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COVID-19 EU PolicyWatch

Database of national-level responses

Eurofound's COVID-19 EU PolicyWatch collates information on the responses of government and social partners to the crisis, as well as gathering examples of company practices aimed at mitigating the social and economic impacts.

Factsheet for case LU-2020-12/303 Updated – measures in Luxembourg

Measures for short-time working in cases of force majeure related to the Coronavirus

Mesures pour le chômage partiel en cas de force majeure liée au corona virus

Country Luxembourg , applies nationwide
Time period Temporary, 19 March 2020 – 31 December 2020
Type Tripartite agreements
Category Employment protection and retention
– Income support for people in employment (e.g. short-time work)
Author Patrick Thill (LISER) and Eurofound
Case created 06 April 2020 (updated 27 May 2021)
Related ERM support instrument

Background information

In view of the scale of the COVID-19 threat and the tangible repercussions on the survival of companies and their employees, the government decided on a 'force majeure / coronavirus' short-time working scheme with an accelerated procedure for all Luxembourg companies impacted by the crisis. The procedure has been simplified for all companies to speed up the treatment process following the Grand-Ducal Regulation of 18 March 2020 introducing a series of measures to combat COVID-19.

A company that resorts to short-time working in cases of a force majeure commits not to dismiss employees for economic reasons as long as the relevant government decisions remain in force.

(Règlement grand-ducal du 18 mars 2020 portant introduction d’une série de mesures dans le cadre de la lutte contre le COVID-19. Mémorial A 178 du 24 mars 2020 Shortime Work: Book v.- Employment and Unemployment -Title I - Prevention of dismissals and maintenance of employment, Chapter 1 - Measures to prevent cyclical redundancies (Livre V.- Emploi et Chomage, Titre Premier – Prévention des licenciements et maintien de l’emploi Chapitre Premier.- Mesures destinées à prévenir les licenciements conjoncturels)

Content of measure

In the event of a drop in activity, short-time working provides for the continued employment of employees through state subsidies by reducing the working time of some or all employees in a company. The measures can apply to all employees on a permanent or fixed-term contract, as well as for apprentices and interim workers. The aim of the measure is to avoid redundancies of employees for cyclical or structural reasons and in the event of force majeure preventing the normal pursuit of economic activities. In the context of the crisis, the government decided to speed up the procedure by means of an online application accessible via the website of the public employment service. The measure is limited to 1,022 hours per year per employee.

The application for short-time work must be communicated to the staff representatives and applies to employees on permanent or fixed-term contracts who do not receive any old-age or disability pension, are insured with the Joint Social Security Centre, apprentices, persons benefiting from an employment programme.

The employer pays each employee the salary due for every hour worked as well as a compensation to 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. Employers also have to continue to pay social contributions and withholding tax on salaries paid for hours worked as well as for inactive hours, with the exception of accident insurance contributions and family benefits.

Based on an agreement within the National Conjuncture Committee, the government reached an agreement on the processing of partial unemployment statements for the months of July to December 2020. It is agreed that the employer receives a detailed statement for each month concerned, both for a possible outstanding balance and for the amount of a potential overpayment.

Updates

The following updates to this measure have been made after it came into effect.

31 December 2020

Based on an agreement within the National Conjuncture Committee, the government reached an agreement on the processing of partial unemployment statements for the months of July to December 2020. It is agreed that the employer receives a detailed statement for each month concerned, both for a possible outstanding balance and for the amount of a potential overpayment.

While industrial companies will continue to benefit from cyclical short-time working and undertake not to lay off staff, the social partners recognised the particularly difficult situation of companies in certain vulnerable sectors heavily impacted by the COVID-19. These sectors are HORECA (catering), the tourism sector and the like. Businesses in these sectors will have accelerated access to partial unemployment from structural sources without limiting the number of employees affected. Companies have the right to lay off a maximum of 25% of their employees until 31 December 2020. If a company succeeds in getting back to a good working order, it will have to give a priority of re-employment of the dismissed persons.

Firms affected by the COVID-19 crisis, other than industrial firms and those in vulnerable sectors will also be able to have recourse to short-time working from structural sources through the fast-track procedure, provided they do not make redundancies. This measure aims to preserve jobs in the enterprises concerned as far as possible.

In this case, however, the number of employees covered by short-time working may not exceed 25% of the workforce for the months of July and August, 20% for the months of September and October and 15% for the months of November and December.

Finally, applications from enterprises in vulnerable sectors making more than 25% of their workforce redundant, as well as those from all other enterprises wishing to make redundancies, will be required to submit a so-called "traditional" short-time working application.

31 December 2020

Decree no. 2020-1316 of 30 October 2020 relating to partial activity and the specific partial activity scheme in the event of a lasting reduction in activity provides that as from 1 January 2021, a partial activity authorisation may be granted for a maximum period of three months. It may be renewed up to a maximum of six months, consecutive or not, over a reference period of twelve consecutive months.

As of 1 March 2021, the partial activity authorisation will be granted for a period of three months, renewable for up to six months over a reference period of twelve consecutive months.

Use of measure

2,849 companies in September 2020 submitted a request for partial unemployment in the context of the special provisions which are in force until December 31, 2020 due to of the COVID-19 crisis. The Conjuncture Committee gave green light to 2,825 requests, which amounts to 23,122 employees.

Contents

  • Employment retention

Target groups

Workers Businesses Citizens
Employees in standard employment
Other groups of workers
Does not apply to businesses Does not apply to citizens

Actors and funding

Actors Funding
National government
Social partners jointly
National funds

Social partners

Social partners' role in designing the measure and form of involvement:

Trade unions Employers' organisations
Role Agreed (outcome) incl. social partner initiative Agreed (outcome) incl. social partner initiative
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:

  • Unknown
  • Main level of involvement: Peak or cross-sectoral level

Involvement

The Ministers of Work, Employment and the Social and Solidarity Economy, the Minister of the Economy, the representatives of the trade unions OGBL and LCGB and the representatives of the employer organisation UEL agreed on the 10 of June 2020 on new measures in a common agreement regarding the short-time work employment linked to the COVID-19 crisis.

Views and reactions

The measure is based on an agreement by the trade unions OGBL and LCGB in the context of the covid-19 crisis and there is a large consensus of the importance of the measure. Within the National Conjuncture Committee, trade unions and employer associations discuss measures on a monthly basis regarding short-time work and companies with financial difficulties.

Sources

Citation

Eurofound (2020), Measures for short-time working in cases of force majeure related to the Coronavirus, case LU-2020-12/303 (measures in Luxembourg), COVID-19 EU PolicyWatch, Dublin, http://eurofound.link/covid19eupolicywatch

Disclaimer: This information has not been subject to the full Eurofound evaluation, editorial and publication process. All information is preliminary and subject to change.