The law dated 24 July 2024 amending among others the Labour Code and implementing Directive (EU) 2019/1152 of the European Parliament and of the Council of 20 June 2019 on transparent and predictable working conditions in the European Union (the “Law”) was published in the Mémorial on 31 July 2024 and entered into force yesterday, i.e. on 4 August 2024.
Why is the Law relevant for Luxembourg employers? Firstly, it requires employers to update their employment contract templates to include the new stipulations it introduces. Secondly, the Law introduces several changes that all employers need to be aware of.
Please note that this newsletter only relates to provisions resulting from the Law and relating to employees (i.e., salaried workers). The Law however also includes changes to the contracts applicable to students and pupils that are hired during their school holidays (in the sense of articles L.151-1 and following of the Labour Code), apprentices and temporary workers. We are of course at your disposal in case you need any information in this regard.
1. New information to be included in the employees’ employment contracts
- The Luxembourg Labour Code already foresees a certain number of information that needs to be included in an employment contract.
- The Law introduces additional elements that must be included in this type of contract, specifically: The workplace or the indication that the parties agree that the employee will be free to determine their place of work.
- The conditions related to the performance and remuneration of overtime, as well as, if applicable, all conditions related to a team change.
- All salary supplements, salary accessories, bonuses, or agreed profit-sharing, if any, must be listed separately from the base salary.
- The modalities of payment of the remuneration and any supplementary pay.
- The procedure to be followed by the employer and the employee in case of termination of the employment contract, including the formal requirements and the notice periods to be observed. According to the preparatory comments to the Law, this information on the procedure also must include the time limit for filing a claim to challenge the termination of the employment contract.
- The conditions of application of the trial period, if any. Concretely, the employment contract shall include, in particular, the notice period in case the employer or the employee wishes to end the relationship before the end of the trial period, the timeframe within which the employer must inform the employee (and vice versa, the employee the employer) to terminate the trial period or the conditions under which the trial period can be extended.
- The identity of the competent social security body and related social security scheme.
- The right to trainings, if any.
Please note that for certain of the above-mentioned points, a simple reference to the relevant legal texts will be sufficient.
If the information has not been previously communicated, the employer must communicate the information to the employees within a specific timeframe, i.e., either in the course of a period beginning on the first working day and ending no later than the seventh calendar day or no later than within one month from the first working day, depending on the element in question to transmit. We nevertheless suggest including all elements in the employment contract, if feasible.
When one or more pieces of information referred to above have not been provided individually to the employee within the maximum allotted timeframes, and after the employer has been duly notified by the employee to comply, the employee may, within a period of 15 days from the notification of the unsuccessful formal notice, request, by simple petition, the President of the Labour Court to urgently and summarily order the employer to provide the missing information, including under penalty of a fine for non-compliance.
Based on the above, Luxembourg employers will need to slightly update their employment contract templates in order to include the above-mentioned elements. Beyond the inclusion of these new provisions, this is in our view also a good opportunity to do a general sanity check of the employment contract templates.
There is no legal obligation to adapt existing contracts at the date of entry into force of the Law. However, employees will have the possibility to ask for a document / contract which is compliant with the new requirements/mandatory provisions provided by the Law. In this case, the employer will be required to provide such a document within 2 months following the employee’s request.
Additionally, the Law foresees the possibility to transmit the employment contract to the employee concerned in digital form, provided that the employee has access to it, can save and print it and that the employer keeps a proof of its transmission or reception.
2. Information to provide to employees in the framework of a secondment abroad
In the event that an employee is expected to perform his/her duties in a location outside the Grand Duchy of Luxembourg for a period exceeding four consecutive weeks, it is incumbent upon the employer to provide a written statement containing specific details prior to the employee's departure.
Such document will now also need to be further completed and among others include a link to the official internet website set up by the host Member State (in compliance with EU regulations).
3. Information to provide to part-time employees
The Law expressly provides that in the absence of a written document mentioning the part-time employee's working hours and his/her distribution, the employee is presumed to be employed on a full-time basis. Part-time contracts must therefore be drafted with caution.
4. Exclusivity clauses in employment contracts
It is currently market practice to include exclusivity clauses in employment contracts, especially for key functions, to prevent them from engaging in any other professional activity, whether as employee or independent.
The Law also regulates the clauses of exclusivity, i.e., any clause that prohibits an employee from engaging in another employment relationship with one or more employers outside the agreed normal working hours specified in the employment contract will in principle not be valid. The same applies to any clause or action that aims to subject the employee to unfavorable treatment for this reason.
However, and by exception, these clauses will be allowed when multiple employment is incompatible with objective reasons as listed by the Law, i.e., for health and safety at work, protection of confidentiality, integrity of the public service or prevention of conflict of interests. A redrafting of the exclusivity template clause might be necessary and an assessment regarding the enforceability of an exclusivity provision must be made on a case-by-case basis.
5. Provision of free trainings
The Law also explicitly states that when the employer is obligated by a law, a regulation, an administrative or statutory provision or a collective agreement, to provide training to the employee for the performance of the work for which he/she is hired, this training must be provided free of charge to the employee during working hours. The hours spent on this training should be considered as actual working time.
6. Limitation of duration of trial period in fixed-term employment contracts
Regarding fixed-term employment contracts, the Law now establishes a clear framework for the duration of the trial period.
The minimum duration for the trial period is two weeks.
The maximum duration of the trial period is one-quarter (1/4) of the length of the fixed-term employment contract (or the minimum duration for which the fixed-term contract is concluded), while adhering to the legally authorised maximum duration of the trial period.
7. Request of a conversion of the form of employment contract
Employees may request in writing a conversion of the form of their employment contract in the following situations:
- To convert a fixed-term employment contract into an indefinite employment contract;
- To convert a part-time employment contract into a full-time employment contract; and
- To convert a full-time employment contract into a part-time employment contract.
Our team of employment law specialists is readily available to offer you comprehensive advice and support on these matters. We can also assist you in revising your standard employment contracts.
***
Employers can be sanctioned with fines of EUR 251 to EUR 5,000 for not complying with certain provisions of the Law (e.g., for the absence of a written employment contract as of the entry into service of the employee). These sanctions can be doubled if a repeat offense occurs within two years and apply individually to each employee, meaning that each act of non-compliance can lead to a fine.
8. Sanctions
Within one month of the employee’s request, the employer must either approve the request or provide a written, detailed explanation for any refusal.
Such requests can only be done by employees that have a length of service within the employer of at least 6 months and that have a passed a potential trial period. Such requests are also limited to one “per situation” every 12 months.
