Following the loss of their job in Luxembourg, workers who accept a new position in Luxembourg with a lower salary may benefit from re-employment support (aide au réemploi). Re-employment support guarantees its recipient a level of pay amounting to 90 % of their previous salary for a period of 48 continuous calendar months from the date they begin their new job.

Initial applications must be submitted to the National Employment Agency (Agence pour le développement de l'emploi - ADEM).

Who is concerned

The following may claim re-employment support: workers resident in Luxembourg and cross-border workers from neighbouring countries, registered in Luxembourg and returning to a job in Luxembourg with a salary lower than that of their previous position.

Temporary re-employment support may be granted to workers who:

• have voluntarily resigned from a company experiencing structural or situational economic difficulties;
• have been dismissed (or are about to be dismissed) for economic reasons;
• have been dismissed as part of business recovery, reorganisation or restructuring measures;
• have lost their job as a result of their employer filing for bankruptcy or being placed in compulsory liquidation;
• have lost their job due to their employer's physical incapacitation or death;
• were transferred as part of a temporary redistribution of workers under a job protection plan approved by the Minister of Labour and Employment (Ministre du travail et de l'emploi).

Furthermore, the business where they were originally employed must have been declared eligible for re-employment support by the Minister, who will rule on the matter at the request of any interested party.

Unemployed persons receiving unemployment benefits may also, in certain circumstances, claim temporary re-employment support.

Prerequisites

Conditions under which a business is eligible for re-employment support

For the minister to be able to declare the employee's original company eligible for re-employment support, the following conditions must be met:

• the company director must have conducted the notification and consultation procedures required for collective dismissals; or
• the company must be placed under controlled management, or other bankruptcy-prevention measures; or
• the company must be in the process of liquidation; or
• the company must have devised a job protection plan; or
• the company must have been declared bankrupt or placed in compulsory liquidation; or
• the company must have applied for and obtained subsidies for the purpose of compensating the partially unemployed.

Condition linked to the hired employee

The employee hired in their new company must meet several conditions in order to be eligible for re-employment support:

• they must have been working legally, under an employment contract, for the 24 months immediately prior to leaving the company (which must have a fixed office in Luxembourg) eligible for re-employment support;
• they must be insured as an employee with the Luxembourg social security institutions;
• they must hold a certificate of vocational aptitude issued by the occupational health practitioner who performed their pre-employment medical examination.

Finally, the new employment contract with a company having a fixed office in Luxembourg must be:

• a permanent employment contract (contrat à durée indéterminée - CDI);
• a fixed-term contract (contrat à durée déterminée - CDD) for a minimum of 18 months;
• a fixed-term contract to replace an employee on parental leave (specified in the contract).

Condition linked to the hired unemployed person

The unemployed person must:

•  be 45 years old at least (i.e. as of the day after their 45^th birthday);
• have been registered with the ADEM for at least one month;
• have worked legally and without interruption as an employee in Luxembourg for the 24 months prior to registering with the ADEM;
  
• be insured as an employee with the Luxembourg social security institutions;
• have been declared fit and able to work by the occupational health services.

The vacancy must have been declared to the ADEM beforehand by the employer.

Disqualifying conditions

The employee is ineligible for re-employment support if they:

• are receiving an early old-age pension, an old-age pension, a tideover allowance, a professional tideover allowance or a full annuity;
• are the holder of the business permit for the company where they are employed;
• hold the position of manager, director, deputy director or officer in charge of the day-to-day management of the company or not-for-profit organisation (ASBL) where they are employed;
• have an equity interest in the unlisted company where they are employed;
• have a spouse, registered partner, direct relative or relative by marriage up to the second degree who:
  • holds the majority of the capital of the company where the worker is employed; or
  • has, at any given time in the 2 years prior to the end of the worker's employment contract, held the majority of shares or capital of the company where the worker is employed;
• has already worked for the company or social and economic organisation in the 5 years preceding the contract for which the temporary re-employment support is sought.

Deadlines

The application must be submitted by the employee within 3 months of taking up the job with the new employer.

Beyond that date, they can no longer claim re-employment support.

How to proceed

Filing an application

An employee who wishes to claim re-employment support must, as soon as possible, file a request with the Ministry of Labour, Employment and the Social and Solidarity Economy to have their former employer declared eligible for such support, unless the conditions for unemployed persons on benefits are met.

Re-employment support is not granted retroactively.

To do so, the employee must fill in and return the re-employment support application form. The decision as to whether or not re-employment support is granted is made by ADEM's director.

• If re-employment support has already been approved, the employee must fill in and submit a monthly declaration for re-employment support.

Supporting documents

The application for temporary re-employment support must be accompanied by a number of supporting documents, which may differ depending on the newly hired employee's situation.

New job found following redundancy for economic reasons

The following supporting documents must be included:

• copies of the employee's payslips for the past 12 months;
• if applicable, a copy of the payslip for the 13^th month pay and/or bonus;
• a copy of the dismissal letter, making mention of the duration of the notice period;
• a bank account identification document.
• a copy of the new employment contract;
• the certificate of fitness for work issued by the relevant occupational health practitioner or, where this is not yet available, confirmation that an appointment has been set up for the examination;
• for non-residents only: proof that they have not been registered as unemployed or that they are not receiving unemployment benefit.

New job found following a period of unemployment, receiving unemployment benefits

The following supporting documents must be included:

• a copy of the new employment contract;
• the certificate of fitness for work issued by the relevant occupational health practitioner or, where this is not yet available, confirmation that an appointment has been set up for the examination;
• a bank account identification document;
• for non-residents only:
  • a copy of their U1 certificate;
  • a copy of their last 3 monthly payslips (full months) from their previous employer;
  • proof of payment issued by the organisation which pays the unemployment benefit, covering the whole period of unemployment;
  • proof of deregistration from the unemployment register in their country of residence.
    

Amount of aid

Re-employment support is calculated to ensure that the employee's maximum overall remuneration in their new job amounts to 90 % of their previous salary.

However, the amount of re-employment support paid may not exceed 50 % of the gross salary paid by the new employer.

If the employee finds a job with fewer weekly working hours than in their previous job, then the re-employment support is reduced in proportion to the actual duration of work.

Determining previous pay

For unemployed persons on benefits, their previous pay is calculated on the basis of the gross salary which was used to calculate the gross amount of unemployment benefit.

For other employees, the salary received before their new job is calculated on the basis of the gross monthly salary actually received by the employee over the 12 months immediately prior to the termination of their previous employment contract.

In calculating the salary, the following are taken into account:

• sick pay;
• standard incentives and extras;
• the bonus and the 13^th month (to be considered as a 12th month).

The following are not included in the calculation:

• overtime pay;
• variable elements;
• allowances for incidental expenses;
• benefits in kind liable for social security contributions.

In all cases, when calculating re-employment support, the applicant's previous salary is capped at 350 % of the social minimum wage for unskilled workers 18 or over.

In addition, income from other salaried jobs or from self-employment will be deducted in determining the amount of temporary re-employment support to be paid.

Determining new pay

The new pay is taken into account in its entirety (overtime pay, pay rises, etc.).

Period of benefit entitlement

The temporary re-employment support will be paid, at most, for the first 48 months of the new job.

However, the support will only be paid for the duration of employment by the former employer.

The re-employment support is paid monthly, and can only be paid over a continuous period; it cannot be interrupted.

Notably, re-employment support ceases to be paid:

• when the employee receives a salary equal to or greater than 90 % of their previous salary (including allowances, overtime pay and bonuses);
• during full-time parental leave;
• during unpaid leave;
• if the employee loses their job. In the event of loss of employment entitling the worker to the full unemployment benefit, the amount of re-employment support is taken into account when calculating the unemployment benefit, as is the pay received from the last employer (for residents only).

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