In order to protect jobs and thus prevent redundancies, Luxembourg labour law allows businesses to use various short-time working schemes (chômage partiel) depending on the nature of the difficulties encountered and subject to certain conditions.
The short-time working scheme in the event of cyclical economic problems is intended to support businesses belonging to a crisis-stricken sector or an economic branch and encountering economic difficulties.
Any business making use of short-time working due to cyclical economic problems undertakes not to make employees redundant for economic reasons.
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 costs and salaries in respect of hours worked.
Carry out your procedure:
By downloading a form
- Chômage partiel - demande d'octroi
This scheme is aimed at businesses belonging to a sector or an economic branch declared to be in crisis by the government.
Short-time working schemes can not be applied to apprentices, to temporary workers or workers having tendered/received their notice.
Sectors officially declared to be in crisis
The Economic Committee (Comité de conjoncture) evaluates whether or not a given sector is in crisis upon each application for short-time working due to cyclical economic problems.
After analysing the sector concerned, the Economic Committee proposes, where appropriate, that the government declare the entire sector in which the business operates as a sector in crisis. Only after the decision of the Government council can the business benefit from short-time working due to cyclical economic problems.
Any business in the sector that satisfies the requirements below then becomes eligible.
The economic sector of a company is determined by its NACE code.
To avoid exposing Luxembourg businesses to a loss of confidence on the part of their suppliers and creditors, the list of sectors in crisis is not published.
In order to not distort competition, short-time work due to cyclical economic problems cannot be applied in highly-competitive sectors.
To apply for short-time working due to cyclical economic problems, the business must:
- be established in Luxembourg;
- hold, where applicable, a business permit granted by the competent authority;
- belong to a sector declared to be in crisis by the government;
- not be suffering from structural difficulties;
- undertake to not make any employee redundant for economic reasons.
Short-time working due to cyclical economic difficulties comes within the scope of complementary job protection measures which, if the company's economic situation so requires, can be combined and/or applied simultaneously.
Short-time working applications must be submitted by the 12th 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).
Short-time working benefits can never be granted retroactively.
Submitting the application
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 the delegation and informed them about the application for short-time work.
If the company employs 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.
Admissibility of the application
The Economic Committee analyses the balance sheet and the financial situation of the business and determines a period of eligibility.
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 put in place short-time work during the period of eligibility.
For applications following the initial application, the business must:
- submit the duly-signed application for short-time work before the 12th of each month;
- indicate any changes in comparison with previous months (e.g. number of employees affected).
Maximum period of short-time working per employee
The permission to make use of the provisions concerning short-time working 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 corresponding 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 contributions for 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.