Collective redundancies

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An employer who intends to dismiss, for reasons that have nothing to do with the employee's person, at least 7 employees over a period of 30 days or at least 15 employees over a period of 90 days must apply a collective redundancy procedure.

The collective redundancy procedure contains 4 main stages:

  • inform the National Employment Agency (Agence pour le développement de l'emploi - ADEM) and the staff representatives or the employees directly if the business regularly employs less than 15 persons;
  • negotiation of a social plan;
  • implementing the social plan;
  • request tax exemption for voluntary departure or severance pay, if applicable.

Who is concerned

The collective redundancy procedure concerns:

  • the employer who wishes to dismiss at least 7 employees over a period of 30 days or at least 15 employees over a period of 90 days for reasons that have nothing to do with the employee's person;
  • the staff representatives who must take part in the negotiations with the employer concerning the collective redundancy procedure, i.e.:
    • the staff delegation;
    • the joint committee, if applicable;
    • in the case of businesses with a collective agreement, the unions involved in the collective agreement;
    • the employees directly in the case of businesses who regularly employ less than 15 employees and therefore do not have a staff delegation;
  • the employees concerned by the redundancy.

It should be noted that joint works committees (also "joint works councils") will cease to exist after social elections which take place after 1 January 2016. As from these elections, the tasks and duties assigned to joint works committees will be transferred to the staff delegations in companies which had at least 150 staff during the 12 months preceding the first day of the posting of the announcement of elections.

Until these elections, the joint works committees currently in place will continue to carry out their tasks.

Prerequisites

In businesses with staff representatives, the collective redundancy procedure must be initiated in the presence of the staff delegation and the joint committee (if such exists).

Any business which, despite its legal obligation, has not yet set up a staff delegation or a joint committee must first hold related elections before initiating any collective redundancy procedure.

In businesses with less than 15 employees, negotiations are carried out directly between the employer and the employees.

Preliminary steps

In order for the collective redundancy procedure to be applicable, the layoffs must:

  • be due to reasons that have nothing to do with the employee's person (i.e. not related to the employee's abilities or behaviour in the company), notably:
    • economic reasons;
    • in the framework of economic recovery, reorganisation, restructuring measures resulting in job losses, liquidation, bankruptcy, etc.;
  • affect at least:
    • 7 employees over a period of 30 days;
    • 15 employees over a period of 90 days;
  • concern at least 4 dismissals for reasons not related to employee behaviour. All other terminations of employment contracts by the employer for reasons that have nothing to do with the employee's person, such as voluntary departures, redeployment, early retirement, etc. are assimilated to redundancies.

How to proceed

Timeline of a collective redundancy procedure

Opening of negotiations

Before D Day
  • provision of information to staff representatives

D Day
  • start of negotiations

If there is an agreement between the social partners

D Day + 15
  • signature of the redundancy plan

D Day + 16
  • implementation of the redundancy plan

In the event of disagreement between the social partners

D Day + 15
  • signature of the non-conciliation report

D Day + 18

D Day + 20
  • the joint conciliation committee (commission paritaire) is summoned by the ONC

D Day + 23
  • meeting of the joint conciliation committee

D Day + 38
  • end of negotiations within the joint conciliation committee

In the event of agreement between the social partners

D Day + 39
  • implementation of the redundancy plan

In the event of failure of negotiations between the social partners

D Day + 39

Information of ADEM and staff representatives

Before initiating a collective redundancy, the employer must begin negotiations with the staff representatives in order to establish a redundancy plan for the individuals concerned.

In order to do this, he must:

  • inform the staff representatives of his intention to initiate a collective redundancy in writing and preferably before the start of negotiations, or at the latest at the start of negotiations, indicating notably the:
    • detailed and justified motives for initiating a collective redundancy;
    • number and categories of employees to be made redundant;
    • number and categories of employees who are usually employed;
    • period during which the redundancies will take place;
    • criteria used to identify the employees to be made redundant;
    • calculation method of the financial compensation which goes beyond the amounts foreseen by law or the collective agreement, or failing this, the reasons for refusing the compensation;
  • send this information to ADEM at the latest at the start of the negotiations, together with a copy of the written communication addressed to the staff representatives, and thereby informing ADEM of the collective redundancy. ADEM will forward a copy to the Inspectorate of Labour and Mines (ITM);
  • provide the staff representatives or, if required, the employees, with a copy of the notification sent to ADEM.

The staff representatives may then report their observations to ADEM, which will forward a copy to the ITM.

The negotiations may then begin.

Negotiation of the redundancy plan

The negotiations must concentrate on the possibilities of preventing or reducing the number of redundancies and limiting the consequences by means of:

  • internal redeployment in the company;
  • retraining;
  • reintegration on the job market;
  • a more favourable financial compensation than established by law.

Businesses with an employment maintenance scheme approved by the Minister of Labour and Employment during the 6 months prior to the start of the redundancy plan negotiations must not renegotiate the measures stated in the employment maintenance scheme but only negotiate a possible financial compensation.

Whenever an employer resorts to collective redundancies, these can only be redundancies with notice.

The minimum notice period of 75 days must be respected. The deadline shall be extended according to the legal notice periods in relation to length of service and the applicable statutory or contractual provisions.

The Minister of Labour may, if he deems it necessary:

  • extend the minimum notice period to 90 days;
  • reduce the notice period to the legal notice period as recognised by law, in the individual employment contract, in the collective agreement, etc.

In this case, the employees and the employer must be informed of the extension or reduction of the deadline and its reasons at the latest on the 15th day before the expiry of the initial deadline.

The employer and the employee representatives have 15 days maximum to reach an agreement on either the redundancy plan or on the fact that the negotiations have failed.

Agreement between social partners

If the negotiations are successful, the redundancy plan must be put in in writing and at least contain the measures agreed upon in terms of redeployment, retraining, reintegration and financial compensation as well as the opinion of the parties regarding these measures.

After being signed by both parties, a copy of the redundancy plan must be sent without delay to the ADEM which, in turn, will send a copy to the Inspectorate of Labour and Mines (Inspection du travail et des mines - ITM).

Disagreement between social partners

If the negotiations fail, all parties involved must:

  • draft and sign a report which documents the impossibility to draw up a redundancy plan and its reasons;
  • send, without delay, a copy of the report to ADEM, which in turn will send a copy to the ITM;
  • jointly inform the National Conciliation Service (Office national de conciliation - ONC), at the latest 3 days after having signed the report, stating the names and positions of the members who will take part in the joint conciliation committee (on both the employer's side as on the employee's side);
  • meet, after being summoned by the chairman of the ONC, in the framework of a joint conciliation committee (the chairman of the ONC will summon the parties within 2 days for a first meeting which must take place at the latest within 3 days of the summons);
  • close the proceedings at the latest 15 days after the first meeting and record its conclusions in a report;
  • send, without delay, a copy of the report to the ADEM and the ITM.

If the intervention of the ONC does not allow to conclude a redundancy plan, the business can dismiss the chosen number of employees without a redundancy plan as soon as the non-conciliation report has been filed, by following the terms and the procedure that apply to individual dismissal but by complying with the minimum notice periods for collective redundancies.

The minimum notice period of 75 days must be respected. The deadline shall be extended according to the legal notice periods in relation to length of service and the applicable statutory or contractual provisions.

Implementing the redundancy plan

When the redundancy plan is approved, the employer may begin to implement collective redundancies.

In order to do so, he must:

  • notify each employee concerned individually and in writing of the redundancy (and inform them whether or not they need to finish their notice period according to the terms of the redundancy plan):
    • either by registered letter;
    • or by giving the letter to the employee in person. In this case, the employee will countersign a copy of the letter to acknowledge receipt;
  • deregister redundant employees from the Joint Social Security Centre at the end of their notice period;
  • request tax exemption for voluntary departure or severance pay, if applicable.
  • carry out all other actions stated in the redundancy plan.

No collective redundancies can take place:

  • before the redundancy plan has been drafted and signed;
  • or in the event where the parties have failed to reach an agreement, before the non-conciliation report of the ONC's joint conciliation committee has been signed.

If a redundancy is announced before these conditions are met, it may be declared null and void and can be appealed by the employees.

Tax exemption for voluntary departure allowance or severance pay

Employees may benefit from tax exemption for their voluntary departure allowance or severance pay from their employer, namely in the following situations:

  • in the event of a collective redundancy due to the complete or partial closure of a business;
  • when the departure allowance is set in a redundancy plan.

The allowances received are therefore tax exempt for up to 12 times the monthly minimum social wage for unskilled workers on 1 January of the tax year during which the first payment of the allowance is made.

The requests have to be submitted to the Economic Committee by:

  • the employer who must also provide the following:
    • the list of employees concerned and their national identification number (13-digit social security number);
    • a copy of the redundancy plan or, failing this, the notification of the collective redundancy sent to ADEM;
  • or the employees directly, their legal representative or trade union.

If the Economic Committee approves the request, the Luxembourg Inland Revenue (Administration des contributions directes - ACD) can authorise the tax exemption.

Who to contact

Ministry of Labour

Inspectorate of Labour and Mines

  • Inspectorate of Labour and Mines (ITM)

    Address:
    3, rue des Primeurs L-2361 Strassen Luxembourg
    B.P. 27, L-2010 Luxembourg
    Phone:
    (+352) 247 76 100
    Fax:
    (+352) 247 96 100
    Email address:
    contact@itm.etat.lu
    Website:
    http://www.itm.lu/home.html
    Closed ⋅ Opens Monday at 8.30
    Saturday:
    Closed
    Sunday:
    Closed
    Monday:
    8.30 to 12.00 , 13.30 to 16.30
    Tuesday:
    8.30 to 12.00 , 13.30 to 16.30
    Wednesday:
    8.30 to 12.00 , 13.30 to 16.30
    Thursday:
    8.30 to 12.00 , 13.30 to 16.30
    Friday:
    8.30 to 12.00 , 13.30 to 16.30

  • Inspectorate of Labour and Mines (ITM) Regional Office Diekirch

    Address:
    2, rue Clairefontaine L-9220 Diekirch Luxembourg
    B.P. 27, L-2010 Luxembourg
    Phone:
    (+352) 247 76 100
    Fax:
    (+352) 247 96 100
    Website:
    https://itm.public.lu/fr/nous-connaitre/guichets/diekirch.html
    Closed ⋅ Opens Monday à 8h30
    Saturday:
    Closed
    Sunday:
    Closed
    Monday:
    8h30 à 11h30, 14h00 à 17h00
    Tuesday:
    8h30 à 11h30, 14h00 à 17h00
    Wednesday:
    Closed
    Thursday:
    8h30 à 11h30, 14h00 à 17h00
    Friday:
    8h30 à 11h30, 14h00 à 17h00

  • Inspectorate of Labour and Mines (ITM) Regional Office Esch-sur-Alzette

    Address:
    1, boulevard de la Porte de France L-4360 Esch-sur-Alzette Luxembourg
    B.P. 27, L-2010 Luxembourg
    Phone:
    (+352) 247 76 100
    Fax:
    (+352) 247 96 100
    Website:
    https://itm.public.lu/fr/nous-connaitre/guichets/esch-alzette.html
    Closed ⋅ Opens Monday à 8h30
    Saturday:
    Closed
    Sunday:
    Closed
    Monday:
    8h30 à 11h30, 14h00 à 17h00
    Tuesday:
    8h30 à 11h30, 14h00 à 17h00
    Wednesday:
    8h30 à 11h30, 14h00 à 17h00
    Thursday:
    8h30 à 11h30, 14h00 à 17h00
    Friday:
    8h30 à 11h30, 14h00 à 17h00

  • Inspectorate of Labour and Mines (ITM) Regional Office Strassen

    Address:
    3, rue des Primeurs L-2361 Strassen Luxembourg
    B.P. 27, L-2010 Luxembourg
    Phone:
    (+352) 247 76 100
    Fax:
    (+352) 247 96 100
    Website:
    https://itm.public.lu/fr/nous-connaitre/guichets/strassen.html
    Closed ⋅ Opens Monday à 8h30
    Saturday:
    Closed
    Sunday:
    Closed
    Monday:
    8h30 à 11h30, 14h00 à 17h00
    Tuesday:
    8h30 à 11h30, 14h00 à 17h00
    Wednesday:
    8h30 à 11h30, 14h00 à 17h00
    Thursday:
    8h30 à 11h30, 14h00 à 17h00
    Friday:
    8h30 à 11h30, 14h00 à 17h00

  • Inspectorate of Labour and Mines (ITM) Regional Office Wiltz

    Address:
    20, route de Winseler L-9577 Wiltz Luxembourg
    B.P. 27, L-2010 Luxembourg
    Phone:
    (+352) 247 76 100
    Fax:
    (+352) 247 96 100
    Website:
    https://itm.public.lu/fr/nous-connaitre/guichets/wiltz.html
    Closed ⋅ Opens Wednesday à 8h30
    Saturday:
    Closed
    Sunday:
    Closed
    Monday:
    Closed
    Tuesday:
    Closed
    Wednesday:
    8h30 à 11h30, 14h00 à 17h00
    Thursday:
    Closed
    Friday:
    Closed

2 of 5 bodies shown

National Employment Agency (ADEM)

2 of 17 bodies shown

Ministry of the Economy - Economic Committee

Related procedures and links

Procedures

Dismissal with notice Dismissal with immediate effect for serious misconduct Transmission of salary statements at the end of the employment relationship Notice of dismissal for reasons not directly related to the employee's person

Links

Tools

Eckdaten der Sozialversicherung

Hier finden Sie die aktuellen Eckdaten der Sozialversicherung.

Legal references

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