Luxembourg: New law to make working time more flexible

New legislation to make working time more flexible came into force on 1 January 2017, allowing for an extension of the reference period from one to four months, in exchange for supplementary leave for employees. Employers are critical of the new law, claiming it will be difficult to enforce.

Government presents law after social partners fail to reach agreement

In 2016, after the social partners failed to reach an agreement on the organisation of working time, the government was forced to present a draft law which was eventually adopted by the parliament on 23 December 2016. This compromise text, criticised by both employers and trade unions, came into force on 1 January 2017. It supersedes the ‘NAP Law’ of 12 February 1999 which implemented a National Action Plan for employment.

One of the key measures of the new law on the organisation of working time is to enable employers to increase the legal reference period from one month to four months. According to the Labour Code, the maximum hours that can be worked per day and per week are 8 hours and 40 hours, respectively. The 40 hours per week limit can be extended under certain conditions to 48 hours. Any hours worked over and above these thresholds are counted as overtime, which means that they must be compensated for in the form of leave or additional pay.

Nevertheless, the employer is entitled to implement a working hours plan (Plan d’Organisation du Travail), fixing the working conditions during a reference period. The previous legislation fixed the reference period to four weeks, or one month, during which employees may be asked to work beyond the thresholds, on condition that the average weekly working hours do not exceed 40 hours. In this case, no extra compensation is received as long as the hours worked do not exceed 40 hours per week (or the duration laid down in the applicable collective agreement).

Increase of legal reference period

The new law has extended this reference period to four months (PDF) to promote flexibility within companies. However, the extension is optional. Companies which have already implemented a working hours plan with a one-month reference period can continue with this or choose to adopt a longer reference period. Employers must inform and consult the staff delegation about their working hours plan or, in the absence of a delegation, the employees concerned, no later than five full days before such a plan takes effect. From now on, an employer can therefore decide to extend the reference period without having to negotiate an agreement with the trade unions.

Additional leave days granted

To satisfy the unions, particularly the Trade Union Confederation of Luxembourg (OGBL), which called for a reduction in working time (PDF), the law provides some compensation (PDF). Employers must allocate additional leave days to employees based on the duration of the reference period: from 1.5 days for a reference period of between one and two months, and up to 3.5 days for a reference period of between three and four months (Labour Code, article 211-6(2)). Otherwise, the law introduces new working time limits depending on the length of the reference period; if the period does not exceed one month, the standard thresholds mentioned above – a maximum of 48 hours per week – has to be observed. Nevertheless, if the reference period is between one and three months, the monthly working hours cannot exceed 12.5% of the normal weekly working time, which means an average of 45 hours per week. If the reference period is between three and four months, the monthly working hours cannot exceed 10% of the normal weekly working time, which means an average of 44 hours per week (Labour Code, article 211-7(4)). If the working time exceeds these limits, additional hours will be considered as overtime and paid accordingly.

Furthermore, an employee is entitled to receive prior notice of three working days of having to work extra hours. If employees are given fewer than three day’ notice of having to work over two hours more than normal, the worked hours will be considered as overtime and must be compensated by time in lieu or with additional pay (an extra 20% of their normal hourly rate).

Changes to flexible working time 

The law has also changed the scheme of flexible working hours (horaire mobile), which allows salaried workers individually to organise their daily working hours and time to meet their personal needs, as long as they respect operational needs, co-workers’ reasonable needs, and the maximum work time thresholds of 10 hours a day and 48 hours a week. From now, flexitime can be agreed in a national or sectoral collective agreement (PDF), subordinated agreement or joint agreement between the employer and the staff delegation or, in the absence of a delegation, between the employees concerned (Labour Code, article L. 211-8).

However, as before, the social partners may negotiate a collective agreement to extend the reference period to 12 months, and negotiate compensation that is appropriate to the needs of the business and the employees. If a company is currently under a collective bargaining agreement that sets the duration of the reference period, however, this period will, despite the new legislation, remain unchanged until the collective agreement is cancelled.

Social partners’ reactions

The main employer organisation, the Luxembourg Business Federation (Fedil), says the flexibility set out by the new legislation is very limited, difficult to enforce and expensive (PDF), ‘to such an extent that it may make any extension of the legal reference period beyond the duration of 1 month, unattractive both from an economic and organisational point of view’.

The Chamber of Commerce and the Chamber of Trades had also criticised the reform for the same reasons (PDF). Fedil concludes that the new legislation does not correspond to the spirit of the agreement of 14 January 2015 settled between the government and the employer organisation. Employers had expected this agreement to deliver more flexibility on working time organisation with them, in exchange, accepting the reform on parental leave, which offers more flexibility for employees.

However, in a leaflet presenting the new legislation to its members (PDF), OGBL states that the law is a good compromise.

Commentary

The adoption of the law has created a gap between the government and employer organisations. However, an assessment of the implementation of the law is expected in five years, which could lead to some of the new rules being revised.

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