result of a professionalisation internship.

3. New regulations for the full salary continuation of the sick or injured employee

The reform which had resulted in the unique status had created legal uncertainty that the reform has clarified.

That legal insecurity had indeed led a large number of employees to pursue legal remedies regarding the calculation of the amount owed again in the case of absence due to illness.

The reform has then taken care to state precisely the rules for calculating the maintenance of the wages in the event of sickness of the employee.

So the reform introduces a distinction between :

• the employees who have their schedule at the beginning of the month ;
• the employees who do not have their schedule at the beginning of the month ; and
• the employees whose pay depends on assignments, productivity, percentage, turnover or is subjected to wide variations ;

and provides, for each of these categories, a precise definition of what one should understand by full salary continuance and the elements that should be taken into account for the calculation of the remuneration owed to the employee in such cases.

In this respect, one has to conclude that this bill expressly clarifies that the non-periodic benefits, bonuses, performance bonuses, incidental expenses incurred and overtime are not taken into account in that calculation (article L. 121-6 (3) paragraph 11).