EMCC European Monitoring Centre on Change

Short-time working

Luxembourg
Phase: Management
Tipo:
  • Response to COVID-19
  • Income support for workers
  • Working time flexibility
Ultima modifica: 10 September, 2020
Nome originale:

Chômage partiel

Nome in inglese:

Short-time working

Coverage/Eligibility

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

  • Short-time working for economic reasons (Chômage partiel pour problèmes économiques conjoncturels): for this measure to be mobilised, a sector must witness economic difficulties and must be declared to be in a state of crisis by the government council. The Conjuncture Committee (Comité de la conjoncture) analyses the sector’s situation and the company’s individual situation.
  • Short-time working due to an economic dependency link (Chômage partiel pour lien de dépendance économique): this scheme applies when the company concerned is in a position of serious dependence on one or more other companies that already benefit from the short-time working scheme in Luxembourg. In such cases, the benefits are the same as those provided for economic reasons. The company concerned may not make any workers redundant for economic reasons while the short-time working scheme is in operation.
  • Short-time working on structural grounds (Chômage partiel pour problèmes économiques structurels): this scheme applies to companies facing structural difficulties and aims to facilitate adaptation and enable them to maintain employment at a satisfactory level. The procedure is the same as for the other short-time working regimes. The Conjuncture Committee's assessment will relate to the company’s individual situation. In this case, the difficulties encountered are not purely due to widespread economic recession.
  • Short-time working due to a major force (Chômage partiel en cas de force majeure): this scheme concerns all employees working in Luxembourg on either a permanent or fixed-term contract (including part-time workers) who are fit for work are eligible, with the exemption of apprentices.

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. 

Main characteristics

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.

  • Short-time working due to economic reasons: This is provided for a maximum of six months over a period lasting twelve months. The hours involved per month cannot exceed 50% of the employee’s normal working hours.
  • Short-time working due to economic dependency: This is individually fixed on the basis of the short-time working duration of the firm(s) on which the company depends. The hours involved per month cannot exceed 50% of the employee’s normal working hours.
  • Short-time working due to structural reasons: This is individually fixed on the basis of the restructuring plan to be submitted for analysis and approval to the Conjuncture committee. If applicable, this submission is accompanied by an employment maintenance plan. The hours involved per month cannot exceed 50% of the employee’s normal working hours. For the non-worked hours, social contributions are based on the reduced salary (at 80% or 90% for those employees taking part in training).

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 extent the deadline of this measure until the end of 2020. 

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 and LCGB. 

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 can not 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.

Funding

  • National funds
  • Employer

Involved actors

National government
Companies have to apply for short-time working compensation to the Conjuncture Committee within the Ministry of the Economy.
Public employment services
Reimbursement will be conducted by the National Employment Agency ADEM.
Employer or employee organisations
Representatives of employer organisations and trade unions within the tripartite Conjuncture Committee.

Effectiveness

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.

Strengths

This measure allows companies to retain their skilled and qualified workforce. It leads to a consensus and cooperation among the social partners. Extensive monitoring is involved. Furthermore, it was efficiently mobilised during the crisis in order to cushion unemployment levels.

Again, during the current COVID-19 crisis, the measure was successfully mobilised to avoid mass unemployment in Luxembourg. 

Weaknesses

No information available.

Esempi

No information available.
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