A practical guide to parental leave (Part II)

Part II: During the parental leave

This article is the second in a series of three articles looking at parental leave from a practical point of view. We will address practical issues relating to parental leave that arise before submitting a request, during parental leave, at the end of parental leave and when employees return to work (or not).

In this article, we will consider employees’ rights and responsibilities while they are on parental leave. Over this period, the employee has rights and responsibilities not only in relation to their employer but also in relation to the state.

The nature of these rights and responsibilities depends on the type of parental leave chosen by the employee. As a reminder, there are three types of parental leave:

  • Full-time parental leave for four or six months,
  • Part-time parental leave (50% for 8 or 12 months or 80% for 20 months) or
  • Split parental leave (4 periods of 1 month split over 20 months).

This means that employees will alternate between periods of leave and periods of work throughout their parental leave (unless they opt for full-time parental leave). Periods of leave and periods of work are both included in the concept of parental leave. The fundamental principle behind parental leave is that the employment contract is suspended during these leave periods.

1. Employee remuneration during parental leave:

  • During periods of work, employees are entitled to continue receiving a salary that is proportionate to their work pattern (50% or 80% of the employee’s salary while on part-time parental leave/their full salary when they are working while on split parental leave). Some in-kind benefits (meal vouchers, pool car, etc.) are also adjusted to reflect the employee’s work pattern. Other in-kind benefits are fully retained (e.g. the employee may retain their company car even when they are not working).
  • During periods of leave, employees are entitled to a monthly parental leave allowance paid by the Caisse pour l’Avenir de l’Enfant (CAE, formerly CNPF) that is proportionate to the length of the leave period taken each month.

The allowance amount is equal to the employee’s average income used to calculate pension insurance contributions over the 12 months prior to the parental leave period. This amount cannot be lower than the social minimum wage (EUR 1,998.59 gross per month at index 794.54 (index applicable from 1 January 2017)) and is capped at 5/3 of this minimum (i.e. EUR 3,330.98 gross per month at index 794.54).

The CAE offers an online calculator that employees can use to find out the parental leave allowance amount they can claim in advance (http://cae.public.lu/fr/conge-parental/calculateur–revenu-nouveau-conge-parental-.html).

This allowance is partially exempt from social contributions (illness contributions, accident insurance and family allowance), but subject to the usual income tax. In principle, employees should automatically receive a new tax form listing the CAE as their primary or secondary employer depending on whether they are taking full-time, part-time or split parental leave.

The parental leave allowance theoretically cannot be seized or assigned by any parties other than public creditors (national authorities, municipal authorities and social security) or to repay a mortgage on a family home.

2. Right to paid holiday during parental leave:

Given that parental leave is based on the principle that the employment contract is suspended during parental leave periods, paid holiday days are not accrued over these periods. Any holiday days that have not been taken prior to the parental leave period are automatically postponed until afterwards.

Accordingly, employees on full-time parental leave will not gain any new holiday days over this time. Employees on part-time parental leave will only gain holiday days in proportion to their working hours.

Of course, employees on part-time or split parental leave are entitled to take their paid holiday during their parental leave in accordance with the usual rules governing paid holiday.

3. What happens if the employee is ill during their parental leave:

  • Employees on full-time parental leave lose the right to receive financial compensation for illness during their parental leave, but their parental leave allowance remains unchanged. Consequently, there is no point in seeking an exemption from work on the grounds of illness.
  • For employees on part-time or split parental leave, the rules regarding illness and the associated compensation only apply to periods when the employee is working.
  • The employee’s obligations to their employer:

Paradoxically, despite the fact that the employment contract is suspended during periods when the employee is not working, employees must honour ALL their obligations to their employer for the duration of their parental leave EXCEPT the obligation to work during leave periods.

Accordingly, the employee’s loyalty and non-compete obligations continue to apply. Employees also retain their obligation to treat their employer with respect (e.g. employees may face disciplinary proceedings when they return from parental leave for public comments made during parental leave, including those on social media), as well as their obligations in terms of confidentiality and discretion.

4. The employee’s rights during periods when they are not working:

During the periods when employees are not working, they are theoretically free to occupy themselves as they see fit (provided that they fulfil the obligations set out above). They are free to travel and can even spend the entirety of the periods when they are not working outside the country without being penalised (although it is important to bear tax residency requirements in mind).

Employees on parental leave also have “the right to access on-the-job training initiatives organised or offered by the employer so as to keep abreast of advances in terms of technology and production procedures”. An addendum to the employment contract may also stipulate that the employee is to take part in departmental meetings and any on-the-job training meetings or briefings that may ensure or improve the employee’s employability, without the employee contributing to the normal business of the company.

5. What happens when an employee falls pregnant again during their parental leave:

In Luxembourg, maternity leave takes precedence over parental leave. As a result, if an employee falls pregnant during her parental leave, the parental leave is suspended for the duration of the new maternity leave. It then restarts and runs its usual course after the maternity leave.

If she decides to take the first parental leave period for this new child (i.e. the parental leave starting immediately after the maternity leave), the new parental leave period will start at the end of the previous parental leave period (the period that was interrupted by maternity leave) rather than immediately after maternity leave.

Please note that the parental leave allowance is also suspended for the duration of the maternity leave, during which time it is replaced by the maternity leave allowance.

6. Protection against dismissal:

  • Dismissal with notice: employees are protected against dismissal with notice for the ENTIRE duration of their parental leave (including periods in which they are working). This means that employers cannot legally notify the employee of their dismissal or invite them to an interview prior to dismissal during this period. Any such notification would be null and void under the law.

Nonetheless, employees must have this notification declared null and void by the President of the territorially competent Labour Court within 15 days of receiving notification of their dismissal. The President of the Labour Court must then rule that the employee remains employed at the company.

  • Dismissal with immediate effect (dismissal for serious misconduct): the employee is NOT protected against this form of dismissal. Moreover, in the event of dismissal with immediate effect, the employee will have their parental leave cancelled and will also be obliged to repay the parental leave allowance they have already received.

7. Change of employer:

If the employee is transferred to another company at the initiative of the employer, parental leave is left unchanged and charged to the new employer.

8. Early termination of the employment contract and the consequences thereof:

  • Death of the parent/beneficiary: Early termination on these grounds does not result in allowance payments received previously being repaid. If the other parent has not yet taken their parental leave, they may do so immediately after the death provided they have notified their own employer of their intention by registered letter with acknowledgement of receipt (the law does not specify whether the employer can object to the type of parental leave chosen or request a postponement).
  • The death of a child or the rejection of an adoption application: Employees on parental leave must return to work no later than one month after the death of a child or the rejection of an adoption application. The employer must allow the employee to return to their post or a similar post that reflects their qualifications and entitles them to at least the same salary. Where this is not possible, the parental leave is extended to its initial term. Parental leave allowance is paid in proportion to the time spent on parental leave and payments that have already been made will not be reimbursed.
  • Voluntary termination of the employment contract by the employee: In principle, given that the employment contract is suspended while the employee is on parental leave, they cannot resign. However, the employee does retain the right to resign if they opt for part-time or split parental leave. In this case, the parental leave shall end immediately and the employee must repay the parental leave allowance they have received since the start of the parental leave. Termination of the employment contract by mutual agreement between the employee and the employer is still possible, but this also triggers the immediate end of the parental leave and the repayment of the parental leave allowance received up to that point (provided that the contract is terminated during the parental leave).
  • Interruption of the parental leave not justified by circumstances that are external to the parent/beneficiary or entirely out of their control: Employees must justify their reasoning for interrupting their parental leave. If the CAE decides that the cause for the interruption is not out of the employee’s control, it will require the employee to repay the allowance they have received to date and the employee will lose their right to parental leave.
  • Bankruptcy, death or incapacity of the employer: Under such circumstances, the law stipulates that the employment contract shall be duly terminated immediately. The parental leave also ends, but the employee may keep the allowance they have already received.

By Matthias Lindauer, Legal Advisor