Eurofound's EU PolicyWatch collates information on the responses of government and social partners to the COVID-19 crisis, the war in Ukraine, rising inflation, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.
Factsheet for measure LU-2006-31/2463 – measures in Luxembourg
|Country||Luxembourg , applies nationwide|
|Time period||Open ended, started on 31 July 2006|
|Context||COVID-19, Restructuring Support Instruments|
|Type||Legislations or other statutory regulations|
Employment protection and retention
– Income support for people in employment (e.g., short-time work)
|Author||Patrick Thill (LISER) and Eurofound|
|Measure added||23 June 2022 (updated 14 November 2022)|
This legal measure is mobilised when all other possibilities within the company facing economic difficulties have been attempted. These include a reduction in the use of agency-supplied temporary workers, time off in case of overtime, the use of remaining holiday entitlement, and internal redeployment.
There are four legal-based short-time working regimes:
The Conjuncture Committee comprises government officials, as well as trade and employer union's representatives and meets on a monthly basis in the Ministry of the Economy.
The Conjuncture Committee can decide to allocate subsidies to employers who, rather than conducting redundancies, attempt to maintain the employment relationship with their personnel and to pay them compensation for lost salary. The compensation for the non-worked hours amounts to 80% of normal pay. It is provided for all non-worked hours except the first 16 hours per month for full-time workers, or the first eight hours per month for part-time workers. There is, however, a ceiling on the public reimbursement which is set at 250% of the minimum wage. The amount of time off work under short-time working arrangements may not exceed 50% of the normal monthly hours worked.
The time limit for public support is proposed by the Conjuncture Committee and varies among the different short-time working arrangements, as outlined below.
In cases of dismissals following the short-time working period, unemployment benefits are calculated based on the full-time wage before short-time working. This is the case except for short-time working for structural reasons: in this case, the employer cannot dismiss any workers for economic reasons during short-time working. They must also maintain their positions following the short-time working period, for the same length of time as the short-time working. Companies have to apply for short-time working compensation to the Conjuncture Committee.
During COVID-19 crisis up to 30 June, the government has simplified the short-time working as a case of force majeure by means of an online application (renewed every month) accessible via a specifically designed website . The application for short-time working must be communicated to the staff representatives and applies to employees on permanent or fixed-term contracts, and who are insured with the Joint Social Security Centre. The government decided to extend the deadline of this measure until the end of 2020. See related case Measures for short-time working in cases of force majeure related to the Coronavirus
As the number of companies applying for short-time working has increased significantly since the outbreak of the crisis, the government decided to change the legal framework concerning compensation allowances as far as short-time working is concerned. On 26 March 2020, the law of 15 September 1975 defining the compensation rate for short-time working (Règlement grand-ducal du 15 septembre 1975 portant fixation du taux d'indemnisation des chômeurs partiels, Mémorial A, Number 59, 22 September 1975) has been changed through a bipartite agreement between the government and the two representative national trade unions OGBL (Confédération syndicale indépendante du Luxembourg) and LCGB (Lëtzebuerger Chrëschtleche Gewerkschafts-Bond).
The bipartite agreement between the government and the two national trade unions establishes that, if employers mobilise short-time working with the objective to combat the economic and social consequences during the defined COVID-19 period, the compensation allowance which the employer pays to each employee amounts to the salary due for every hour worked as well as a compensation of at least 80% of the salary that should be received for the inactive hours, but only up to a maximum of 250% of the social minimum wage which amounts to €2,141.99 for the aged 18 plus. Employers also have to continue to pay social contributions and to withhold tax on salaries paid for hours worked as well as for inactive hours, except for accident insurance contributions and family benefits. If there is a difference between the amount of the compensation allowance and the unqualified minimum social wage, the difference will be paid by the Employment Fund (Fonds pour l'Emploi). The measure does not apply to temporary workers.
A company applying the scheme cannot implement dismissals for economic reasons. The government has decided to set up a 'force majeure/coronavirus' short-time working scheme with an accelerated procedure based on a new online questionnaire. While different short-time working schemes are usually applied, with different procedures, the temporary short-time working scheme in the event of force majeure applies in principle to all businesses in all economic sectors where the causes invoked are directly linked to the coronavirus.
During the COVID-19 crisis, the government decided to suspend the trial clause in the following types of contract arrangements: permanent employment contracts (CDI); fixed-term employment contracts (CDI); apprenticeship contracts; assignment contracts. Nonetheless, the measure is limited and applies to companies and their employees affected by the closure of governmental decisions, or to companies and their employees admitted to short-time working in the event of a force majeure due to COVID-19. The trial period is suspended from the effective date of the government decision, taken on 18 March 2020, or from the date of admission of the employee in the accelerated short-time working scheme linked to the coronavirus. The remaining portion of the trial period is to be resumed the day after the end of the state of crisis.
Since January 2021 New dispositions on partial unemployment were introduced.
Regarding the funding, the companies have to apply for short-time working compensation to the Conjuncture Committee within the Ministry of the Economy. The reimbursement will be conducted by the National Employment Agency ADEM. An FAQ on short-time can be found here .
The number of short-time working schemes has increased during the COVID-19 crisis in Luxembourg. As of 15 of August 2020 (the latest data available), the Conjuncture Committee approved 2,966 requests by companies, which concern a total of 15,690 employees, with the majority in the catering and touristic sector. No information has yet been disclosed on the number of workers concerned by the suspension of the trial period during the COVID-19 crisis.
Employees in standard employment
||Applies to all businesses||Does not apply to citizens|
Public employment service
Social partners' role in designing the measure and form of involvement:
|Trade unions||Employers' organisations|
|Form||Consultation through tripartite or bipartite social dialogue bodies||Consultation through tripartite or bipartite social dialogue bodies|
Social partners' role in the implementation, monitoring and assessment phase:
Representatives of enterprises: UEL (Union des Entreprises Luxembourgeoises) and employees' organisations: LCGB (Confédération luxembourgeoise des syndicats chrétiens), OGBL (Confédération syndicale indépendante du Luxembourg) andCGFP (Confédération Générale de la Fonction Publique), are involved in the tripartite consultation committee.
For trade unions (OGBL & LCGB), public and non-market services, social security, state social benefits and labour law have played a estabilising role throughout the crisis (notably the massive use of short-time working, family leave, unemployment benefits, etc.). This role prevented an even more massive social crisis from occurring.
However, the trade unions (OGBL & LCGB) consider that, in this context, it is above all necessary to ensure that the economic crisis resulting from the health crisis does not ultimately turn into a social crisis. In this sense, we must not only help companies with their liquidity needs, but also help employees by preventing them from suffering major losses of income or even of their jobs.
Eurofound (2022), Partial unemployment, measure LU-2006-31/2463 (measures in Luxembourg), EU PolicyWatch, Dublin, https://static.eurofound.europa.eu/covid19db/cases/LU-2006-31_2463.html
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Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process.