ALEBA’s goal has always been to understand the concerns of the financial sector employees that it represents. We have prepared a series of fact sheets intended to inform you and to address, in practical terms, some of the questions that you have asked us. Your obligations and your rights in different situations, how the institutions around you function, the organisation of the employee representative bodies at your company: find out more today!

This information is of course in addition to the personal support and advice our staff provide to each member, and in terms of employment law and social legislation in particular.

I'm ill: what do I need to do?

A medical certificate is not required for a one- or two-day absence from work. From the third day of absence onward, you must provide your employer and the National Health Fund (Caisse Nationale de Santé – CNS) with a medical certificate confirming that you are unfit for work.

Written proof must be available to the employer by the third day of absence. One section must be sent to the CNS, another to your employer, and the third one is for you to keep. It is important to respect this legal deadline of three days, otherwise you run the risk of being dismissed for gross misconduct.

In the event of emergency hospitalisation, however, the medical certificate may be given to the employer within eight days of hospitalisation. In all cases, the employer must be informed on the same day that you are unable to work. For peace of mind, you can even send your certificate by registered letter with acknowledgement of receipt.

Can I go out if I am ill?

You are not allowed to leave your home for the first five days of your sick leave, regardless of your doctor’s opinion of your health. After these five days, you may leave your home, but only between 10:00 and 12:00 and from 14:00 to 18:00. Essential outings for treatment or diagnosis in connection with your illness, or related to summons by the Medical Board of the Ministry for Social Security are authorised, but you must be able to justify them if requested by an inspector. All other outings outside these times must be authorised in advance by the CNS.

Can someone come to check on me?

The CNS may perform a check outside the periods during which you may leave your home as of your first day of sick leave, either on its own initiative or at your employer’s request. Checks may be performed in cases where you are supposed to stay at home and are not authorised to go out. A CNS inspector will then visit your home, although this inspection may also be performed on public premises. If you are absent at the time of the inspection, you will find a form to be completed in your letter box. You must then provide a written explanation for your absence and send it within two days of the inspection (with the postmark serving as proof of date).

The management committee of CNS will then decide on a fine, where applicable. 4/Who pays me? Your employer pays you up to the 77th day of your absence. The employers’ mutual insurance scheme, to which your employer pays contributions, then reimburses 80% of the paid salary to your employer. In simple terms, the CNS takes over after the 77th day. You are entitled to receive your salary and other benefits stated in your employment contract in full until the end of the month in which the 77th day of your sick leave occurs. For the period covered by the CNS (from the 78th day onwards), your salary corresponds to the basic remuneration (plus any additional and incidental income) on the condition that this is payable monthly in cash (the allowance for your company vehicle is therefore excluded, for example). See next month’s edition for our practical guide on issues related to ending the working relationship.

Can my employer fire me?

No, if you have sent your medical certificate to your employer on time, you are protected from dismissal for the first 26 consecutive weeks of illness.

Where should I send my certificate?

If you go on sick leave, you must send your medical certificate without putting a stamp on your envelope (in Luxembourg) to the following address: CNS, Département des Indemnités Pécuniaires, L-2979 Luxembourg. Always state your (13-digit) social security number on your certificate!

The National Pension Insurance Fund (Caisse Nationale d’Assurance-Pension - CNAP) in seven questions

Are you planning for your retirement? Do you have any questions? ALEBA Info tells you all about Caisse Nationale d’Assurance-Pension, Luxembourg’s official pension body.

1) What is the National Pension Insurance Fund (Caisse Nationale d’Assurance-Pension) ?

The National Pension Insurance Fund or CNAP is a social security institution. As its name suggests, it is responsible for managing pensions in Luxembourg. It was created following the merger of four pension funds: the Caisse de Pension des Employés Privés (CPEP), the Établissement d’Assurance contre la Vieillesse et l’Invalidité (AVI), the Caisse de Pension des Artisans, des Commerçants et Industriels (CPACI) and the Caisse de Pension Agricole (CPAG*).

2) When was it created?

It was created in 2008**. The law of 13 May 2008 introducing a single status for all employees, which came into force on 1 January 2009, put an end to the distinction between the socio-professional categories of private sector employees and blue-collar workers in terms of social security and employment law.

3) What is its principal role?

Its role entails being the specific point of contact for private sector employees working in Luxembourg or earning a replacement income there, and providing benefits in three cases:

  • Old age
  • Disability
  • Survival

Its staff are available to handle scheme members’ enquiries at its branch in Luxembourg City, no appointment necessary.

4) Who runs it?

It is run by a management committee. This comprises representatives elected by the various professional chambers, on the basis of the electoral results obtained

in these chambers’ elections. There are eight private sector employees appointed by the Chambre des Salariés (CSL).

The Chamber of Commerce sends a “non-employee” representative, as does the Chamber of Skilled Trades and Crafts and the Chamber of Agriculture. Four “employer” representatives are appointed by the Chamber of Commerce, whereas the Chamber of Skilled Trades and Crafts appoints just one. There are as many permanent members as substitute members. The Chairman, a civil servant, is appointed by the Grand Duke. The committee members’ term of office is five years.

The Management Committee draws up CNAP’s internal regulations. It approves the annual budget, the annual breakdown of income and expenses and the balance sheet; it also decides on the legal benefits within the limits of the laws and regulations. It makes decisions concerning CNAP’s employees.

5) Is ALEBA represented?

Yes, ALEBA Vice-Chairman Christian Hoeltgen sits on the Management Committee as a permanent member.

6) How is it funded?

CNAP is funded by member contributions and other resources such as income from investments.

7) Where is its registered office?

CNAP is located at 1a, boulevard Prince-Henri, L-1724 Luxembourg. Tel: (+352) 22 41 41 -1

Fax: (+352) 22 41 41-6443

Website: http://www.cnap.lu

email: cnap@secu.lu

Opening hours:

Monday to Friday, 08:15 to 16:00.

What about my pension?

You can see the amounts of the contributions deducted in respect of your pension on your payslips. The percentages deducted are 8% for the employee, 8% for the employer and 8% for the government.

The statutory retirement age in Luxembourg is 65. To claim a pension you need to have paid in at least 120 months’ contributions. To claim your pension at age 57 you need to have paid 40 years’ contributions, i.e. 480 months. The old age pension starts on the day of the member’s 65th birthday.

In the case of early retirement, members receive their pension on the day the relevant age and payment period conditions are met.

To ensure a smooth transition to retirement, we recommend that you apply for your pension 2 – 3 months before you leave work. Cross-border workers whose last place of work was in Luxembourg must also apply to CNAP for their pension. If they have been in paid employment in their country of residence, the relevant pension fund will forward the paperwork to CNAP. For more information visit www.cnap.lu

All you need to know to about the Employment Tribunal

What is the Employment Tribunal?

Have you ever wondered what the role of this legal body is, and how it is composed? Is ALEBA represented on it? Here are the answers to your questions.

What are its powers?

The Employment Tribunal is a court with legal jurisdiction in the same way as the police courts and magistrate courts, which rules on civil and commercial matters. It deals with company disputes.

The Employment Tribunal hears disputes relating to employment contracts, supplementary pension schemes, insolvency insurance and apprenticeship contracts.

Its role is both to deliberate and to take the “employee” point of view of the case. It must be objective and fair.

How is it composed?

It comprises a chairman and two assessors. The first assessor represents the employee(s), and the second the employer. They are selected from a “list of elected candidates put forward by the relevant professional chambers”. Their term of office is five years, and is renewable. The clerks at the magistrate’s court perform the Employment Tribunal’s clerical duties.

Is ALEBA represented on the Employment Tribunal?

Yes, ALEBA has four members representing it. Jim Schneider, ALEBA’s Vice-Chairman is the permanent assessor in Luxembourg City, and ALEBA Chairman Roberto Scolati is the substitute. Nico Diedenhoffen acts as permanent assessor in Diekirch. His substitute is Carlo Krier.

When should I use the Employment Tribunal, and how?

An employee uses the Employment Tribunal to take legal action against his or her employer. The process starts with the lodging of an application. It is drawn up either by the employee, or by a lawyer defending his or her interests. There are two types. A summary application (requête en référé) enables an employee to obtain an immediate ruling, ordering the employer to pay the employee the amounts owed. A full application (requête au fond) is used, according to the Chamber of Employees “when there may be grounds for disputing the ruling against the employer”.

What is the procedure for a case brought at the Employment Tribunal?

The application is submitted in writing, including the first name, surname, profession and address of the employee. The employer’s contact details and the reason for the application must be provided. The applicant is required to provide a brief description of the case and state the amounts that he/she is claiming from the employer. The grounds for the application must be set out, together with their legal basis. Supporting documents must be enclosed with the application. The application is signed and dated by the employee or his/her lawyer. Before lodging an application, the applicant can send a formal notice to his/her employer by recorded delivery letter. In this notice, the applicant sets a deadline for payment of the outstanding sums.

Both parties will receive a notice to appear from the clerk of the Employment Tribunal. The notice to appear will indicate the date, time and venue for the hearing. On the day of the hearing, the parties attend the court in person or are represented by their lawyers. The case is not argued at the preliminary hearing. A second date is set for hearing the arguments. At the second hearing, the parties must exchange the supporting documents that they are going to submit to the Tribunal.

If the case is argued, the parties’ explanations are heard by the Tribunal, which takes receipt of the documents. At this point, the case is deliberated and a date is set for the ruling.

Where is it?

The Employment Tribunal has three sites: Diekirch, Luxembourg City and Esch-sur-Alzette

Diekirch Employment Tribunal

Bei der Aeler Kirch, L-9211 Diekirch Tel: (+352) 808853-1

Luxembourg City Employment Tribunal

Bâtiment JP, Cité judiciaire, L-2080 Luxembourg Tel: (+352) 475981-227 (mornings)

Esch-sur-Alzette Employment Tribunal

Place Norbert Metz, L-4006 Esch-sur-Alzette, Tel: (+352) 530 529 300

The little-known role of the Compensation Fund

“Managing the compensation reserve of the general pension scheme”. This is the role of the Compensation Fund (Fonds de Compensation – FDC) The Compensation Fund was set up in 2006 pursuant to the amended law of 6 May 2004 governing the administration of the assets of the general pension scheme. The compensation reserve holds the surplus of the receipts of the National Pension Insurance Fund (Caisse Nationale d’Assurance Pension) over its expenditure.

The purpose of the reserve is to “minimise the negative impact of external factors on the level of contributions or disbursements that may lead to sharp variations in contribution rates”. The money is invested through an undertaking for collective investment set up by the Fund itself. It is a limited company called “Fonds de Compensation de la Sécurité Sociale, SICAV-FIS” (FDC SICAV-FIS).

This limited company is regulated by the Financial Supervisory Authority (Commission de Surveillance du Secteur Financier -CSSF). These investments help to safeguard the future of the general pension scheme. At 31 December 2012, the general pension scheme’s total reserves amounted to €12.64 billion. Of this sum, €11.79 billion was managed by the Compensation Fund, and €848 million was managed by the National Pension Insurance Fund.

Of the Fund’s €11.79 billion, €10.46 billion was invested through FDC SICAV-FIS. The Management Committee has 12 permanents and 12 substitutes. In the permanent group, four members represent the government, four members represent employers and four members represent scheme members. Jean-Marie Scheider (Foyer Assurances), Vice-Chairman, represents ALEBA. The breakdown of positions among the substitutes is the same, with Micky Grulms (BIL) flying the ALEBA flag.

Note that Jean-Marie Schneider is also a member of the General Meeting of FDC SICAV-FIS and the Board of Directors. The Board of Directors is assisted by the Investment Committee, which is composed of six members, three of whom are external experts.

Lorsque le salarié quitte son emploi (1/2)

Ce mois-ci, nous faisons le point sur la cessation de la relation de travail lorsque c’est vous qui en êtes à l’origine. Deux cas de figures peuvent alors se présenter : soit votre démission, soit votre départ en retraite. Il est également important faire la distinction entre un contrat à durée indéterminée (CDI) et un contrat à durée déterminée (CDD).

La démission est un acte par lequel vous mettez à votre initiative unilatéralement un terme à votre relation de travail. La mise à la retraite est acte par lequel vous (ou votre employeur) mettez un terme à la relation de travail en raison de votre âge. Dans la pratique, voici plus précisément ce qu’il faut retenir :

CDI CDD
Démission Comment ? La loi prévoit que votre démission doit être envoyée en courrier en recommandé ou remis en main propre, dans les deux cas contre accusé de réception.
Délais : Quand ? Le préavis à respecter dépend de votre ancienneté: . En principe, vous devez effectuer votre CDD jusqu’à son terme.

Si vous décidez de l’interrompre avant ce terme, un CDD ne pouvant être supérieur à 2 ans, le préavis est toujours d’un mois.

Ancienneté < 5 ans > 5 et < 10 ans > 10 ans Préavis 1 mois 2 mois 3 mois
Retraite Comment ? La loi ne prévoit pas de formalisme particulier. Il est cependant préférable d’informer votre employeur par courrier recommandé ou par courrier remis en main propre contre accusé de réception.
Quand ? Comme la loi ne prévoit pas de formalisme, elle ne prévoit pas non plus de délais. Il est cependant d’usage d’informer votre employeur dès que la date de mise à la retraite est connue. Dans le cadre d’un CDD, il est utile de connaître sa date de mise à la retraite au moment de la conclusion de contrat de façon à pouvoir faire coïncider la durée du contrat avec la durée du travail restant à couvrir jusqu’à la mise en retraite.

Dans tous les cas, n’hésitez pas à contacter notre Service juridique en cas de question ou pour tous renseignements complémentaires. Le mois prochain, nous aborderons la cessation de travail à l’initiative de votre employeur. Il n’est évidemment plus question de choix dans ce cas de figure souvent douloureux et les processus sont différents. Nous vous expliquerons également en détail l’aide et le support que vos Délégués ALEBA peuvent vous apporter, dans ces circonstances.

Rightly or wrongly classified senior executive? It is time to define the RIGHT situation!

Rightly or wrongly classified senior executive? It is time to define the RIGHT situation!

Not a day goes by without ALEBA’s legal department being contacted by a member or a staff representative to report a “wrongly classified senior executive” in their company.

This is hardly surprising given the many rights that are directly attached to this status: salary, overtime, bonuses, leave, etc.

But what is a “wrongly classified senior executive”?

The term wrongly classified senior executive refers to a situation where an employee has been hired or promoted within a company as a senior executive, thereby excluding said employee from the scope of application of the relevant sectoral collective labour agreement, without satisfying the current legal conditions to qualify for the status of senior executive.

Imagine being hired or promoted within a company as a senior executive, without qualifying as such. Your tasks and duties become increasingly time-consuming. You work overtime for years, without knowing that in reality you were protected by your sector’s collective agreement. Years of work and stress, and to cap it all, without being paid for all the overtime worked, simply because you were wrongly classified.

Another fictitious, but not impossible scenario: a consultant, established in Luxembourg, presents the Luxembourg market to a foreign company as being business friendly, highlighting a legal loophole which gives companies access to a highly skilled workforce without having to pay overtime, simply by attracting employees with the lure of “senior executive” status (despite the fact that such status does not exist in Luxembourg) together with an inflated job title and a company car to mislead him or her.

The reason why this issue has received such extensive media coverage recently is because the number of employees potentially affected is reaching worrying proportions. Some estimates suggest that more than 10,000 employees in the financial sector could be affected.

According to an article in L’Essentiel, the Minister for Employment, Nicolas Schmit, undertook in February 2017 to investigate the matter.

Pending the results of the Minister for Employment’s investigation, ALEBA has decided to provide a brief update on the issue, relying in particular on current case law, in order to get the facts on the table.

As an employee, does this issue concern me?

If you work in a sector covered by a collective labour agreement, then yes!

If you have any doubts, ask our legal department to assess your situation.

It should be noted that only two statuses exist in the Grand Duchy of Luxembourg: senior executive and employee. It is therefore important to avoid confusing the statuses recognized in the Grand Duchy of Luxembourg with the status classifications of neighbouring countries, such as France for example (which recognizes a third “middle management” status).

What defines a senior executive?

Article L.162-8 of the Luxembourg Labour Code defines a senior executive as follows:

“[…] The following are considered as senior executives within the meaning of this title: employees having

  •  a significantly higher salary than that of employees covered by a collective labour agreement or based on another salary scale, taking account of the time needed to perform their duties,
  • if this salary is paid in consideration for the exercise of real and effective management powers or where the nature of the tasks involves a clearly defined authority,
  • wide-ranging autonomy in the organisation of work and
  • a high degree of freedom as regards working hours, and no constraints as regards such hours […]”.

It is important to emphasise that the above-mentioned criteria are cumulative, that is to say all of the above-mentioned conditions must be met in order to be classified a senior executive within the meaning of the law.

If even one of them is not met, then the person in question cannot be considered to be a senior executive in accordance with current legal provisions.

It is therefore entirely possible to have an annual salary of EUR 150,000, a company car, a smartphone and still be an employee covered by a collective agreement if the senior executive criteria are not met.

Needless to say, therefore, an analysis of the employee’s status should not be limited solely to the remuneration criterion, as is often the case in practice.

The remuneration criterion or the main criterion for the employer

The concept of a “significantly higher salary” differs between sectors.

It is also the criterion that the employer uses to try and focus the analysis of the employee’s status, which is, as already noted, just one of many criteria and not the main criterion.

The law does not provide a clear, unequivocal answer in this regard. Current case law has established a calculation based on two cases, by comparing the highest annual remuneration that can be earned by an employee covered by a collective agreement, including the benefits of the collective agreement, with that received by the employee having lodged the appeal with the employment tribunal:

  • If this is less than 10%: the condition of a significantly higher remuneration is not met and the employee is therefore to be considered as an employee covered by a collective agreement and not as a senior executive.
  • If this is greater than 20%: the condition of a significantly higher remuneration is met and the employee may be considered as a senior executive, if the other legal criteria are met.

In the banking sector, ALEBA estimates for 2017 that the total annual remuneration of an employee covered by a collective agreement in group VI, threshold 2 is around EUR 100,000. The significantly higher salary for a senior executive should not, in practice and in accordance with case law, be less than EUR 120,000.

The criterion of real and effective management powers or where the nature of the tasks involves a clearly defined authority

The position held by the employee must include duties and obligations which are not entrusted to a simple employee (e.g. supervisory powers, number of people reporting to him or her, etc.).

More importantly, the employee must have more important responsibilities to be considered as a genuine senior executive (e.g. category A signing authority, as case law considers that category B signing authority is insufficient to presume the existence of such status).

Maria Petrosillo, ALEBA’s Head of Social and coordinator for almost 20 years, uses an interesting comparison when advising members and representatives.

She compares senior executives with army generals and employees covered by a collective agreement with the other officers. For her, the number of generals (who issue orders) in a company cannot be greater than or equal to the number of soldiers, regardless of their title. For example, a captain, although a high-level rank, remains a junior officer.

ALEBA considers that a company cannot have more than 5-10% of senior executives.

The organisation chart could be a useful indicator for employees to position themselves and thus assess their position within the company.

The criterion of wide-ranging autonomy in the organisation of work

The employee’s tasks and duties are geared towards achieving an objective or result. To that end, he or she does not simply carry out management orders, but must be able to carry out his or her work autonomously.

As the duties of each employee differ, we advise you to obtain a job description in order to make it easier to analyse your status.

The criterion of a high degree of freedom as regards working hours/no constraints as regards such hours

Senior executives work longer hours than an employee covered by a collective agreement in order to carry out their tasks and duties (e.g. international travel, etc.). This is one reason why they are better paid.

It is therefore inconceivable for an employer to impose working hours on a senior executive. The legislature has made a point of insisting that a senior executive must have a large degree of freedom as regards working hours and no constraints as regards such hours.

Therefore, an employee who has specific working hours, or who has to clock in or out, in accordance with the working hours specified in his or her contract of employment, cannot be considered to be a senior executive.

If it is so clear, why does such abuse exist?

This definition has only existed since the enactment of the Law of 30 June 2004 on collective labour relations.

Prior to that, we had only the definitions resulting from Luxembourg case law established with regard to disputes heard by labour courts.

Today, the situation is clear and it is the employer’s responsibility to comply with current legislation. It would be detrimental to the efficient running of companies and the health of employees to neglect the importance of putting the situation on a proper footing in light of current legislation.

It is worth recalling that protecting the health all employees is part of the employer’s social responsibilities.

In France, the Court of Cassation has ruled that it is the responsibility of human resources to maintain good industrial relations and thus protect the health of employees.

In a ruling dated 8 March 2017, the Court upheld the dismissal of a human resources manager on grounds of serious misconduct for having taken no action with regard to the company’s management methods. The Court considered her to be an accomplice to some extent, who had contributed to the deterioration in industrial relations within the company and had indirectly endangered, with the management, the physical and psychological health of employees.

The French Court of Cassation has therefore underscored that, over and above the functional aspect of human resources (recruitment, payroll management, etc.), there is a human, operational aspect in managing employees. The failure by human resources to react to the employer’s exploitative behaviour, thereby endangering the physical and mental health of employees, makes the human resources manager complicit in “endangering the lives of others”, a concept which exists in criminal law.

How can we prevent such abuse?

The social dialogue between management and the delegation, together with ALEBA, is the preferred solution to ultimately solve this problem.

“How can I determine whether I really am a senior executive or not?”

While some people will retort that “everything is in employment contract”, it is important to bear the following in mind.

An employee’s status is analysed in concreto, i.e. with reference to the situation at the time when the status was defined or amended.

This means that the employment relationship is likely to change over time: the contract (provided that the working relationship is established in writing) may be amended; there may be one or more written (or even oral) amendments; the nature of your job and your role may change, resulting in more responsibilities, etc.

There are other factors to be taken into consideration, such as acquired rights and situations involving the transfer of a company (for example, a merger or a sale).

It is therefore difficult to rely solely on the employment contract to determine your status.

Please don’t hesitate to ask ALEBA’s legal department to analyse your situation!

However, these are the main components of a body of evidence:

  • The employment contract
  • Amendments to the employment contract
  • Current job title and position held
  • Job description
  • Pay slips

The following factors are also relevant:

  • The way in which working time is organised within the company
  • The system for clocking in and out
  • Internal regulations
  • The organisation chart/schematic representation of work relations

Be wary of certain factors that create the illusion of being a senior executive, without being sufficient to meet the relevant criteria:

  • Whether you manage a team
  • Having a company car
  • Business travel
  • Having a company smartphone
  • Teleworking

“Can I ask to have my situation corrected retroactively?”

Yes. You can attempt to resolve such a situation amicably within the framework of employer-employee relations with the help of your union or staff representative, or, if necessary, by instituting legal proceedings.

However, please note: the recovery of unpaid wages is subject to a three-year time limit.

“Can I choose the status that I want?”

No. Article 162-8 of the Luxembourg Labour Code stipulates that any clause in an employment contract intended to exclude an employee from the scope of a collective labour agreement is void. In other words, even if an employee wishes to be hired as without being covered by a collective agreement, an employer may not do so if such a status is not appropriate.

Conclusions:

The situation of wrongly classified senior executives is an open wound that has neither been treated nor closed, and today it has repercussions that go beyond the issue of salary.

The impact on health (e.g. risk of burnout owing to the poor management of working hours) and on private life (e.g. too many constraints, too much overtime or recovery time to achieve a work/life balance) are very serious, as clearly illustrated by the alarming figures on work-related psychosocial risks.

It is therefore time to heal this wound and close it properly to prevent the risk of collateral damage.

Wrongly classified senior executive (Part 2)

A few months ago ALEBA carried out a thorough investigation into the issue of wrongly classified senior executives and produced an article summarising the current legal position and the position in Luxembourg case law.

Who could have imagined that it would have attracted such attention: ALEBA’s communications department logged over 5,000 readers across all the social media and material issued. The coordination and legal departments were bombarded with requests from banking and insurance representatives seeking insight into the controversy and to have ALEBA check the position at their companies. The social department noted a striking link between certain cases of professional burn-out (or other psycho-social risks) and the consequences of this wrongly classified senior executives status.

ALEBA’s departments are receiving more and more enquiries; employee representatives are increasingly putting the topic on the agenda of representative-management meetings; an increasing number of employees are asking ALEBA to check their classification and HR departments are assessing their potential “complicity” following the ruling by the French Court of Cassation of 8 March 2017 and its potential implications for Luxembourg law in the future.

The question asked most frequently nevertheless remains: what are the implications in real terms of this misclassification for an employee?

For a clearer understanding of the issue, take for example X, recruited to work in a bank’s IT department in 1986 in a position covered by the banking collective agreement at the time, promoted to project manager at the end of 2008, reassigned (without amendment to his contract) beyond the scope of the collective agreement with effect from 1 January 2009 and currently earning a gross annual salary of €60,000 (€5,000 per month). On average he works 55 hours a week, not counting any foreign business trips.

The main implications of this are as follows:

  • Remuneration:

Hypothesis one: If X had really been a senior executive his basic annual salary would now have been around €120,000. In theory his employer is therefore paying him €60,000 less than his “status” would normally grant him.

Hypothesis two: Assuming in this example that the position of project manager would meet all the criteria of group function VI, “IT project manager”, as provided for in the banking collective agreement, his employer should now be paying him a salary of up to €100,000. In this instance, a shortfall of up to €40,000.

Hypothesis three: X earns €5,000 per month over 12 months. By omitting the 13th month, the June bonus and the other remuneration relating to the collective agreements, he is losing out on approximately €10,000 a year.

In short, X is losing out on somewhere between €10,000 and €60,000 a year.

As the law limits salary-related claims to the last three years, once he has filed his claim with the courts, X can at best hope to obtain redress for 2015–2017 only, as the other years (2009–2014) are definitively time-barred.

  • Overtime:

Note that in theory, not only are senior executives excluded from the scope of the collective agreement for their sector, they are in addition not subject to the laws on working hours and weekly rest (excluding public holidays and statutory leave).

Senior executives are therefore not paid overtime.

It is on this sensitive issue that the balance between professional and personal life can go awry. The much-celebrated work/life balance is significantly disrupted, depending on the number of hours’ overtime worked, on the pretext that it is “normal” for a senior executive to work overtime.

Let us not forget that, as in other European countries, the Luxembourg legislator has deliberately limited weekly working hours to 48 hours so that employees have enough time to cultivate a personal life, and also to prevent a rise in psycho-social risks or the diminution of the private individual in favour of the legal entity that is the company.

According to Eurostat, employees in Luxembourg worked 1,909 hours in 2015 on average. Luxembourgers work 263 hours (32.8 days) a year more than their French counterparts and 151 hours (18.8) more than the Belgians.

As a result of his key position in the company and in accordance with the law, a senior executive effectively waives legal protection for this balance in exchange for said salary, which is significantly higher than the best-paid workers covered by a collective agreement.

Getting back to our example, on average X works 15 hours a week on top of the 40 hours already worked, for no additional salary and instead of spending time with his family or on personal interests.

If he wants to claim these hours, he must not only prove that he actually worked them, but what is more difficult prove that his employer (or line manager) agreed to him working them.

In this instance that corresponds to around €2,500 a month, or €30,000 a year, not counting the other items that could be added to this (such as public holidays).

  • Loss of protection against dismissal:

An employee covered by a collective agreement in the banking and insurance sector is protected against dismissal on economic grounds for two years (article 5.3 of the banking or insurance CCT) if there is a change in the employer’s legal situation, in particular as a result of inheritance, sale, merger, transformation of funds or conversion to a company, i.e. in the event of a business transfer.

Until X manages to have his real status recognised by either his employer or the court he will not be able to invoke this protective clause in the collective agreement as, strictly speaking, it does not appear in his employment contract.

In practice, wrongly classified senior executives are frequently invited to personal interviews with a view to making them an offer that disregards their misclassification and is therefore often much less attractive when compared with the benefits of a redundancy plan.

  • Exclusion from protective measures in the event of mass redundancies:

An incorrectly classified employee risks being excluded from the measures provided for by the law in the event of mass redundancies, whereas the law excludes employees not covered by a collective agreement from negotiations that aim to agree a redundancy plan.

Employees not covered by a collective agreement (especially wrongly classified senior executives) are left to their fate and often have to negotiate their own “exit package” under their contract terms, without automatic legal aid or corporate justice.

Redundancy plans in the banking and insurance sectors offer financial and above all social measures that are often more attractive (e.g.: extended notice period, a “safety net” if they are made redundant by their next employer, help with the cost of retraining outside the banking and insurance sectors, etc.).

FREQUENTLY ASKED QUESTIONS

  • If I ask to be covered by the CCT, will I lose my company car, smartphone, position and other benefits linked to my “executive” status?

NO! If these benefits are stipulated in your employment contract or can be demonstrated, joining a collective agreement should not result in you losing either your salary level or other items which the law calculates in the remuneration package. Company cars usually count as a benefit in kind, stipulated in the employment contract or in another official document (such as internal regulations). It is, however, worth having this point checked by one of ALEBA’s legal team so that he can determine for sure whether it is a company car, or simply a car made available to the employee for the requirements of his work.

  • If I ask to be covered by the collective agreement, will my employer be entitled to divide my salary by 13 or to “recalculate” it in order to include all the financial items stipulated in the collective agreement for my sector in my current salary?

NO! By law, employers must classify their employees under the correct status. If they do not, and they fail to add all the benefits stipulated in the collective agreement to employment contracts, they are in the wrong if they claim that they have to “recalculate” the salary. We should not lose sight of the fact that changing an employee’s salary in a manner that is unfavorable for the employee is tantamount to amending a substantive component of his employment contract. To do so, the employer must initiate the procedure provided for in article 121-7 of the Luxembourg employment code (notification by recorded delivery letter, possibility of demanding explanation, etc.) for cutting the salary. If the employer does not proceed in accordance with the terms provided for by law, the employee can have a court declare the unfavorable amendment made unilaterally by the employer null and void.

  • Should my employer include my bonuses in the calculation of my salary? Can he do this?

NOT NECESSARILY! Bonuses constitute what are known as “rewards” or “premiums”. If there is no bonus clause in a contract or in the collective agreement, this bonus constitutes a donation to be paid at the discretion of the employer and cannot therefore be calculated as part of the remuneration package.

For peace of mind, ask ALEBA’s legal advisers to check your situation for you.

  • My employer is refusing to include me under the collective agreement. What can I do?

Employees in this situation have three options, bearing in mind that this problem is systematically analysed on a case-by-case basis:

  • try to have your real status recognised on your own: In practice this is usually unsuccessful, unless an employee has the support of his union.
  • vote for his company’s employee representatives, who act by virtue of the law of 23 July 2015 on labour relations: In practice this approach is generally effective, as it creates a situation similar to a US-style class action resulting in joint action, combined with the tools of the law of 23 July 2015 on labour relations, to pursue a common cause or to negotiate the terms of inclusion under the collective agreement and the payment of back pay with the employer.
  • take legal action: In practice only dismissed employees and employee representatives dare to assert their rights in this manner.

 

  • Why doesn’t the Minister for Labour do something?

Minister for Labour Nicolas Schmit has promised to investigate this matter. Given that it involves case-by-case analysis, it is unlikely that the Minister will be able to check the employment contracts of each and every employee in the financial sector.

As part of its investigations, ALEBA supports the cause and is planning to present an investigation report shortly.

To ensure that the results are as realistic as possible, any employee who thinks they may be concerned by this matter is firmly encouraged to contact ALEBA as soon as possible (the survey will be completely anonymous).

  • What is ALEBA planning to do next?

ALEBA is continuing to gather as much information as it can and will present it to the Minister for Labour shortly. Depending on the outcome, ALEBA will have to think about possibly opening up the debate with a view to negotiating a special collective agreement for senior executives.

ALEBA will of course carry on advising and supporting any employees and representatives that request its help and support on this matter.

by Safouane Jaouid – Head of Legal at ALEBA

How many days of paid leave am I entitled to?

How many days of paid leave am I entitled to?

DISCLAIMER: Unless specified otherwise, this article only addresses the general cases of full-time employees working under a permanent employment contract (CDI) with no special status (other than the application of a Collective Labour Agreement, for either the banking or insurance sectors). We will discuss the taking of leave and the rights and obligations of employees when on leave in a subsequent article.

Article L.233-4 of the Labour Code stipulates that the minimum amount of paid annual leave is 25 working days per calendar year (from 1 January to 31 December). Employers are free to grant additional days of paid annual leave (but a smaller amount of leave cannot be imposed by employers or accepted by employees).

According to Article L.233-5 of the Labour Code, “working” days are “all calendar days, excluding Sundays and public holidays”.

The Collective Labour Agreement for the banking sector (CCT Banks) adds a day of leave for employees having achieved 25 years of service before the age of 50. CCT Banks and the Collective Labour Agreement for the insurance sector (CCT Insurance) add two days of leave for employees between the ages of 50 and 54 (regardless of the number of years of service) and three days for employees aged 55 and older. These days are acquired in the year of the birthday in question.

Finally, CCT Banks grants 8.5 “personal days” per year and CCT Insurance grants 9.5. The Collective Labour Agreements (CCTs) set forth a number of specific rules for these personal days, but with regard to the definition of employee rights, the rules are the same as for paid annual leave.

In the first year of an employment contract, entitlement to leave is only granted from month to month in proportion to the number of whole months worked (the law only considers a month to be “whole” if the contract covers a period of at least 15 calendar days. For example, employees having worked from 15 to 31 January are entitled to 1/12th of the amount of leave for the month of January. However, if they only worked from 18 to 31 January, they will have no leave entitlement for the month of January).

Entitlement to paid annual leave is calculated over the course of a calendar year (from 1 January to 31 December). Employees are entitled to the entirety of their leave for the year from 1 January. Employers cannot, therefore, object to employees taking their full leave entitlement at the start of the year. Of course, in this case, if the contract were to be subsequently terminated later in the year, the employee would theoretically be required to reimburse the employer for the excessive leave taken.

Employers can only reduce entitlement to paid leave in the event of unjustified absence. In that respect, certain unworked periods are legally considered as providing an entitlement to leave: absence due to sickness or accident, absence authorised by the employer (unworked notice period, dismissal, paid leave, extraordinary leave, etc.), public holidays and contractual holidays, industrial action and cases of force majeure (in which employees are unable to notify their employer in advance, except in the case of imprisonment). Specific attention should be paid to unjustified absences, which may, in certain cases, be deducted from the statutory leave entitlement by the employer.

Finally, the law stipulates that employees whose work is planned to be spread across at least five weekdays may only take five days of leave to cover the whole week, even if in reality they work in excess of five days a week.

By Matthias Lindauer, Legal Adviser

CHANGES FOR 2018 CONCERNING SPECIAL LEAVE

The Law of 15 December 2017, which entered into force on 1 January 2018, introduced significant changes to the field of special leave. Here is a comparison table summarizinng the most important changes: 

Types of special leave  Before the reform  Since 1 January 2018 
Leave due to the birth or adoption of a child aged under 16, also called paternal leave (1)  2 days  10 days within two months of the birth 
Leave due to the death of a minor child  3 days  5 days 
Leave to enlist for military service  1 day  None 
Leave due to marriage or PACS (pacte civil de solidarité – civil partnership) (Note for cross-border workers: a request for recognition of the PACS must be submitted to the Luxembourg civil register via the public prosecutor’s office)  6 days for the couple 

2 days for the parents 

Marriage 

– 3 days for the couple 

– 1 day for the parents 

PACS 

– 1 day for the couple 

– Parents are no longer entitled to leave 

Leave due to moving residence (2)  2 days  2 days every 3 years 
Family leave (3)  2 days per year  Depends on the age of the child: 

– Under 4: 12 days 

– Between 4 and 13: 18 days 

– Between 13 and 18 + hospitalisation: 5 days  

Postnatal leave and adoption leave (4)  Postnatal leave: 

8 weeks + breastfeeding leave 

Adoption leave: 

8 weeks – 12 weeks if adopting more than one child 

Postnatal and adoption leave: 

12 weeks 

(1): This leave must also be granted to divorced/separated parents and step-fathers/step-mothers who are raising the child with the mother or father. 

The 10 days of leave do not have to be taken in one block (subject to the agreement of the employer), but they must be taken within two months of the birth. If the employer does not agree to this, the leave must be taken in one block immediately after the birth or adoption of the child. 

Conditions: the employer must be given 2 months’ notice prior to the date on which the employee wishes to start their leave. When giving notice, the employee must provide a medical certificate attesting to their due date or a supporting document attesting to the predicted date for the adoption of the child. If notice is not given two months in advance, the leave can be reduced to 2 days. Hence it is presumed that this special leave provision will not enter into force until 1 March 2018. 

(2): The duration of this type of leave has not been changed, but it can now only be taken once every 3 years with the same employer. Accordingly, an employee who changes employer is still entitled to this leave and their new employer will not check whether they took this leave at their old workplace. 

(3): Family leave may be taken by an employee with a dependent child aged under 18 who requires the physical presence of one of their parents. The term “dependent child” encompasses children born in and out of wedlock, as well as adopted children. 

Family leave cannot be taken by both parents at the same time. Divorced/separated parents and step-fathers/step-mothers who are raising the child with the mother or father are entitled to this leave. 

Where the child suffers from a deficiency or loss of at least 50% of their physical or mental capacity, the duration of the leave is doubled and there is no age limit. 

It is still not mandatory to take the entire leave in one block. 

It is important to note that for the last age bracket, leave is only granted if the child is hospitalised. 

NB: leave days taken before 1 January 2018 will be deducted from the maximum number of leave days available for the relevant age bracket. However, this only applies to the first two age brackets. 

(4): Postnatal leave is now 12 weeks for all mothers, regardless of whether or not they are breastfeeding, and whether or not it was a multiple or pre-term birth. 

In terms of adoption leave, only one of the two parents may take the full 12 weeks of leave. 

Specific provisions under the Collective Agreements (banks and insurance): 

Although the two Agreements have now been terminated, they will remain in force until the new collective agreement enters into force. The provisions of the most recent convention collective de travail (collective employment agreement – CCT) will therefore remain in force in 2018 until the new CCT is signed. 

Since CCTs can only improve upon the statutory provisions, here are the additional rights that currently remain in force: 

Type of special leave  “Banks” collective agreement  “Insurance” collective agreement 
Leave to enlist for military service  1 day  No special leave 
Leave due to the birth or adoption of a child aged under 16  3 days until 1 March 2018, 10 days thereafter  3 days until 1 March 2018, 10 days thereafter 
Leave due to marriage or PACS (pacte civil de solidarité – civil partnership) (Note for cross-border workers: a request for recognition of the PACS must be submitted to the Luxembourg civil register via the public prosecutor’s office)  Couple: 

6 days (until the new CCT enters into force) 

Parents of the couple: 

2 days 

Couple: 

6 days (until the new CCT enters into force) 

Parents of the couple: 

2 days 

General information: 

Special leave must be taken at the time of the event that triggers the entitlement. It cannot be taken before or after this time. Exception: the new paternal leave. 

If one of the days of special leave falls on a Sunday, a legal public holiday or a business day on which the employee does not work, it will be postponed until the next business day after the event. 

E.g.: a child is born on 1 May. As 1 May is a legal public holiday, the ten days of leave will not begin until 2 May. 

If the event takes place when the employee has already taken ordinary leave, their leave is interrupted for the duration of the special leave. 

If the event triggering the entitlement to special leave takes place while the employee is ill, this leave is unfortunately lost. 

Finally, the special leave is not calculated on a pro-rata basis for part-time employees. In fact, it’s always question of clear days. Therefore, even part-time employees are entitled to the whole amount of the special leave. 

By Carla Valente, Legal Advisor 

Modification of the employment contract: possible?

Modification of the employment contract: possible?

Economic and personal circumstances change frequently during a career, and these can lead the employer to revise the employment contract. Often the employer will use this option to avoid redundancy.

This can have not insignificant consequences. The employer cannot make working conditions less favourable by unilaterally changing a contract. Specific procedures need to be respected. The steps for modifying an employment contract, or changing a key clause in the employment contract, are governed by article L.121-7 of the Labour Code.

1. Modification of the employment contract by common consent

Virtually everything is possible if there is agreement between the employer and employee. Thus once an employee puts its signature to a document, he cannot easily go back on this decision. This also applies when an employment contract is being revised. If the employer would like to make a change, and this would put the employee at a disadvantage, and the employee accepts, then no action can be taken to change this after joint agreement has been reached. However, a change in a contract such as this can only happen with agreement, normally after negotiations. The employer cannot act alone to change a key clause in the employment contract.

2. Modification of a secondary condition (“clause accessoire”)

It is important to note that the employer can always modify the employment contract in the employee’s favour, or make changes on so-called “secondary conditions” (known as “clauses accessoires” in French). A secondary condition is defined as a clause that is not important for either party at the time of signing the contract, or a clause featuring a certain degree of flexibility. An example of a flexible clause is a mobility clause, or clause that features a form of words such as “can be modified according to the needs of the employer/company”. This form of words will render flexible any clause that could be considered to be essential. Thus a revision by the employer is defined as them exercising their management power. The employee must accept this change and continue to carry out their employment contract in good faith.

Thus, if any particular clause in the contract needs to be identified as important, this must be made explicit in the employment contract. For example, this could be done by stating something such as: “the present clause is to be considered to be an essential clause” or “important for the signatories”.

3. Unilateral modification of an essential clause of the employment contract in disfavour of the employee

Clauses that can be considered as essential to the employment contract include the place of employment, working times, the job title and the related role, the salary, and more.

The salary or any other part of remuneration is always judged to be an essential part of the employment contract. As for the place of employment, working times, and the job title, one must refer to the terminology used in the contract to ensure that this is not classed as a secondary condition.

Working times are, in principle, only viewed as constituting an essential clause if this change would have major repercussions on private life, such as being required to work on a Sunday, for example.

As for the place of work, if the contract contains a mobility clause then a change of work place is not always a substantial modification.

If the employer wants to change a contract, then they may be required to carry out a preliminary interview. Every employer with more than 150 employees must invite the concerned employee by registered letter to a preliminary interview. For the banking sector, this number is reduced to 100 by the collective agreement.

If you need advice about matters such as this, the lawyers in our Legal Department are available to offer you support. Feel free to contact them at legal@aleba.lu

4. The procedure

The procedure to be respected by the employer varies depending on the reasons for seeking to modify the contract:

“How do I take my annual leave?”

How do I take my annual leave?

This article is the follow-up to the article: “How many days of paid leave am I entitled to?” A future article will be published looking at the responsibilities of employees when on leave.

DISCLAIMER: Unless specified otherwise, this article only addresses the general cases of full-time employees working under a permanent employment contract (CDI) with no special status (other than the application of a Collective Labour Agreement, for either the banking or insurance sectors). We will discuss the rights and obligations of employees when on leave in a subsequent article.

Article L.233-8 of the Labour Code provides that, in principle, leave is to be taken consecutively, unless the needs of the business do not permit this or the employee has made a reasonable request (in which case the leave may be divided into smaller periods provided that one of the leave periods taken comprises at least 12 consecutive working days). This provision of the Labour Code has, however, fallen into disuse and has ceased to be applied in practice; it must therefore be considered no longer binding.

  1. Principle: employees are free to choose the dates of their annual leave

In practice, we generally tend to refer to article L.233-10 of the Labour Code, which stipulates that “leave is determined on the basis of the employees wishes, unless they conflict with their job requirements or the justified requests of other employees.”

Employees are therefore free to set the dates of their leave however they wish. Employers may not force employees to take their leave on certain dates (except in the case of a period of collective leave owing to the annual closure of the business). Employees can therefore choose to take their leave in a continuous block or by dividing their annual leave over the year.

The Labour Code allows for leave to be divided, but does not specify units of division (i.e. in days, half-days, hours, etc.). It is generally accepted that leave may be split into periods no shorter than half-days, but as the law does not stipulate any units of division, it should also be possible to take leave by the hour.

There is one instance in which employers may force employees to take leave. This is the case of collective leave owing to the annual closure of the business. Collective leave is a scenario in which the employer decides (in agreement with the staff representative body) to close the business for a fixed period. As the business is closed, employees obviously cannot work and these days are deducted from employees’ annual leave allowance.

  1. Restrictions when choosing leave dates

As we have seen above, employers cannot impose leave on employees as a rule. Yet, the law does allow employers the (limited) discretion to reject leave requests.

As such, if employees’ wishes are not compatible with the operational needs of the business, employers may refuse to allow leave. They must nevertheless justify such refusal by explaining why the requested leave is not compatible with the operational needs of the business or with the requests of other employees. Furthermore, this cannot be an ongoing justification; as employees are legally entitled to leave, employers are required to ensure that they are able to take holiday during the course of the year. Therefore, normal business operations must not prevent employees from ever taking leave.

Similarly, employers may refuse to approve the leave of certain employees if several employees have requested leave during the same period. Here again, the refusal must be justified. In practice, this justification is only a variation of the first reason for refusal. Employers may not refuse the leave requests of all employees on these grounds. They must put in place priority criteria.

Employers are relatively free to decide on the criteria (length of service, family circumstances, etc.) without discriminating in a way that is legally prohibited (discrimination on the basis of gender, ethnic origin, etc.). Prioritising the leave requests of members of a specific religion for leave on religious holidays is one of the only cases where discrimination on the grounds of beliefs is tolerated.

  1. How to request leave

Most employers have internal rules outlining the procedure for requesting leave. The law is silent on this point.

In any case (whether or not an internal procedure is in place), we would recommend that employees submit their requests in writing (preferably by email, saving the email to a private network, or by copying the request form and keeping it at home).

Employers are also expected to respond in writing. In any event, case law considers leave requests to be approved where no response is given by employers, but it is up to employees to seek clarification on the matter before any absence (failing this, employees run the risk of being dismissed for unauthorised absence).

Rights and responsibilities of employees when on leave

Rights and responsibilities of employees when on leave

This is a follow-up article to the article published in the November-December 2017 issue of ALEBA INFO (How many days of paid leave am I entitled to?) and to the article in the last newsletter (How do I take my leave days?)

DISCLAIMER: Unless specified otherwise, this article only addresses the general cases of full-time employees working under a permanent employment contract (CDI) with no special status (other than the application of a Collective Labour Agreement, for either the banking or insurance sectors). 

Throughout periods of leave, it is important for employees to bear in mind that their employment contract has not been suspended (unlike during periods of unpaid leave). Accordingly, they have a number of rights derived from their employment contract, but also many obligations. If an employee fails to fulfill his or her obligations while on statutory leave, this may constitute grounds for dismissal.

  1. Rights of employees while on leave
  • The right to holiday pay (article L.233-14 of the Labour Code)

The Labour Code does not provide for salary continuation during periods of leave, but rather for the payment of “an allowance equal to the average daily salary of the three months immediately preceding the date on which the leave begins. The average daily salary is established on the basis of the employees gross monthly salary. It is calculated by dividing the gross monthly salary, including any incidental amounts, by 173 hours. () For employees whose salary is fixed as a percentage, linked to turnover or subject to wide variations, the average of the salary of the previous 12 months is used as the basis for calculating the leave allowance.

However, extraordinary and/or exceptional income such as bonuses is not taken into account when calculating the allowance.

  • The deferment of holiday leave in the event of sickness (article L.233-11 of the Labour Code)

If an employee provides the employer with a medical certificate for a period of holiday leave, his or her leave will be cancelled for the period covered by the medical certificate.

Accordingly, the cancelled days of leave reappear in the employee’s outstanding leave entitlement. Similarly, the employee will not receive any holiday allowance for this period, but will instead receive the benefits he or she is entitled to in the event of incapacity for work (paid by the employee or the CNS).

  • Maintaining the employee’s seniority

A period of leave does not constitute a suspension of the employment contract. As a consequence, employees continue to accumulate seniority during their leave.

  • The right to rest, to disconnect and to privacy

While on leave, employees are entitled to rest. This means that they are entitled to not have to work remotely, to disconnect, to not take work home to finish it, and to not respond to requests from their employer during their leave (N.B. an employer can recall an employee from leave on valid grounds, such as a genuine professional emergency).

Moreover, employers do not have any right of oversight regarding the private activities of employees during their statutory leave.

2. Responsibilities of employees while on leave

  • Employees are not allowed to engage in other professional activities

As already mentioned, the employment contract is not suspended during periods of leave. Therefore, employees cannot use their leave to engage in another professional activity, whether as an employee or on a self-employed basis.

Non-compliance with this obligation could constitute grounds for dismissal.

  • Duty of loyalty to the employer

Employees are still obliged to treat their employers with respect while on leave. Accordingly, they may not criticise, denigrate or insult their employer, whether in private or in public.

By Matthias Lindauer, Legal Advisor

Terminating an employment contract (Part 1)

Terminating an employment contract  (Part 1)

There are several ways to terminate a permanent employment contract, and these are referred to as either a termination with or without notice period.

In this edition of the newsletter, we will be exclusively considering dismissal with notice. The next edition will cover other forms of dismissals.

Termination with notice period

The employer’s decision often takes the employee by surprise. In such cases, the decision to terminate the employment contract is made solely by the employer. The term for this is a dismissal with notice. Before a dismissal can occur, both the employer and the employee must comply with various procedural rules and strictly defined deadlines.

a) Interview prior to dismissal (art. L. 124-2 of the Labour Code)

Depending on the company’s workforce (see below), the employer, generally its representative the Human Resources must send the employee notice to attend an interview prior to dismissal either by registered letter or hand-delivered letter with acknowledgement of receipt. The notice to attend must indicate the date, time and location for the interview. The employee representative body (staff delegation) receives a copy of the letter, as the employee is entitled to seek assistance from the staff delegation or an employee of his/her choice. The notice to attend the interview prior to dismissal may also exempt the employee from work until the day of the interview.

In accordance with the collective bargaining agreement for bank employees, any employer who legally employs more than 100 employees must conduct an interview prior to dismissal. The earliest the interview can take place is the fourth business day after the notice is sent.

For insurance companies, the collective bargaining agreement stipulates that all employees must be invited to an interview prior to dismissal regardless of the number of employees in a company. The earliest the interview can take place is the fourth business day after the notice is sent.

For all other sectors not covered by an agreement, a company must have a workforce of at least 150 employees for interviews prior to dismissal to be mandatory. The earliest the interview can take place is the second business day after the notice is sent.

For companies with fewer members of staff, interviews prior to dismissal are not a requirement and the employer can dismiss the employee without notice (see point b).

At the interview, the employer will inform the employee of the reasons behind the decision to terminate the employment contract. The employee and the staff delegate will then have an opportunity to take a position on the employer’s version of events.

b) Dismissal letter (art. L. 124-3 of the Labour Code)

If a company is required to hold an interview prior to dismissal by virtue of the criteria set out above, a dismissal letter must be sent to the employee no earlier than one day and no later than eight days after the interview.

If a company is not required to hold an interview prior to dismissal, the employer may dismiss the employee at any time.

Employees must be informed of their dismissal either by registered letter or by hand-delivered letter with acknowledgement of receipt. The dismissal letter will indicate the duration of the notice period, when it starts and when the contractual relationship will end definitively.

The notice period is dependent on the employee’s seniority:

  • between zero and five years: notice period of two months
  • between five and 10 years: notice period of four months
  • over 10 years: notice period of six months

The notice period will begin on either the 1st or the 15th of the month, depending on the date on which the letter is sent. If the employee is informed of the dismissal between the 1st and the 14th, the notice period will begin on the 15th of the current month. If the employee is informed of the dismissal between the 15th and the last day of the month, the notice period will begin on the 1st of the next month.

The dismissal letter will not state the grounds for dismissal. If an employee wishes to be informed of this, he/she must submit an express request (see point c).

As regards the exemption from working during notice period, also called garden leave (art. L. 124-9 of the Labour Code), this is the employer’s prerogative. This means that it is the employer who decides whether or not an employee must work during the notice period. ALEBA strongly advises against requesting an exemption from working during the notice period. The employer may interpret such a request on the part of the employee as evidence of a termination by mutual agreement and immediately terminate the employment contract accordingly.

Regardless of whether or not the employee is exempt from working during the notice period, the salary he/she receives at the end of the month remains unchanged. The employee will continue to benefit from any advantages granted prior to the termination of the contract.

c) Requesting grounds for dismissal (art. L. 124-5 of the Labour Code)

From the date of receipt of the dismissal letter, the employee has a one-month period in which to request the grounds for dismissal. What does “date of receipt” mean?

  • Hand-delivery with acknowledgement of receipt: 1 month from the date in question
  • Registered letter: 1 month from the date of processing by the post officer (delivery note) rather than the date of collection from the post office

Grounds for dismissal requests must be sent to the employer by registered letter. However, ALEBA recommends sending with acknowledgement of receipt.

d) Grounds for dismissal (art. L. 124-5 of the Labour Code)

Upon receipt of the request for the grounds for dismissal, the employer has a one-month period to send a registered letter indicating the grounds for dismissal, which must be linked to the aptitude or conduct of the employee or be based on the company’s genuine and pressing operational, establishment or service needs.

Simply by reading this letter, the employee should be in a position to understand what the employer is alleging that he/she did wrong.

Should the employer fail to meet this deadline, the dismissal will be automatically deemed unfair. It is therefore important to keep the acknowledgement of receipt of the request for the grounds for dismissal to check whether the employer replied before the deadline.

e) Contesting grounds for dismissal (art. L. 124-11 of the Labour Code)

Upon receipt of the letter setting out the reasons why the employment contract was terminated, the employee has a three-month period to either take direct legal action in response to the dismissal, or to contest the grounds for dismissal by registered letter, indicating that the reasoning given does not meet the accuracy criterion provided for in law.

If the grounds for dismissal are contested within three months, the debarment period is reset and a court action must occur within one year.

What is the benefit of contesting grounds for dismissal? Simply by sending a letter contesting the grounds for dismissal, the burden of proof of the genuine and pressing grounds for dismissal is incumbent upon the employer.

f) Legal action (art. L. 124-11 of the Labour Code)

A legal appeal against the dismissal must be filed with the Labour Court either within a year of the date on which the grounds for dismissal were contested or within three months of the date on which the grounds for dismissal were received.

The judge will rule on the validity of the dismissal and will decide whether or not it was justified. If the dismissal is deemed to have been justified, the employee cannot claim damages of any kind and is highly likely to be required to pay a procedure fee to the employer. If the dismissal is deemed to have been unfair, the employee will be awarded material and moral damages.

g) Severance allowance (art. L. 124-7 of the Labour Code)

Based on the employee’s length of service at the company, he/she will be entitled to the following salary-linked severance allowance:

  • one month of pay if the employee’s seniority is five years or more;
  • two months of pay if the employee’s seniority is ten years or more;
  • three months of pay if the employee’s seniority is 15 years or more;
  • six months of pay if the employee’s seniority is 20 years or more;
  • nine months of pay if the employee’s seniority is 25 years or more;
  • 12 months of pay if the employee’s seniority is 30 years or more.

The seniority is calculated at the end of the notice period, regardless of whether or not the employee is exempt from working over that period.

Severance allowance is calculated on the basis of gross salary over the preceding 12 months. The salary used to calculate the severance allowance includes cash allowances in the event of illness and standard allowances and supplements, excluding overtime pay, and any benefits and allowances for incidental expenses.

The allowance paid is not subject to tax or social deductions.

h) Full unemployment benefit

At the end of the notice period, all employees will be provided with an employment certificate (the U1 certificate) by their employer. If the employer does not provide this automatically when issuing the final payslip, it should be formally requested. The certificate showing the final payments received by the employee must be submitted to the National Employment Administration (Agence pour le développement de lEmploi – ADEM). This document is an essential part of any unemployment benefit application, and no payments can be made without it.

ALEBA also strongly advises individuals to register with ADEM as a jobseeker on the receipt of the termination letter. This will enable them to view job offers and also, where applicable, to receive extraordinary leave to apply for a new job (art. L. 124-8 of the Labour Code).

In the next edition of our newsletter, we will be discussing other types of contract termination, in particular termination for economic reasons, dismissal during probation, dismissal for gross misconduct, termination by mutual agreement and resignation.

By Carla Valente, Legal Advisor