Reform of re-employment support

The reform of temporary re-employment support announced in late 2017 was recently put to a vote and entered into force on 15 April 2018 under the title Law of 8 April 2018 amending 1) the Labour Code; 2) the Law of 24 December 1996 introducing income tax relief for the hiring of unemployed people, as amended; 3) the Law of 12 September 2003 on people with disabilities, as amended.

Here is a table summarising re-employment support after the reform, as applied to all requests submitted after 15 April 2018:

Re-employment support beneficiaries – Employees who have resigned, but are able to prove that their resignation was due to economic difficulties that the company is facing;

– Employees who have been made redundant for economic reason;

– Employees who have been dismissed as a result of remedial, reorganisation or restructuring efforts;

– Employees who have lost their job as a result of the bankruptcy, compulsory liquidation, or the physical disability or death of their employer;

– Unemployed persons receiving unemployment benefits aged 45 at least and who have been registered with the National Employment Administration (Agence pour le développement de l’Emploi – ADEM) for at least a month and who worked in Luxembourg for 24 months before receiving full unemployment benefits. ADEM must have been informed that the new post is vacant.

Preliminary conditions The personnel of the company in question must have been declared eligible for re-employment support by the Minister of Labour in response to a prior request by any interested party. This condition does not apply to unemployed persons receiving unemployment benefits.

Employees must have worked legally for 24 months prior to their departure from the company in Luxembourg.

Conditions governing the granting of re-employment support The new employment contract must be:

– Either a permanent contract

– Or an 18-month fixed-term contract

– Or a fixed-term contract to replace an employee on parental leave starting directly after maternity leave or adoption leave

Employees must have insurance from the Luxembourg Joint Social Security Centre (Centre Commun de la Sécurité Sociale) and must be in possession of an aptitude certificate issued by the occupational health doctor for the new post.

Employees must not be managers, directors, managing directors or day-to-day operations managers in their company and must not hold an equity stake in the company that employs them.

Re-employment support amount If the remuneration for the new post is lower than that of the old post, employees can claim annual guaranteed remuneration of up to 90% of their previous salary for the first 48 months in which they are employed.

Limits of this guarantee:

– Amount capped at 350% of the social minimum wage, i.e. 6.995,06 (index 794.54)

– Re-employment support amount cannot exceed 50% of the new gross salary

The former salary is calculated as follows: gross monthly salary for the 12 months prior to the end of the employment contract. Including: cash allowances in the event of illness and standard allowances and supplements. Incentives and the 13th month are included in fractions of 1/12 per month.

The following are excluded when calculating the former salary: overtime remuneration, variable remuneration components, benefits in kind, allowances for incidental expenses.

Length of time for which support is received 4     years

Limits on this length of time: the length of time cannot exceed the period for which the employee worked for the employer. Given the fact that the granting of support is subject to the employee having had a professional relationship with the employer for at least 24 months (see above), the minimal period is two years.

How to seek support Requests must be submitted to ADEM within three months of the start of the new contract.

Requests to enquire the eligibility, after all conditions are met, are generally submitted by employee representatives (staff delegation) with ALEBA’s support.

For further information, please do not hesitate to contact ALEBA’s legal department, which will assess your personal situation and respond to specific questions on a case-by-case basis.

By Matthias Lindauer, Legal Advisor