Thematic feature - redundancies and redundancy costs

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This article examines the procedures and costs involved in collective redundancies in Luxembourg, as well as current trends and debate in this area, as at November 2003.

In November 2003, the EIRO national centres in each EU Member State (plus Norway), were asked, in response to a questionnaire, to give a brief overview of: the procedures and costs involved in collective redundancies - ie the dismissal of a number of employees for economic/organisational reasons (rather than reasons related to the individuals concerned); the levels of, and reasons for, redundancies over recent years; and current debate on the issue. The Luxembourg responses are set out below (along with the questions asked).

Redundancy procedures

Please outline briefly the statutory procedures involved in making'collective redundancies' (please indicate how these are defined) in your country, in terms of: information and consultation of employee representatives/trade unions; notification of (or obtaining permission from) public authorities; notice periods to be given to the redundant employees; rules on the order of priority for redundancy or giving special protection to particular groups of employees; and obligations to mitigate the planned redundancies or provide assistance in the form of redeployment, training, outplacement etc (including provisions on'social plans'). Where collective agreements add to or improve on these statutory provisions, please provide a brief overview of such additional procedures (with examples).

The procedure oncollective redundancies is governed by the law of 23 July 1993, amended by the law of 15 May 1995. Collective redundancies are understood to be dismissals carried out by the employer for one or more reasons that have nothing to do with the employees themselves, and when the number of dismissals is: at least seven over a period of 30 days; or at least 15 over a period of 90 days.

Before carrying out collective redundancies, the employer must enter into negotiations with employee representatives with a view to reaching an agreement on a'social plan' (redundancy programme). Negotiations must focus at least on ways of avoiding the dismissals, or reducing the number, and on ways of mitigating the consequences either by introducing support measures - mainly consisting of assistance for the retraining or redeployment of the dismissed workers and the possibility of them re-entering the labour market immediately - or by the establishment of measures involving financial compensation.

Employee representatives (LU0309102T) are deemed to be members ofemployee committees (délégations du personnel), forjoint works committee s (comités mixtes d'entreprise) - if they exist - and, in enterprises covered by collective agreements, trade unions that are party to the agreement in question. Where an enterprise has not organised the election of an employee committee or the establishment of a joint works committee, despite the statutory obligation on employers (with at least 15 or 150 employees respectively) to do so, the collective redundancy procedure cannot proceed until an employee committee or a joint works committee has been set up.

The parties must record the outcome of the negotiations in a duly signed agreement no more than 15 days after the talks begin. A copy of this agreement, known as a'social plan', must be forwarded immediately to the Employment Administration (Administration de l’Emploi, Adem), which must in turn send a copy to the Labour and Mines Inspectorate (Inspection du Travail et des Mines, ITM). The document must contain:

• an agreement by the parties on all or some of the elements of the social plan, expressly mentioning at least the issues referred to above and the attitudes of the parties to them; or
• an agreement by the parties on the impossibility of establishing a social plan, and the justifications for this state of affairs.

In the event of a disagreement, the parties must jointly notify the National Conciliation Office (Office National de Conciliation, ONC) no more than three days after the statement registering a failure-to-agree has been signed; a party refusing to add its signature to a referral to the ONC is in breach of criminal law. The deliberations of the ONC are terminated no later than 15 days after the date fixed for the first meeting. Any notification of a dismissal made after this procedure has been triggered is null and void.

To enable employee representatives to formulate constructive proposals aimed at concluding a social plan, the employer is obliged to provide these representatives with all necessary information, including a written communication on:

• the reasons for the planned redundancies;
• the number and categories of the workers affected by the redundancies;
• the number and categories of workers normally employed;
• the period during which it is planned that the redundancies will take place;
• the criteria used in selecting the workers to be made redundant, without prejudice to the powers of the joint works committee and/or the employee committees in this respect; and
• if appropriate, the planned method of calculating any redundancy payment exceeding what is provided for under the law (see below) or by the relevant collective agreement or, in the absence of such a calculation, the reasons justifying the employer’s rejection of such a payment.

The employer is also obliged to send a copy of the written communication referred to above to the Adem, which must then forward it to the ITM.

The employer may issue individual redundancy notices to affected employees only after the social plan or the ONC’s statement registering a failure-to-agree have been signed. Any redundancy notices that are issued in contravention of these provisions are null and void.

Collective redundancies carried out in compliance with the provisions of the law affect workers after a waiting period of 75 days, without prejudice to any longer waiting periods provided for by provisions under the law or under the terms of collective agreements governing individual rights in relation to notice periods. The Minister of Labour may extend this notice period by 90 days if the problems posed by the collective redundancies are unlikely to be resolved within the initial waiting period. If the enterprise has previously been in receipt of state benefits aimed at stimulating economic expansion, the notice period may be extended to 120 days.

Since these statutory provisions were introduced in 1993, collective agreements have ceased to concern themselves with this issue, and rely on the law.

Redundancy payments

Please outline the statutory rules on compensation for employees affected by collective redundancies, in the form of minimum notice periods, redundancy pay, severance pay etc - ie what is the level of payment, how does it vary with age, service etc. Where collective agreements add to or improve on these statutory provisions, please provide a brief overview of such additional payments (with examples). Overall, please provide any figures or estimates which may be available on the'average' or'typical' level of redundancy pay per employee. Where company practice and/or collective agreements provide for accompanying measures (ie set up an recruitment agency, retraining schemes with employer’s contribution, etc) please give an overview of such schemes.

By law, the employer may terminate a contract of employment unilaterally - including in cases of collective redundancy - only if the period of notice has been complied with, and if aseverance payment is made - see table 1 below for details.

Compensation for the notice period, where unworked, and the severance payment must be based on the pay that the employee previously earned.

Collective agreements normally repeat the statutory periods of notice, although some exceed statutory periods. Collective agreements in the insurance sector and the collective agreement in the banking sector contain special provisions on notice periods and severance payments in the event of rationalisation, reorganisation or the cessation of business - see tables 2 and 3 below. Furthermore, if a change takes place in the employer’s legal situation (for example, as a result of a succession, a sale or a merger), no contracts may be terminated during the first two years.

Redundancy levels

Where this is possible, please give statistics on the number of collective redundancies effected in your country each year from 1990 to 2003 (or the latest year for which data are available). If available, please break down by sector, and the jobs, age and gender of the workers affected. Also, please provide any information on the grounds for collective redundancies - eg company restructuring, closure or transfer/relocation. In response to this question, please give an assessment of trends and developments, even where full statistical information is not available.

There are no statistics available on the number of collective redundancies, but these are very rare in Luxembourg, with employers preferring to reduce their workforces by using measures such as the various forms of early retirement A recent example occurred atSES Astra, the Luxembourg-based satellite operator, where a social plan negotiated between management and the Luxembourg Confederation of Christian Trade Unions (Lëtzebuerger Chrëschtleche Gewerkschafts-Bond, LCGB) was able to avoid 32 redundancies through internal transfers, transfers to other SES enterprises in Luxembourg or abroad, voluntary early retirement, or external transfers to other enterprises (LU0302105F).

However, collective redundancies do take place. For example, in 2000 a social plan negotiated at theThomas & Betts electronics plant, which had been taken over by theTyco Electronics Corporation, provided for the redundancy of 94 employees, who received compensation amounting to an average of one year's pay (LU0010144N), Furthermore,Villeroy and Boch announced in November 2003 that it planned to make 195 employees redundant in the coming months.

Debate

Please summarise any current debate on the issue of collective redundancies in your country. For example, is this an important topic for trade unions and employers’ organisations and in collective bargaining? Has there been any recent new legislation or proposed legislation on the subject, or the prospect of new legislation - eg to implement EU legislation such as Directive 2002/14/EC on national information and consultation rules (EU0204207F), which requires'information and consultation on the situation, structure and probable development of employment within the undertaking or establishment and on any anticipatory measures envisaged, in particular where there is a threat to employment'? Has there been any debate on the cost met by the government as a consequence of collective redundancies (ie what is the cost associated with unemployment benefits, training schemes funded by the government etc).

There has been virtually no debate on the subject of collective redundancies since the 1993 law, probably because Luxembourg has (so far) been spared wide-ranging redundancies. This also explains why there have not yet been any detailed calculations of the level of costs of collective redundancies. There are currently no plans to update the law on collective redundancies. (Marc Feyereisen)