New law on posted workers

A new law affecting employees who come from companies based outside Luxembourg to work in the Grand Duchy has come into force. The Duchy had been criticised in a 2008 European Court of Justice ruling for posted worker regulations that interpreted European Commission and Council of Europe directives too rigidly. However, the Duchy has not changed its public and social policy, but instead has excluded posted workers from some provisions of labour legislation.

The legislative process began in October 2008 after the European Court of Justice (ECJ) ordered adjustments to the law of 20 December 2002 – which transposed into national legislation Directive 96/71/EC on the posting of workers. The new law on posted workers came into force on 11 April 2010.

The ECJ highlighted three failures in the earlier law of 20 December 2002 (LU0807019I), ruling that it encompassed too large a conception of public policy while imposing unnecessary regulation wrongly justified as being for the protection and control of workers.

Change to scope of national public policy on posted workers

The ECJ ruled that the Grand Duchy’s comprehensive notion of national public policy infringed the principle of freedom to provide services.

Rather than reframe the policy, the new law excludes posted workers from those provisions that were considered by the Court to infringe the principle of service provision. Thus, it exempts the companies that send workers to work in Luxembourg from fulfilling obligations that are normally compulsory. These relate to the:

  • provision of written employment contracts or the equivalent documentation;
  • observation of regulations relating to part-time work and fixed-term contracts;
  • fulfilment of the legal requirements of collective bargaining agreements.

Another major change concerns the automatic adjustment of pay in line with the cost of living. This no longer applies to posted workers whose wage exceeds either the minimum wage as set by law, or the minimum salary rates applicable in their sector, branch and/or profession as determined by the appropriate collective agreement.

Dealing with potential salary gaps

A preliminary version of the bill limited a worker’s posting to a maximum of 12 months, renewable only under specific conditions. This provision was finally abandoned when the Council of State (in French, 416Kb PDF) decided that this might also be interpreted as a restriction of the principle of the freedom of services provision under European Commission Directive 96/71. This is the directive that, in the view of the European Court of Justice, had been interpreted too rigidly by the government.

However, the new law has introduced a more restricted definition of posting workers, limiting the duration of such employment to the time it takes to deliver the specific service described in the worker’s contract.

The definition of a posted worker has been narrowed to describe an employee whose regular employment is performed outside the Duchy, and who comes to Luxembourg to work only during the limited period determined by their contract of service provision.

Stronger legal certainty for sending companies

The Court also criticised the onerous process imposed on companies sending workers to Luxembourg. The new law simplifies and clarifies the whole process and offers these companies more legal certainty that they will be permitted to post workers there when necessary.

The 2002 law required companies to give formal notice before a posted worker took up employment in the Duchy, but the new provisions postpone this. The information required is also described more clearly and is not quite as detailed as before. Companies no longer have to provide work and residence permits or employment contracts for posted workers.

Instead, employers must supply certificates of compliance with European employment regulations, part-time work and fixed-term contracts. The new law does not, however, specify the circumstances that are expected to deliver such certificates in the sending country.

The new law no longer requires the designation of an ad hoc representative to hold such documentation in readiness for the labour inspectorate, and allows the sending company to lodge the documents with its own representative or even with posted workers during their time in the Duchy.

New law without altering fundamental national policy

In a statement introducing the new measures, the Luxembourg legislator emphasised that the bill was being introduced to remedy only those aspects of previous legislation that had been ruled unlawful by the ECJ (see text of ruling). This means that the 2010 law is not intended to alter or amend Luxembourg’s national public social policy.

It is intended instead to achieve a balance between European and national standards, and it was made clear that the adjustments that have had to be made to take account of the ECJ’s ruling would not deprive the Grand Duchy of its right to call for further discussion at European level about the European social model.

Guy Castegnaro and Ariane Claverie, Castegnaro Cabinet d'Avocats

 

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