In order to protect jobs and thus prevent redundancies, the Luxembourg labour law allows businesses, under certain conditions, to resort to various short-time working (chômage partiel) schemes depending on the nature of the difficulties encountered.

The short-time working scheme due to structural economic problems is intended to support business encountering structural difficulties.

During the short-time working period, the State reimburses the business 80 % of the salaries normally received by the employees during the non-work periods. Reimbursement is limited to 250 % of the social minimum wage. The business still has to pay social security contributions and salaries in respect of hours worked.

Who is concerned

Eligible businesses

The scheme for short-time working due to structural economic problems is aimed at businesses facing structural difficulties.

Eligible employees

Short-time working due to structural economic problems can apply to all employees with their place of work in Luxembourg, whether they are under a permanent employment contract or a fixed-term employment contract.

Prerequisites

To apply for short-time work due to structural economic problems, the business must:

• be established in Luxembourg;
• hold, where applicable, a business permit granted by the competent authority;
• be faced with problems of a structural economic nature (i.e. related to the legal, social, tax or commercial organisation of the business).

Preliminary steps

Before applying for short-time working due to structural economic problems, the business must:

• contact the secretariat of the Economic Committee (Comité de conjoncture) to check that the problems encountered are recognised as being of a structural economic nature;
• design a recovery plan at the request of the secretariat.

The recovery plan must include precise commitments that the business intends to undertake according to an agreed timetable.

Before applying for short-time work, the business manager must inform and consult with the staff delegation (délégation du personnel) and the trade unions until the next social elections in the case of businesses bound by a collective agreement.

Deadlines

Short-time working applications must be submitted by the 12^th day of the month preceding the requested short-time working period (for example, before 12 September for a short-time working application relating to the month of October).

How to proceed

Initial application

Submitting the application

Businesses have to submit their application for short-time work to the secretariat of the Economic Committee (Comité de conjoncture). Each application will be treated with complete confidentiality.

The form must be duly signed by the business manager and by the staff delegation. By signing the form, the staff delegation acknowledges that the business manager has received and informed the delegation about the application for short-time work.

If the company has less than 15 employees or does not have a staff delegation, each employee concerned must sign the form individually.

Documents to be submitted with the application

The initial application must be accompanied by the following documents:

• the annual financial statements for the last 3 financial years;
• proof of payment of social security contributions;
• a recovery or job-protection plan.

Admissibility of the application

The Economic Committee analyses the balance sheet and the financial situation of the business as well as the planned restructuring measures.

It then submits a written opinion to the Government Council (Conseil de Gouvernement) who will decide whether or not to allow short-time work.

After the decision taken by the Government Council, the Economic Committee will send the decision by post and by fax to the number indicated in the application. No information will be provided by telephone.

If the application is approved, the business is authorised to resort to short-time work in addition to the measures implemented by the restructuring plan.

The business must nevertheless renew its application each month and inform the secretariat of the Economic Committee of any change in the situation.

Monthly renewal

For subsequent applications after the initial application, the business has to:

• submit the duly-signed application for short-time work before the 12^th of each month;
• indicate any changes in comparison with previous months (e.g. number of employees impacted).

Maximum period of short-time working per employee

The permission to make use of the provisions concerning short-time working due to structural economic problems can only be granted for a maximum of 1,022 hours per year and per full-time working employee. For persons working on a part-time basis, the limit of 1,022 hours are pro-rated.

Payment of salaries and social contributions by the employer

During the period of short-time work, the employer pays each employee:

• the salary due for every hour worked;
• and a compensatory allowance amounting to:
  • at least 80 % of the normal salary for inactive hours;
  • at least 90 % of the normal salary if the worker has participated in continuous vocational training during inactive hours.

Employers also have to continue to pay the following to the competent public administrations:

• social contributions (the employer's and the employee's share) and withholding tax on salaries paid for hours worked;
• and also social contributions (the employer's and the employee's share) and withholding tax on the compensatory allowance paid for inactive hours, with the exception of the following employer's contributions:
  • accident insurance contributions;
  • and family benefits.

Reimbursement of the compensatory allowances paid by the State

Within 2 months of each month under short-time work, the employer must send the ADEM a monthly declaration of claim, the individual payslips signed by the employees concerned by the short-time working and a statement of the amounts to the ADEM.

The State then reimburses the employer the compensatory allowance (80 % or 90 % of the gross salary) normally received by each employee for the inactive hours up to a maximum of 250 % of the social minimum wage (the balance of the salary remains payable by the employer).

Availability of the worker and return to work

Employees are not required to stay at work during inactive hours.

However, they need to remain at the employer's disposal who may, at any time, call the employees back to work in the event of a pick-up of activity.

Forms / Online services

Who to contact