Luxembourg: New parental leave law enters into force

The new law to extend the scope of parental leave, and establish an allowance for this which is proportional to income, came into force in Luxembourg on 1 December 2016. The government has also presented a draft law to increase certain types of family leave, also with the aim of achieving a better work–life balance.

Background

The reform of parental leave was announced at the end of 2014, during separate discussions between the government and the social partners, and the law was finally passed by the Chamber of Deputies on 11 October 2016. The law of 3 November 2016 reforming the system of parental leave came into force on 1 December 2016. Its aim is to improve work–life balance and to encourage parents, particularly fathers, to make greater use of parental leave.

According to data from the General Inspectorate of Social Security (IGSS), fewer than half of those entitled to take parental leave do so (44.1% in 2014). Just 20% of fathers take parental leave, according to the Ministry of Family Affairs, Integration and the Greater Region. Under the new system, the parental leave allowance, previously paid at a fixed rate of €1,778 per month, becomes a replacement income that is paid pro rata to the income earned by the parent taking the leave. The income received and the average number of hours worked during the 12 months preceding the leave are taken into account.

The allowance cannot be less than the minimum wage (social minimum wage) which, on 1 January 2017, was €1,998.59 for a full-time (40 hours) employment contract, and its upper limit will be €3,330.98 (five-thirds times the minimum wage). The allowance payments will be treated as a replacement income, and will be subject to tax and social security contributions.

More flexible system 

Both parents will be able to take parental leave until the child is six years old (instead of five, as under the previous system). One of the parents must take their parental leave after the maternity leave, breastfeeding leave or adoption leave (which the law calls the ‘first parental leave’). Failure to do so will result in loss of entitlement and loss of the parental leave allowance. The other parent may take their parental leave at the same time, or later, but this parental leave (called ‘second parental leave’ by the law) must always start before the child is six years-old. In the case of an adopted child, the age limit is extended to 12 years.

Those entitled to parental leave can now choose from several options, depending on the number of hours’ work provided for in their contract of employment.

Four options

For a person employed full-time (40 hours per week), there are four possible options:

  • full-time leave for 4 or 6 months;
  • part-time leave for 8 or 12 months;
  • fragmented leave – 4 months taken over a maximum period of 20 months;
  • fragmented leave – a 20% reduction in the weekly hours worked (for example, 1 day per week) for a maximum of 20 months.

The choice is limited for people who work part time. For employees who work 20 or more hours per week, only the first two options are available. For those who work 10 hours (the minimum threshold at which workers become entitled to parental leave) or more, the only possible option is the first one. The same applies to people who have an apprenticeship contract.

Employer's consent

Employers are obliged to agree to full-time parental leave, without exception. However, they can refuse to allow part-time or fragmented parental leave (even where this concerns the first parental leave) but in this case they are obliged to propose an alternative. If an employee does not wish to accept an employer’s alternative proposal, they will still be entitled to full-time parental leave of four or six months, as they wish.

Future reform of family leave

Also with the aim of achieving a better work–life balance, the Government Council adopted a draft law on 29 July 2016 on the establishment of leave for family reasons. This document proposes, in particular, to amend the statutory provisions concerning three categories of leave:

  • leave for personal reasons;
  • postnatal leave;
  • family leave.

The proposed amendments for the first category are mainly intended to give fathers more free time when a child is born; the draft law proposes a general extension of postnatal leave from 8 to 12 weeks. As for family leave, the draft law introduces a new system that gives parents greater flexibility in using their days of leave. Instead of providing for two days of family leave, which are lost if they are not used during a calendar year, the law provides for some usable days per age category, each of which covers several years.

Reactions from the social partners

In an opinion given on 16 March 2016, the Chamber of Employees (CSL) – the body that represents all employees in Luxembourg except government/public employees – backed the proposed parental leave reform, while requesting some amendments. It pointed out that workers who work 20 hours per week and receive the minimum wage were able to claim the fixed-rate payment of €1,778 under the old system, but would now receive only €961.48 under the new system. In addition, the CSL wanted the law to give employees a genuine entitlement to the part-time and fragmented leave options, accompanied by an employers’ right of refusal that is governed by statute.

For their part, the employers (see the Opinion of the Chamber of Commerce dated 11 April 2016, and the Opinion of the Chamber of Skilled Trades and Crafts (PDF) dated 29 April 2016) were broadly in favour of the reform’s objectives. However, they have asked for a parallel reform of working hours to give them greater flexibility (which is being drafted) and for amendments to allow employers to refuse part-time or fragmented parental leave without giving a reason, and to dismiss an employee who is taking part-time or fragmented parental leave but is guilty of misconduct during their working hours.

Commentary

These changes form part of an extensive reform of family policy in Luxembourg, which is included in the Package for the Future programme, introduced by the government elected in 2013. The aim of this reform is to rationalise certain items of expenditure and also to modernise family policy by establishing, in particular, a new child allowance, which is fixed at a single figure of €265 per child per month and is paid for the first child as well as subsequent children, and the back-to-school allowance. Although the reform of parental leave has been generally well-received by the trade unions and non-governmental organisations (NGOs), the reform of family allowances has not (PDF), with criticism from organisations such as the charity Caritas.

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