Employment

In Luxembourg, wage indexation is an automatic mechanism for the adjustment of salaries to keep pace with evolving living costs. From 1 August 2018, the index applicable to employees' wages will climb. From 1 August 2018, the index applicable to employees' wages will climb from 794.54 to 814.40. This index increase will result in a 2.5% increase in the gross salary paid to employees with employment contracts subject to Luxembourg law. Wage indexation is an automatic mechanism for the adjustment of salaries to keep pace with evolving living costs, as determined by the statistics and economic studies bureau, STATEC. Thus, salaries are automatically increased when the cost of living increases by at least 2.5%. The aim of this measure is to compensate for a loss of purchasing power due to inflation by increasing the salaries of employees accordingly. Even though making this adjustment on the wage index on 1 August 2018 might seem to be surprising given that the last adjustment only dates back to 1 January 2017, STATEC’s growth expectations also seem to predict another adjustment before the end of 2019. Adaptation indiciaire A partir du 1er août 2018 l’indice applicable aux salaires sera augmenté pour l’élever à 814,40 (anciennement 794,54). Cette hausse indiciaire impliquera une augmentation obligatoire des salaires bruts payés en vertu de contrats de travail soumis au droit luxembourgeois de 2,5%. L’indexation des salaires est un mécanisme d’adaptation automatique des salaires à l’évolution du coût de la vie tel que déterminé par l’Institut National de la Statistique et des Etudes Economiques (STATEC). Ainsi, les salaires connaissent une hausse automatique dès que la variation du coût de la vie équivaut au moins à 2,5%. Le but de cette mesure est de compenser la perte de pouvoir d’achat des salariés en raison de l’inflation par une augmentation de leur revenu. Alors que la date du 1er août 2018 peut sembler surprenante du fait que la dernière adaptation de l’indice applicable aux salaires a été effectuée en date du 1er janvier 2017, les prévisions de croissance du STATEC laissent présager une nouvelle augmentation de l’indice avant la fin de l’année 2019. Anpassung des Indexstands Ab dem 1. August 2018 wird der auf die Angestelltengehälter anwendbare Index von 794,54 auf 814,40 angehoben. Diese Anhebung des Index löst eine Erhöhung von 2,5% der Bruttogehälter aus, welche auf Grundlage der dem luxemburgischen Recht unterliegenden Arbeitsverträge gezahlt werden. Die Indexierung der Gehälter stellt einen automatischen Mechanismus dar, wonach die Gehälter an die Entwicklung der Lebenshaltungskosten angepasst werden, so wie dies von dem Nationalen Institut für Statistik und Wirtschaftsstudien (STATEC) festgelegt worden ist. Somit werden die Gehälter automatisch angehoben, soweit die Lebenshaltungskosten um mindestens 2,5 % steigen. Das Ziel dieser Maßnahme besteht darin, den durch die Inflation verursachten Verlust der Kaufkraft der Arbeitnehmer durch eine Erhöhung ihres Einkommens auszugleichen. Die Erhöhung des Index zum 1. August 2018 erscheint überraschend, da die letzte Angleichung der Gehälter mittels Erhöhung des Indexstands erst zum 1. Januar 2017 erfolgte. Die Wachstumserwartungen der STATEC sehen jedoch eine erneute Angleichung der Gehälter vor Ende des Jahres 2019 vor. >>Click here for the pdf version of this newsflash 

Equal treatment The Law of November 7 2017, which came into force on January 1 2018, partially transposed EU Directive 2014/54/EU on measures facilitating the exercise of rights conferred on workers in the context of freedom of movement for workers into Luxembourg law. As such, Article L251-1 of the Labour Code was amended to incorporate 'nationality' as a criterion for direct or indirect discrimination prohibited by law. Similar provisions were also incorporated into the general regulations for both national civil servants and municipal civil servants. However, an exception to the principle of non-discrimination based on nationality was included in Article L252-2 of the Labour Code regarding the conditions for the arrival, residency and employment of nationals from third-party countries (ie, countries that are not EU member states, parties to the Agreement on the European Economic Area or the Switzerland) and stateless persons, in keeping with the applicable statutory provisions relating to the free movement of people and immigration stipulated by the Modified Law of August 29 2008. Further, the law tasked the Centre for Equal Treatment (CET) with conducting and commissioning independent inquiries into and analyses of: unjustified restrictions and obstacles to the right to free movement; nationality-based discrimination against workers from the European Union and their family members. The law also stipulates that the CET is now directly connected to the Chamber of Deputies. Minimum pay The Ministerial Regulation of November 30 2017 updated the minimum pay levels for highly qualified workers, as required by Article 45 of the Modified Law of August 29 2008 on the free movement of people and immigration. According to the regulation, STATEC set the average gross annual salary designed to determine the minimum pay for a highly qualified worker at €49,332 as of 2015. Thus, in accordance with the applicable statutory and regulatory provisions, the minimum pay level for a highly qualified worker is €49,332 x 1.5 (ie, €73,998) as of December 11 2017 – the date on which the regulation was published in the Memorial. For jobs in professions belonging to Groups 1 and 2 of the International Standard Classification of Occupations – for which the government has identified a particular need to employ workers from third-party countries – the minimum pay threshold is €49,332 x 1.2 (ie, €59,198.40) as of December 11 2017.

Equal treatment The Law of November 7 2017, which came into force on January 1 2018, partially transposed EU Directive 2014/54/EU on measures facilitating the exercise of rights conferred on workers in the context of freedom of movement for workers into Luxembourg law. As such, Article L251-1 of the Labour Code was amended to incorporate 'nationality' as a criterion for direct or indirect discrimination prohibited by law. Similar provisions were also incorporated into the general regulations for both national civil servants and municipal civil servants. However, an exception to the principle of non-discrimination based on nationality was included in Article L252-2 of the Labour Code regarding the conditions for the arrival, residency and employment of nationals from third-party countries (ie, countries that are not EU member states, parties to the Agreement on the European Economic Area or the Switzerland) and stateless persons, in keeping with the applicable statutory provisions relating to the free movement of people and immigration stipulated by the Modified Law of August 29 2008. Further, the law tasked the Centre for Equal Treatment (CET) with conducting and commissioning independent inquiries into and analyses of: unjustified restrictions and obstacles to the right to free movement; and nationality-based discrimination against workers from the European Union and their family members. The law also stipulates that the CET is now directly connected to the Chamber of Deputies. Minimum pay The Ministerial Regulation of November 30 2017 updated the minimum pay levels for highly qualified workers, as required by Article 45 of the Modified Law of August 29 2008 on the free movement of people and immigration. According to the regulation, STATEC set the average gross annual salary designed to determine the minimum pay for a highly qualified worker at €49,332 as of 2015. Thus, in accordance with the applicable statutory and regulatory provisions, the minimum pay level for a highly qualified worker is €49,332 x 1.5 (ie, €73,998) as of December 11 2017 – the date on which the regulation was published in the Memorial. For jobs in professions belonging to Groups 1 and 2 of the International Standard Classification of Occupations – for which the government has identified a particular need to employ workers from third-party countries – the minimum pay threshold is €49,332 x 1.2 (ie, €59,198.40) as of December 11 2017.

Court decision in Bărbulescu v. Romania On 5 September 2017, the Grand Chamber of the European Court of Human Rights (the “ECHR”) examined for the first time the issue of the monitoring of electronic communications of an employee by a private employer, within the framework of an action brought by Mr Bărbulescu, an engineer employed by a private company in Romania. Mr Bărbulescu had been dismissed for using for personal purposes, in breach of the provisions of the internal regulations of the company, a professional Yahoo Messenger account created at his employer’s request for the purpose of responding to customers’ enquiries. The decision handed down last month overturns a ruling made less than two years earlier in the same case. The ECHR had then held, by six votes to one, that the monitoring by the employer of the communications of Mr Bărbulescu had been reasonable in the context of disciplinary proceedings deeming that the domestic Romanian courts had struck an adequate balance between the employee’s right to respect for his private life and correspondence and the employer’s interests. This decision in which the Grand Chamber has just held, by eleven votes to six, that there has been a violation of the applicant’s right to respect for his private life does not however constitute an absolute enshrinement of the right of employees to protection of their privacy to the detriment of the employer’s right to carry out monitoring. In reality, its impact on employers in Luxembourg will be limited (I). However, in the light of the facts of the decision (II), it is highly advisable that employers eager to implement a monitoring system to ensure that their employees spend their working time performing their professional duties, should make sure that they observe a particular time schedule as well as follow the methodology suggested by the Court (III). Please click on this link to read our full newsflash. 

As Luxembourg is gaining increasing success in international mobility and business immigration, the applicable legal framework has been recently adapted by introducing several new categories of residence permits in Luxembourg, including a residence permit for investors. Our business immigration experts, Philippe Schmit and Françoise Faltz, have outlined the major practical aspects of the currently applicable provisions in a dedicated chapter of the International Comparative Legal Guide (ICLG) to corporate immigration.