Public sector establishment
A public sector establishment is a legal person established under public law that, based on a law, is responsible for managing one or more specific public services in order to serve certain needs of the population. It operates under the supervision of:
- the State; or
- the commune where the legal person is located, in accordance with the principle of decentralisation in services.
A public sector establishment is created by a law that:
- determines its structure and purpose;
- may stipulate its missions and functioning.
The public sector establishment exists as a legal person and has financial and/or administrative autonomy. It may have the authority to make regulations within the limits of its specialisation. These regulations may be subject to:
- approval by the supervisory authority; or
- oversight by judges who may cancel or suspend them if they are illegal.
Who is concerned
A public sector establishment is created to provide a specific public service.
There are a variety of public sector establishments in a wide range of areas, such as the Banque et Caisse d’Épargne de l’État, Chamber of Skilled Trades and Crafts (Chambre des métiers), Supervisory Authority for the Insurance Sector (Commissariat aux Assurances), Joint Social Security Centre (Centre commun de la sécurité sociale – CCSS), University of Luxembourg, etc.
How to proceed
Formation of a public-sector establishment
A public sector establishment is created by a law that may determine:
- its purpose;
- its missions;
- the supervising minister;
- its head office;
- its structure; and
- its functioning.
Board of directors
The public sector establishment is managed by a board of directors that is made up of:
- representatives of the State; and
- where applicable, persons qualified in the establishment's area of specialisation.
Employee representatives may also sit on the board of directors.
The public sector establishment is led by a chair appointed from among its members by the Government in Council, upon the recommendation of the supervising minister.
The members of the board of directors are appointed for a 5-year renewable term by the Government in Council, upon the recommendation of the supervising minister.
The public sector establishment is managed on a day-to-day basis by a governing body consisting of:
- either a managing director;
- or several directors, one of whom holds the title of managing director.
The managing director:
- attends the meetings of the board of directors with an advisory vote;
- or the governing body, is responsible for implementing the decisions taken by the board of directors;
- and the directors are:
- appointed by the Grand Duke upon the recommendation of the Government in Council when they are governed by public law; or
- appointed by the board of directors if they are governed by private law.
The managing director and director serve for renewable 5-year terms.
There may be internal regulations outlining the operating procedures of the board of directors of the public sector establishment. A template of these regulations is available here.
Remit of the board of directors
The remit of the board of directors varies based on the individual public sector establishment.
However, there are key remits such as:
- approval of the budget and annual financial statements;
- adoption of the organisational structure, list of jobs and their categories, and their remuneration (for public sector establishments that have staff working under a private-law employment contract);
- determination of the establishment's general policy;
- hiring and dismissal of the managing director and management staff (for public sector establishments that have staff working under a private-law employment contract);
- decision-making about judicial actions to initiate and settlements to conclude;
- adoption of the internal regulations;
- decision-making on loans to take out;
- acceptance and rejection of gifts and bequests.
The public sector establishment falls under the supervision of the minister who is responsible on account of its purpose.
The board of directors submits for the approval of the supervising minister decisions concerning:
- the establishment's general policy;
- the approval of the budget;
- The yearly and multi-year investment programmes;
- the appointment and dismissal of the managing director and members of the governing body when they are governed by private law.
The board of directors submits for the approval of the Government in Council decisions concerning:
- the approval of the financial statements;
- loans and guarantees;
- the organisational structure, list of jobs and the terms and conditions of remuneration.
Every February, the public-sector establishment must submit an activity report on the essential aspects of the functioning of the establishment to the supervising minister.
Accounting and audit of accounts
Public sector establishments must keep their books in accordance with the principles and procedures of business accounting. The financial year coincides with the calendar year.
The public sector establishment's accounts are subject to an audit by a statutory auditor and the Court of Auditors.
Public sector establishments supervised by a communal administration
Public sector establishments supervised by a communal administration have particular features. Specifically:
- the commune's college of the mayor and aldermen is responsible for supervising them;
- the Grand Duke may annul collective and individual decisions taken by these establishments;
- decisions discussed by these establishments must be submitted to the relevant communal council in advance;
- the district commissioners (commissaires de district) oversee the management of these establishments;
- the budgets and financial statements of these establishments are submitted to the communal council for approval;
- the Minister for Home Affairs names the establishments that must keep their books in accordance with the principles of business accounting.
For establishments that do not follow the principles of business accounting, the governing body responsible for implementing the budget must submit a single financial statement at the end of the financial year.