Due to the advent of new forms of employment, the digitalisation of the economy and changing demographic factors, the employment market is constantly evolving. With such changes, it has become essential to provide transparent information on employees' basic working conditions. In response, the new legislation, adopting European Directive 2019/1152 of 20, June 2019, aims to introduce greater transparency and predictability in employment by imposing new obligations on employers relating to employment contracts.
Bill No 8070 transposing Directive (EU) 2019/1152 of the European Parliament and of the Council of 20 June 2019 on transparent and predictable working conditions in the European Union has been put before the Luxembourg Chamber of Deputies on 7 September 2022. The law was published on 31 July 2024 and will come into force on 4 August 2024 (hereinafter the "Law").
I. Scope and purpose of the Law
The Law covers employment contracts strictly speaking (employees), apprenticeship contracts (apprentices), temporary employment contracts and work contracts with pupils and students.
The main purpose is to guarantee more transparent and predictable employments. This includes improving workers' access to essential information about their working conditions.
II. Adding mandatory clauses to employment contracts
Although the Luxembourg Labour Code already contains provisions on this subject, the Law adds mandatory or optional clauses that must appear in the employment contract. These mandatory clauses include the following changes:
– The place of work
In the absence of a fixed or predominant place of work, the employment contract may now stipulate that the employee is free to determine his or her place of work.
– Terms and conditions relating to the provision of overtime and its payment
This compulsory clause has been introduced so that the employer can inform the employee of the situations in which he or she may be required to work overtime and of the salary increases applicable to such work.
– Remuneration
The employment contract must now make a clear distinction between what is basic pay and what are salary supplements. This is in order to distinguish what comes under salary and what comes under supplements, accessories, bonuses or participations granted to the employee.
– The procedure to be followed by the employer and the employee in the event of termination of the employment contract
The employment contract must specify the termination procedures. These include, in particular, the conditions of form and the notice period to be observed by the employer or the employee.
– The length and conditions of application of the trial period
The employment contract must now include information on the conditions governing the trial period. For example, the time when the employer must inform the employee at the latest if he or she intends to terminate the employment relationship will be specified. The notice period in the event of premature termination of the trial period must also be specified.
In the case of fixed-term contracts, the trial period has now to be neither less than two weeks nor more than a quarter of the duration of the fixed-term contract.
– The right to training granted by the employer
If the employer decides to grant training, the employment contract must include information on the number of training days to which the employee is entitled per year, as well as information on the general conditions of the employer's training policy.
– The identity of the social security body or bodies
The employment contract must now contain the identity of the social security body or bodies to which the employer pays social security contributions.
III. The Law's other contributions
– The employer may send a copy of the employment contract in electronic format to the employee, apprentice, pupil or student, provided that the contract can be accessed, saved and printed by them. The employer must keep proof of transmission or receipt of this copy.
– Employees have the right to apply in writing once a year to change from a fixed-term contract to a permanent contract, from part-time to full-time and vice versa. For employees to benefit from this right, they must have worked for the same employer for at least six months. The employer must, within one month, either amend the employment contract by mutual agreement, or state precisely the reasons for its refusal.
– With regard to secondment, when the employee is required to work for more than four weeks outside the territory of the Grand Duchy, the employer is required to issue the employee with a written document containing a certain amount of information. In particular, the employer must indicate the country or countries in which the work is to be carried out, the remuneration to which the employee is entitled under the provisions of the host Member State, as well as the allowances specific to the secondment and the arrangements for reimbursing travel, accommodation and food expenses.
– With regard to exclusivity clauses, it is provided that any clause prohibiting an employee from engaging in another employment relationship outside the normal working hours agreed in the employment contract is null and void. This prohibition does not apply where the combination of activities is made impossible for objective reasons, such as health and safety at work, the protection of business confidentiality or the prevention of conflicts of interest. This means that a part-time employee may have a parallel job provided that it does not overlap with his or her contractual working hours.
IV. Penalties for non-compliance with these new obligations
Employers will have to comply with these new requirements or face financial penalties. A fine of between EUR 251 and EUR 5,000 will be imposed on individuals. For legal entities, a fine of between EUR 500 and EUR 10,000 may apply in the event of a breach of one or more of the obligations contained in these new provisions.
Employers will have to update their model employment contracts. Existing contracts do not have to be adapted, and no amendment is required. However, employees will be able to request a written document adapted to include the new mandatory wording.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.