Covid-19 and labour law in Luxembourg

I. Overview

The first Covid-19 case in Luxembourg was reported on 1 March 2020: the person returned to Luxembourg from an Italian region via Charleroi airport. ¹ At that time, the Health Minister was convinced it was not the case to spread panic; a crisis may arise only once residents in the country started to become infected. Two days later the Government put in place a hotline to inform residents of the risks and measures related to the virus. The spread was relatively slow in the first weeks, so that flight prohibitions were limited to Italy and public announcements simply suggested not to organise events with more than 1,000 persons. ² On 16 March 2020 the government decided to shut down schools, non-essential public services, the University and, with effect on 20 March, all construction sites. ³ The week after, on the basis of Article 32(4) of the Constitution, the Parliament confirmed a state of emergency for the following three months, conferring on the Government the ability to enact whatever regulatory measure was needed, even derogating from existing legislation. ⁴ As of 4 May, the government allowed partial deconfinement, becoming structural on 11 May, with primary schools re-opening on 25 May. ⁵ Meanwhile it planned to systematically test the entire population (625,000 residents) plus cross-border workers (approximately 200,000) on a voluntary basis, with the aim of tracing a-symptomatic carriers of the infection. ⁶

The specific situation of the country – its small size, its economic dependency on other countries for the supplying of goods, and its constant need of cross-border workers (particularly in the health sector) – led the Government to introduce tailored solutions to adequately respond to the needs of Luxembourg's business and society at large. On some occasions, such solutions required temporary amendments or derogations both to international treaties (e.g., those on the limits of tax imposition for teleworkers residing in neighbouring countries) and to EU rules (e.g., those on the access of foreign workers in spite of the partial border closures by some countries).

II. Income support measures

Income support measures can be grouped into three main categories: those applicable to employees and assimilated; those applicable to the self-employed; and those applicable to unemployed people.

The main income support measure for employees introduced by the Government as a result of the lockdown of most economic activities in Luxembourg is the chômage partiel scheme, legally justified as a typical case of force majeure. ⁷ The scheme applies to all employees, including fixed-term workers and agency workers, as well as to apprentices, whose work is partially or totally reduced because of the crisis. According to Article L. 511 of the Luxembourgish Code du Travail, the State reimburses 80% of salaries for a period up to 1,022 hours per year through the Fonds pour l’emploi, on the condition that the employer continues paying the salaries and does not dismiss the beneficiaries for economic reasons (Article L. 511-3). Before accessing this measure, the employer must inform and consult the staff delegation and the relevant trade unions. The amount of the state reimbursement may not be less than the statutory minimum wage (for non-qualified employees) and has been capped up to 250% of such minimum wage. ⁸ Uncertainties still remain over the relationship between the chômage partiel and leave (in particular parental leave). No specific measure has affected the employer’s ability to dismiss employees, an exception having been made for those who benefit from chômage partiel schemes. ⁹ The Government has, instead, adopted the suspension of probationary periods in respect of all locked-down activities and those benefitting from the chômage partiel. ¹⁰

The self-employed in Luxembourg have been granted a special lump sum aimed at addressing the lack of liquidity as a direct consequence of the pandemic crisis. ¹¹ Its personal scope of application is limited to tradespeople, artisans, and intellectual self-employed workers, who must comply with the following conditions: they must have exercised on their own an activity included in the scope of application, or own at least 25% of the shares of a limited liability company, or be a director, general partner or delegated representative for the day-to-day management of a limited liability company. The lump sum of EUR 2500 is non-imposable, not cumulative with other subsidies given to commercial and artisanal economic activities, and limited to those who have an imposable revenue of less than 2.5 times the statutory minimum wage (EUR 64,259.70 per year). On 6 May 2020 the Government introduced a supplementary measure for the self-employed, providing for a single flat-rate, non-repayable financial aid in their favour, the amount of which varies depending on the income bracket of the person concerned (from EUR 3000 to EUR 4000). ¹² Other indirect measures – such as a repayable advance to cover operating costs, a postponement of loan repayments offered by certain banks, and the cancellation of tax advances for the first two quarters of 2020 – benefit the self-employed. ¹³

As of 20 May 2020, 20,253 unemployment claims have been processed by ADEM, the Luxembourgish employment agency, with an increase of 31.1% compared to last year’s data. ¹⁴ On unemployment, the Government has adopted specific measures aimed at granting income support despite the original expiry of the benefit. All unemployment benefits have been extended for the entire duration of the pandemic crisis. ¹⁵ Conditionality mechanisms have been relaxed so that, first, reference periods do not run during the crisis and, second, jobseekers are exempted from proving to have actively searched for a job during the crisis period.

To help employers face the shortage of personnel during the crisis, the Government has allowed the leasing of staff from one entity to another, beyond the (ordinarily) strict limits imposed by the Code du Travail for the prêt temporaire de main-d’œuvre (Article L. 132 -1). Furthermore, the requalification and conversion of jobs have been encouraged through the platform JobSwitch, whose purpose is to ‘to facilitate the implementation of solidarity behaviour between companies during the current crisis’, aiming to ‘facilitate and accelerate the use of temporary loans of labour that the law allows in exceptional circumstances.’ ¹⁶ Having concluded its pilot phase, the platform has been re-integrated into the public employment agency ADEM. ¹⁷

III. Health and safety measures

The Government has not introduced a general reform of the already complex legislation on health and safety at work. However, competent authorities have issued specific recommendations addressed both to the general public and to certain sectors or employers. The Code du Travail (Article L. 326-4) provides that jobs-at-risk – meaning occupations that expose the individual to potentially dangerous biological substances – must be granted enhanced protection. In a number of sectors considered ‘essential’, ¹⁸ the Government has increased working time limits, derogating from Article L. 211-12, Code du Travail, up to 12 hours per day and 60 hours per week. From 11 May 2020, the measure has been re-focused on those activities considered 'essential for the maintaining of vital interests of the populationa and the country'. ¹⁹

The application of the precautionary principle suggests employers should not require the performance of work from those employees who could be at risk. Uncertainties remain over the right of each employee to refuse to perform because of the risks to which he/she could be exposed. Such right, provided by Article L. 312-4(4), Code du Travail, allows an employee in serious and immediate danger, which cannot be avoided, to refuse to work.

IV. Teleworking

As happened in most countries, the Luxembourgish Government has pushed to increase teleworking during the pandemic. In the public sector, restrictions on the use of teleworking have been lifted. ²⁰ In the private sector, teleworking has been encouraged by all means, due to the high number of cross-border workers typically employed in tertiary occupations.

Teleworking in the private sector is regulated through a Collective Agreement, declared of universal application by a Grand-Ducal decree in 2016. ²¹ Such agreement has not been modified during the crisis. However, its widespread application has raised at least two issues. The first deals with the voluntary nature typical of teleworking: is it contradicted by the unilateral employer’s request to perform work from home? The labour inspectorate has so far argued that the need to take care of employees’ health and safety justifies the unilateral adoption of teleworking regimes. A second issue concerns the invasion of private life caused by the massive use of information technology (IT) during teleworking. To what extent can the employer be required to put in place all available measures in order to ensure the respect of employee’s privacy and personal data?

Since almost half of private employees are cross-border, the lockdown restrictions suggested taking specific measures, especially on the applicable taxation. Luxembourg has in place international tax treaties with neighbouring countries to ensure that teleworking is used respecting strict time limits (days worked remotely per year). In the short term, the Government reached separate agreements with France, Belgium and Germany, providing that the days spent on teleworking during the pandemic crisis are not counted in the time limits for fiscal purposes. ²²

V. Deconfinement

At the time of writing, all activities have been gradually re-opened, with the exception of cinemas, physical training centres and the like, amusement parks and theme parks, indoor play and entertainment activities, gambling activities, fairs and shows. ²³ The massive compulsory use of face protective masks in all circumstances on public transport and for activities that involve an audience has been ensured by their systematic distribution to all households. Wearing a mask is compulsory during the exercise of any activity if an interpersonal distance of two metres cannot be respected, unless there is a more restrictive sectoral provision. The obligation does not apply between people who cohabit and to minors under six years of age. ²⁴ Still, private gatherings ‘in an organised form’ are prohibited, except events, visits or meetings of a private nature organised at home for a maximum number of six people, in addition to people already living in the same household; open air gatherings in a public place for a maximum number of 20 people; civil marriages and funerals for a maximum number of 20 people; and drive-in type activities in places where the parking of cars or motorcycles is authorised. ²⁵