Redeployment of employees: what’s new for employers?
In 2016, the Luxembourg legislator reformed the redeployment procedure applicable in the Grand Duchy of Luxembourg (“procédure de reclassement” in French). The reform has, however, not achieved its objectives and has received a lot of criticisms from all involved parties. To address its flaws and make it more efficient, while also improving the financial situation of redeployed employees and to simplify the redeployment process, a new law of 24 July 2020 has been enacted, which entered into force on 1 October 2020.
Below is a summary of the main aspects of the redeployment procedure following the reform.
Which of my employees can benefit from the redeployment procedure?
The following employees can benefit from the redeployment procedure:
- employees in possession of a certificate stating that they are fit for the job, established by the competent occupational physician at the time of their hiring; or
- employees having a seniority of at least three years; or
- employees who are no longer fit for their jobs due to a work accident or a professional sickness.
For the sake of completeness, the following persons can also benefit from the redeployment procedure:
- beneficiaries of a disability pension who have lost the right to it but are incapable of performing their work according to their last position;
- beneficiaries of a pension who have lost the right to it but are incapable of performing their work according to their last position.
Who can trigger the redeployment procedure?
The procedure of redeployment (internal and external) can be triggered by the Social Security Medical Board or the relevant occupational physician.
The physician shall establish that the employee is unfit for his current job and bring the matter before the Joint Committee (the “Committee”). The Committee will then decide whether a redeployment is necessary and under which conditions.
Is the employer bound to internally redeploy its employee?
Yes, the employer may be obliged to internally redeploy its employee if on the day the file is referred to the Committee it:
- employs at least 25 employees; and
- does not meet the quotas of employees redeployed internally or externally. These are the quotas applicable to disabled employees, which are as follows:
- 1 full-time reclassified employee for a workforce of 25 employees;
- 2% of redeployed employees (full-time) per the total number of employees for a workforce of 50 employees;
- 4% of redeployed employees (full-time) per the total number of employees for a workforce of 300 employees.
It is up to the employer to prove that it employs fewer than 25 employees, if applicable, and that its quota requirements are met in order to avoid a mandatory internal redeployment. For companies with multiple establishments, this obligation applies to each establishment taken individually.
Can the employer object to the internal redeployment?
Yes, if it employs fewer than 25 employees.
However, if it employs more than 25 employees, it must pay the Employment Fund a compensation tax for a maximum period of 24 months.
This tax is equivalent to the average monthly pensionable income for the 12 calendar months prior to the internal redeployment decision. The Committee decides on the duration and amount of the compensation tax. The employer may lodge an opposition claim in case of disagreement.
By how much can the working hours of the internally redeployed employee be decreased?
The working hours cannot be decreased by more than 20% of the working hours as provided for in the employment contract. The health physician must provide reasons for his decision to the Committee who will ultimately rule on the reorganisation of the working time.
Exceptionally, the working hours can be decreased up to 75% with a minimum of 10 hours per week based on the recommendation of the health physician of the Unemployment Agency. To this end, a motivated request must be introduced by either the employer or the employee with proof that the other party to the employment contract has been informed.
Any contemplated change in the working hours or work arrangements must be requested in advance from the Committee.
Which salary shall the employer pay to the redeployed employee?
The employer is required to pay the redeployed employee the salary as set out in his employment contract. In the event that the redeployment would imply a decrease in the working hours of the redeployed employee, the employer must not in any way decrease the hourly wage of the employee. Consequently, the employer must reduce the salary proportionally to the reduction of the working hours, eg: decrease of 50% of the working hours – the remuneration is divided by two.
The redeployed employee is assured to keep a remuneration equivalent to the one he was earning before. If the redeployment triggers a decrease of remuneration, the redeployed employee is entitled to a compensatory indemnity, provided he requests it with the Unemployment Agency within six months from the day the addendum to the employment contract is effective (such addendum providing for a decrease of remuneration).
The Unemployment Agency will therefore pay the difference between the former salary of the redeployed employee (before the redeployment procedure) and the new salary (following the professional redeployment).
One of the benefits of the redeployment reform is that, in the case of increase of the remuneration of the redeployed employee, either contractually or legally (with a change of index for instance), the compensatory indemnity paid by the Unemployment Agency will not be decreased, which was the case before, except if certain thresholds are reached.
In the event of a change of position, the compensatory indemnity is determined by calculating the loss between the average monthly taxable income and the new salary set by amendment to the employment contract. It takes into account the employee's seniority and, where applicable, the salary scales defined by the collective bargaining agreement.
The compensatory indemnity may be adjusted in accordance with the decisions of the Committee in relation with the redeployment.
Are the redeployed employees entitled to the payment of a lump sum indemnity?
Employers may have to pay an indemnity to externally redeployed employees.
This concerns employers of more than 25 employees who have an obligation to redeploy internally but refuse to do so because it would seriously prejudice their business and as a consequence benefit from an exemption by the Committee.
However, for companies employing less than 25 employees and therefore have no obligation to redeploy internally, and who choose not to do so, the indemnities will be reimbursed by the Employment Fund, provided they have introduced such reimbursement request within six months from the notification of the external redeployment by the Committee.
The lump sum to be paid to the externally redeployed employees is based on their length of service on the day the external redeployment is notified. It is calculated as follows:
- one month’s salary for a seniority of at least 5 years;
- two months’ salary for a seniority of at least 10 years;
- three months’ salary for a seniority of at least 15 years;
- four months’ salary for a seniority of 20 years or more.
The lump sum payment calculation is based on the gross remuneration effectively paid to the employee for the last 12 months preceding the notification of the decision for external professional reclassification. Illness benefits as well as fixed bonuses and premiums are included in this respect. Overtime, gratuities and any compensation for incidental costs incurred are, however, excluded.
When is the lump sum to be paid?
It shall be paid as soon as the external redeployment notification is served to the employer.
When can the employer ask its redeployed employee to increase his working hours?
Based on this decision, the employer shall adjust the working hours of his redeployed employee. The new working hours cannot, in any cases, exceed the initial working hours which were contractually agreed before the redeployment decision. The employer has 12 months to adjust the working hours of his employee from the date he has been notified by the Committee. If it is not possible to adjust the working hours of the employee, the employer shall offer the employee a similar position adapted to his qualifications with the same level of remuneration. The occupational physician shall declare the employee fit for this new position.
Can the employer benefit from any financial aid in case of loss of productivity of his employee?
The wage participation will start on the day the application has been submitted to the Unemployment Agency.
The wage participation is pro rata to the loss of productivity. However, it may not exceed 75% of the salary, except in special cases due to retraining or rehabilitation measures.
The amount of the wage participation depends on the loss of the employee's work capacity, the employer's efforts towards redeployed employees and the nature of the work performed.
The loss of productivity is periodically re-evaluated and the wage participation will vary according to its evolution.
Are there any other obligations for the employer during the professional redeployment procedure?
The employer shall inform the Committee where:
- he grants unpaid leave to his redeployed employee; or
- the President of the National Health Fund orders the employer to stop the payment of the remuneration of the employee during his sick leave or stops the payment of the employee’s sickness indemnity.
Can a redeployed employee be dismissed?
No, a redeployed employee cannot be dismissed from the day the Committee receives the redeployment request until one year following the notification to the employer of the redeployment decision. Such dismissal or convening notice to the preliminary meeting would be considered null and void.
From now on, both the redeployed employee and the employee in the process of being redeployed can submit a plea to the president of the Labour Court (who shall decide in urgent summary proceedings) to declare the dismissal null and void.
When can the redeployment be terminated?
The professional redeployment ends when:
- the occupational physician notices that the redeployed employee has recovered his capacity to perform his duties under his former job. The Committee decides to withdraw the redeployment status from him and informs the Unemployment Agency which stops the payment of the compensatory indemnity. Such decisions are effective six months after their notification;
- the employee has avoided the periodic medical reassessment and refuses to accept the similar position corresponding to his qualifications offered to him by the employer. This decision shall take effect on the date of notification.
Can the employer be subject to sanctions in the context of the redeployment procedure?
If the employer has fraudulently induced the Unemployment Agency to provide a compensatory indemnity that was not due, in whole or in part, the employer is liable to imprisonment from one month to six months and/or a fine of EUR 500 to EUR 5,000. The attempt to commit this offence is punishable by imprisonment from eight days to three months and/or a fine of EUR 251 to EUR 2,000.