Dismissal with notice

An employer who dismisses an employee for a reason other than serious misconduct must give the employee notice and, if they have worked in the business for 5 or more years, pay them severance pay.

One or more reasons must be cited for the dismissal with notice. Valid reasons include:

  • reasons of a personal nature (related to the employee's person); or
  • reasons connected to the business' operational requirements (not related to the employee's person).

If the business has a workforce of:

  • more than 150 employees: the employee in question must be summoned to a pre-dismissal interview;
  • at least 15 employees: the business must notify the Economic Committee of all dismissals for reasons not inherent to the employee's person.

In addition, the employer must initiate a collective redundancy procedure if they intend to dismiss, for reasons other than those inherent to their person:

  • at least 7 employees over a period of 30 days; or
  • at least 15 employees over a period of 90 days.

Who is concerned

In principle, employees with a permanent employment contract can only be dismissed with notice. As such, an employer may not give notice of dismissal to any employee:

  • on a fixed-term employment contract before the end of their contract: if they do so, the employer must compensate the employee by paying them the salary that they would have received for the period until the end of their contract. However, the amount of such compensation is limited to the salary due for the notice period that would have been required had the employee been on a permanent contract;
  • on maternity leave;
  • on parental leave.

It should be noted that staff representatives and their alternates, as well as equal opportunities officers and health and safety officers cannot be dismissed, nor can they be summoned to a pre-dismissal interview:

  • during their legal term of office (5 years);
  • during the first 6 months following the expiry or cessation of their term of office;
  • in the 3 months preceding staff elections, once they have submitted their candidacy.

Any redundancy procedure against them is deemed null and void.

Prerequisites

Reasons of a personal nature

Reasons of a personal nature include:

  • the employee's unsuitability for the job they have been employed to do, e.g.,:
    • the employee's performance is considered sub-standard in terms of quality or quantity;
    • frequent and/or prolonged absences due to incapacity for work for non-work related causes. If the employee is being dismissed because their repeated or prolonged absences have caused serious organisational problems for the business, then the employer may dismiss the employee either:
  • the employee's conduct, e.g.:
    • their behaviour toward their employer, colleagues or customers;
    • persistent tardiness;
    • events in the employee's private life which have an effect on their work.

The dismissal must take place within a reasonable time frame after establishing the facts held against the employee. If the most recent of these facts precedes the dismissal by several months, the dismissal may be deemed unfair.

Reasons connected to the business' operational requirements

The reasons for dismissal with notice may be economical and connected to the employer's wish to restructure their business and shed certain jobs.

The employer must be able to explain, in a precise and factual manner:

  • the reason why they are taking the restructuring measures: financial difficulties, preserving the business' competitive position in the event of a downturn in business, etc.;
  • the impact of these measures on the employee's job. The employer must clearly specify why the state of their business operations prevents them from keeping on the employee.

When a business finds itself in financial difficulty, the financial well-being of the group to which it belongs should not, in principle, have any bearing on the employer's decision to restructure. However, in the case of a Luxembourg companies that is administratively, legally and financially dependent on the group to which it belongs, the employer must refer to the difficulties encountered by the group in the letter of dismissal.

In these specific instances of dismissal for economic reasons, the employer:

  • can freely choose which employee to make redundant and does not have to justify their choice;
  • is under no obligation to reclassify the redundant employee within the company or elsewhere.
However, employees who have been made redundant for reasons connected to their employer's operational requirements are given priority for re-employment in the company.

Deadlines

If the business employs:

  • fewer than 150 people: the employer can give them notice of dismissal without delay;
  • 150 people or more, notice of dismissal must be given:
    • at the earliest, on the day after the pre-dismissal interview;
    • at the latest, 8 days after the pre-dismissal interview.

How to proceed

Steps in the dismissal procedure

Steps in the dismissal procedure according to the number of staff employed

Number of staff

Reasons related to the employee's person

(suitability for the job, employee's conduct, frequent absences or long illness)

Reasons not related to the employee's person

(reasons connected to the company's operational requirements)

< 15 employees

Notice of dismissal to the employee

15 to 149 employees

Notice of dismissal to the employee

  1. Notice of dismissal to the Economic Committee
  2. Notice of dismissal to the employee

≥ 150 employees

  1. Pre-dismissal interview
  2. Notification of dismissal to the employee
  1. Pre-dismissal interview
  2. Notice of dismissal to the Economic Committee
  3. Notification of dismissal to the employee

Pre-dismissal interview

Number of staff in the business

Employers with at least 150 staff are legally required to summon the employee to a pre-dismissal interview before dismissing them. Should the employer fail to do so, they may be required to pay the employee compensation, in the amount of up to one month's salary, for procedural irregularities in the dismissal.

In determining the size of the workforce, the total number of staff employed in the different companies of a group considered as a sole economic and social entity must be considered.

Summons to the pre-dismissal interview

Employers are required to send:

  • the employee a letter summoning them to the interview:
    • by registered mail; or
    • deliver it to them by hand against the employee's signature:
      • on a receipt; or
      • a duplicate copy of the letter of summons.
  • a copy of the letter of summons to the staff delegation.

The letter of summons must specify:

  • the reason for the summons, i.e., the employer's intention to dismiss the employee;
  • the date, time and venue of the interview;
  • that the employee is entitled to be assisted by:
    • another employee in the company; or
    • a representative of a trade union with representation at the national level and represented in the company's staff delegation;
  • that the employer is entitled to be assisted by:
    • a member of staff; or
    • a representative of an employers' organisation.

If the employer opts to seek assistance or representation, even by a lawyer, that option must be:

  • mentioned in the letter of summons to the interview;
  • also be offered to the employee.
The employer is not required to specify the reasons for the dismissal in the letter of summons, but such reasons must exist at the time the summons is sent.

Pre-dismissal interview procedure

The pre-dismissal interview may take place at the earliest on the 2nd working day after the summons was sent. Its purpose is to:

  • inform the employee of the employer's intention to dismiss them;
  • explain the reasons for the dismissal;
  • provide the employee with the opportunity to explain themself.

After the interview, the employer is free to decide whether or not to proceed with the dismissal.

It should be noted that in businesses with fewer than 150 employees, the employer is under no obligation to summon the employee to a pre-dismissal interview, but may do so if they wish. In this case, failure to observe the pre-dismissal interview procedure has no bearing on the validity of the dismissal since such an interview is not legally required.

Absence of the employee at the pre-dismissal interview

There are 2 possible reasons for an employee's failing to attend the pre-dismissal interview:

  • they have simply decided not to attend: in that case, the dismissal procedure continues as per normal; or
  • they are on sick leave: the employer must then take into consideration 2 possible scenarios:
    • the employee informed the employer of their incapacity for work and/or submitted a medical certificate before the letter of summons was sent: in that case, the employee cannot be legitimately required to attend a pre-dismissal interview;
    • the employee is on sick leave, and informs their employer and/or provides a medical certificate after having received the summons to interview: the dismissal procedure continues as per normal.

Exception: in the event of emergency hospitalisation: the employee has 8 days from the date of their hospitalisation to submit a medical certificate to their employer.

Giving notice of a dismissal to the Economic Committee

Businesses with at least 15 employees must inform the Economic Committee of all dismissals for reasons not connected with the employee's person (financial reasons, recovery measures, company reorganisation, etc.).

Businesses with 15 employees or more must organise employee representative elections.

The notice of dismissal must:

  • be sent, at the latest, when the letter of dismissal is sent to the employee;
  • be sent:
    • to the secretariat of the Economic Committee, using the notice of dismissal form;
    • preferably by email to emploi@eco.etat.lu;
  • specify:
    • the name of the company and its NACE code;
    • the employer's official registration number;
    • the total number of employees before the dismissal(s);
    • the total number of dismissals since the last notice of dismissal, broken down by type of dismissal;
    • the dates of hire and of the notices of dismissal for each employee being dismissed;
    • the date of the last notice of dismissal sent to the Economic Committee.

Notice of dismissal to the employee

Notification procedure

The employer must notify the employee of their dismissal in writing:

  • by registered mail; or
  • by hand-delivering the letter to the employee, who must sign a receipt or a duplicate of the letter in acknowledgement.

The letter must specify that that the employee is being dismissed with notice. It may also specify:

  • the notice period to which the employee is entitled, based on their length of service in the company;
  • an exemption from work, if applicable.

The dismissal letter must be written in a language which the employee understands.

If the employee changes their address during the course of their employment, they must inform their employer. Thus, if the employer sends the registered letter to the address given by the employee, the notification must be deemed valid.

Communication of reasons for dismissal at the employee's request

The employer is not required to specify the reasons for dismissal in the letter of dismissal. However, if the employee wishes to know the reasons for their dismissal, they can submit a request to the employer. The request must be sent:

  • by registered letter;
  • within one month of receiving the letter of dismissal.

The employer is then required to respond to the employee:

  • by registered letter;
  • within one month of receiving the employee's request;
  • clearly specifying the reasons for the dismissal connected the employee's person or to the company's operational requirements;
  • in a language which the employee understands.

Notice

Start of the notice period

Irrespective of the date on which the letter is received by the employee, the notice period begins:

  • on the 15th day of the current month, if the letter of dismissal is sent before the 15th;
  • on the 1st day of the following month, if the letter of dismissal was sent between the 15th and the last day of the month.

In general, the starting point of the notice period is determined in consideration of:

  • the date on which the letter of dismissal was sent by registered mail; or
  • the date on which the letter was hand-delivered to the employee against a receipt.

Examples

The employer posts the letter of dismissal:

  • on 23 July: the notice period begins on 1 August;
  • on 31 July: the notice period begins on 1 August;
  • on 1 August: the notice period begins on 15 August;
If the employer fails to observe the notice period, they must pay the employee compensation in lieu of notice in an amount equivalent to the remuneration due for the notice period that they failed to observe.

Duration of the notice period

The duration of the notice period depends on the employee's length of service at the time of notification of the dismissal. For example, if the employee's length of service is:

  • less than 5 years: the notice period is 2 months;
  • between 5 and less than 10 years: the notice period is 4 months;
  • 10 years or more: the notice period is 6 months.

The notice period is a fixed period of time. It cannot be extended in the event of illness, accident or leave.

Exemption from work

The employer may wish to grant the employee a full or partial exemption from work during the notice period. To do so, the employer must:

  • give the employee written notice of the exemption from work:
    • in the letter of dismissal; or
    • in a subsequent letter;
  • continue to:
    • pay the employee their full salary along with any other benefits owing to them, with the exception of work-related costs (e.g. meal allowances, travel allowances, etc.);
    • grant the employee any pay raises implemented during the notice period.

The period during which the employee is exempted from work is considered as actual working time.

A dismissed employee who continues to work during their notice period may request leave to seek alternative employment during the notice period.

Remaining leave due

The employer cannot force the employee to take any leave during the notice period. Indeed, the employee may opt for the payment of compensation in lieu of unused leave.

However, if the employee wishes to use up their leave entitlement before the end of the notice period, they must submit a request to their employer. Their employer may deny the request on the grounds that the employee's services are required or that priority has been given to other employees. In that case, the employee must continue to work until the end of their notice period. At that point, the employer will compensate the employee for any leave not taken.

Severance pay

Conditions

The employer is required to pay severance pay:

  • to any employee dismissed with notice, who has at least 5 years of service in the business;
  • at the end of the notice period (whether or not the employee has actually worked during the notice period).
Severance pay is not subject to income tax or social contributions.

The employer and the dismissed worker may also agree on a voluntary severance package. Subject to certain conditions, such severance pay will be tax exempt up to an amount equivalent to 12 times the social minimum monthly wage for unskilled workers. The employer is free to apply this exemption without seeking prior approval from the Luxembourg Inland Revenue (Administration des Contributions directes).

Amount of severance pay

Severance pay depends on the employee's length of service on the last day of the notice period (whether or not the employee has actually worked during the notice period).

In addition, businesses with fewer than 20 employees may:

  • disburse the severance pay; or
  • extend the dismissed employee's notice period.

The employer must specify the option they have chosen in the letter of dismissal.

Severance pay and notice period according to length of service

Employee's length of service

Severance pay
and standard notice period

No severance pay
(businesses with <20 employees)

Severance pay (salary)

Notice

Extended notice without severance pay

Less than 5 years

0

2 months

/

Between 5 and less than 10 years

1 month

4 months

5 months

Between 10 and less than 15 years

2 months

6 months

8 months

Between 15 and 20 years

3 months

6 months

9 months

Between 20 and less than 25 years

6 months

6 months

12 months

Between 25 and less than 30 years

9 months

6 months

15 months

30 years or longer

12 months

6 months

18 months

Basis for calculating severance pay

The severance pay is calculated on the basis of the wages or salaries actually paid to the employee over the 12 months preceding the dismissal.

These wages/salaries:

  • include:
    • sick pay;
    • standard incentives and extras, etc.;
  • do not include:
    • overtime pay;
    • bonuses;
    • allowances for incidental expenses.
If the employee has worked on both a full time and a part-time basis, the severance pay is calculated proportionally to the different periods.

Example

An employee is dismissed by their employer for whom they have worked for 5 years on a full-time basis and for 15 years on a part-time basis (20 hours/week).

At the time of termination of the employment contract, the employee was working part time and receiving a gross monthly salary of EUR 1,500.

The severance pay is calculated as follows:

  • total duration of work in the company: 20 years;
  • duration of full-time work: 5 years, i.e., ¼ of the total duration;
  • duration of part-time work: 15 years, i.e., ¾ of the total duration;
  • salary received working part time: EUR 1,500, i.e., a full-time equivalent of: 1,500 × 2 = EUR 3,000

The monthly amount of severance pay to be paid to the employee is:

  • for full-time work: ¼ of EUR 3,000, i.e., EUR 750;
  • for part-time work: ¾ of EUR 1,500, i.e., EUR 1,125.

Total = 750 + 1,125 = EUR 1,875

In view of their 20 years of service, the employee is entitled to severance pay in the amount of 6 months' gross salary.

Therefore, the dismissed employee is entitled to a total of 1,875 × 6 = EUR 11,250 in severance pay.

Liquidation of the time savings account

In the event of dismissal, if the business has a time savings account scheme in place, the employer must liquidate the balance of the employee's account by way of a compensatory payment.

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En outre et excepté le cas où le traitement de vos données présente un caractère obligatoire, vous pouvez, pour des motifs légitimes, vous y opposer.

Si vous souhaitez exercer ces droits et/ou obtenir communication de vos informations, veuillez-vous adresser à l’administration concernée suivant les coordonnées indiquées dans le formulaire. Vous avez également la possibilité d’introduire une réclamation auprès de la Commission nationale pour la protection des données ayant son siège à 15, boulevard du Jazz L-4370 Belvaux.

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Les destinataires de vos données sont les administrations compétentes dans le cadre du traitement de votre demande. Veuillez-vous adresser à l’administration concernée par votre demande pour connaître les destinataires des données figurant sur ce formulaire. Conformément au règlement (UE) 2016/679 relatif à la protection des personnes physiques à l'égard du traitement des données à caractère personnel et à la libre circulation de ces données, vous bénéficiez d’un droit d’accès, de rectification et le cas échéant d’effacement des informations vous concernant. Vous disposez également du droit de retirer votre consentement à tout moment.

En outre et excepté le cas où le traitement de vos données présente un caractère obligatoire, vous pouvez, pour des motifs légitimes, vous y opposer.

Si vous souhaitez exercer ces droits et/ou obtenir communication de vos informations, veuillez-vous adresser à l’administration concernée suivant les coordonnées indiquées dans le formulaire. Vous avez également la possibilité d’introduire une réclamation auprès de la Commission nationale pour la protection des données ayant son siège à 15, boulevard du Jazz L-4370 Belvaux.

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Les destinataires de vos données sont les administrations compétentes dans le cadre du traitement de votre demande. Veuillez-vous adresser à l’administration concernée par votre demande pour connaître les destinataires des données figurant sur ce formulaire. Conformément au règlement (UE) 2016/679 relatif à la protection des personnes physiques à l'égard du traitement des données à caractère personnel et à la libre circulation de ces données, vous bénéficiez d’un droit d’accès, de rectification et le cas échéant d’effacement des informations vous concernant. Vous disposez également du droit de retirer votre consentement à tout moment.

En outre et excepté le cas où le traitement de vos données présente un caractère obligatoire, vous pouvez, pour des motifs légitimes, vous y opposer.

Si vous souhaitez exercer ces droits et/ou obtenir communication de vos informations, veuillez-vous adresser à l’administration concernée suivant les coordonnées indiquées dans le formulaire. Vous avez également la possibilité d’introduire une réclamation auprès de la Commission nationale pour la protection des données ayant son siège à 15, boulevard du Jazz L-4370 Belvaux.

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