Luxembourg: Reform of employee representation in companies
On 1 January 2016, implementation began of a law radically reforming social dialogue in Luxembourg. By 2018, this law will have abolished joint committees, which are currently mandatory for all companies employing 150 employees or more. The powers of these committees will transfer to staff delegations, present in all companies with more than 15 employees.
Merger of representative bodies
Currently, Luxembourg law provides for a three-tier staff representation system depending on the size of the workforce:
- a staff delegation in establishments with a workforce exceeding 15 employees;
- a joint committee in companies with a workforce exceeding 150 employees;
- employee representatives on the board of directors in businesses operating in the form of a public limited company and employing at least 1,000 employees.
The new law aims to abolish the works councils by 2018 and transfer their powers to the staff delegations. The new law makes the delegation the only body that will represent employee interests, fulfilling functions such as presenting complaints or suggestions to companies on issues such as working safety, part-time work, harassment and training. The size of the delegation depends on the number of employees at the company, ranging from one member for a company that has 15–25 employees, to 25 members for companies with between 5,101 and 5,500 employees.
The Luxembourg government has published an explanatory memorandum (in French, 332 KB PDF). A report by the Labour, Employment and Social Security Committee of the Chamber of Deputies says the law aims to improve the quality of social dialogue (2.2 MB PDF, in French). The report adds that ‘social dialogue is not only a tool for protecting the rights of employees, but also for economic performance.’
The Chamber of Employees, which represents all employees at national level, emphasised in a statement on the legal reform of social dialogue (250 KB PDF, in French), that 'employees defend [a company’s] long-term development, while … shareholders run the risk of prioritising short-term profits, which often involves limiting costs.'
The new law also means that, instead of a staff delegation being elected in every company branch, there will be just one for every company. Staff delegates will benefit from increased paid leave and more time for training to fulfil their duties. In companies with at least 250 employees, some delegates (délégués libérés) will be exempted entirely from work to fulfil their staff representation duties.
The right of information
Until now, the task of the joint committee has been to safeguard and protect the interests of a company’s salaried employees – in terms of working conditions, job security and social status. The purpose of the delegation will now be to settle disputes and present the employer with ‘any individual or collective complaints’. The employer will provide the delegation with information about the company, including the developments of its activities, its financial outlook, and foreseen changes in its employment situation. In companies with at least 150 employees this will either happen once a month, or at the request of the delegation; in smaller companies, at least annually.
The right of consultation and co-decision
A key tasks of the staff delegation is to express its opinion and draft proposals regarding the improvement of working and employment conditions and the social situation of employees. In addition, the staff delegation will contribute to the implementation of internal reclassifications. The employer is also required to discuss with the delegation the situation, structure and probable development of employment within the company and provide ‘gender-specific statistics on recruitment, promotions, transfers, redundancies, employee salaries and training’ for each six-month period. This information and consultation also concerns decisions that may lead to collective redundancies, a transfer of undertakings, or the use of temporary workers. Staff delegations will have co-decision rights only on matters of health and safety, or on the introduction of employee monitoring tools in companies with at least 150 employees. The staff delegation in companies with fewer than 150 employees have no co-decision rights on these topics, but they are informed and consulted, and they do not have to agree with the employer.
Use of experts and consultants
One of the reforms attracting the greatest criticism from employers is that now, in companies with at least 51 employees (instead of 150 employees before the reform), staff delegates will have increased opportunity to seek the advice of external counsellors or have experts to assist them on technical matters, and the employer will pay for this help. This right was previously restricted to those trade unions considered representative at national level; now, it is extended to those unions that represent a major economic sector (such as the Aleba trade union in the financial sector), on the condition that their members make up at least one-third of the delegates in staff delegations within the sector.
Another innovation is the right to use mediation in the event of disputes about the interpretation of the Labour Code in relation to staff delegations.
Reaction of the social partners
The reform has divided the country’s two main trade union confederations. The Confederation of Independent Trade Unions of Luxembourg (OGBL), the largest confederation, with 75,000 members, sees the law as a first step towards more co-management in companies (in French).
The Confederation of Christian Unions in Luxembourg (LCGB), the country’s second-largest confederation with 42,000 members, has said that the law has failed to improve the democratisation of the workplace since the law does not improve the quality of social dialogue within companies (in French). Christophe Knebeler, Deputy Secretary General of the LCGB, said ‘Its aim is to place all powers in the hands of the majority trade union.’
However, a spokesperson for OGBL replied: ‘It would be complete nonsense to say […] that this law has been made to measure for the OGBL. … It reinforces the majorities that resulted after all employees within the company were asked to vote. It will enable the delegations to work more efficiently and reinforces their position in relation to the management.’
The employer organisations have attacked the law for placing greater burdens on companies. In a statement, Business Federation Luxembourg (FEDIL) said: ‘This law profoundly changes the staff representation landscape in companies.’
This reform will come into effect gradually between now and 2018, when the joint committee will finally be abolished. Social elections will then take place and will alter the balance of power between trade union organisations within companies. It remains to be seen whether this document will prompt the stakeholders to move towards the German model, which inspired the legislation, and enable closer cooperation between employers and employee representatives.