New year, new benefit and employment laws: Are you compliant?

2017 has arrived and some legislative changes with it.

In order to assess if your HR department is compliant with the new laws, you will find a short summary of the major innovations:

1 Minimum salary increase and indexation of wages from January 1st 2017

After long discussions and much expectation, the salary indexation has been implemented by a law dated December 15, 2016.

The new index used in the mobile salary grid is increased from 775.17 points to 794.54 points, which will lead to an automatic increase by 2.5% of all salaries and pensions and will thus adjust the remunerations to the evolution of the cost of living.

Besides this increase, the amount of the minimum wage has also be increased by 1.4%.

Therefore, from January 1st, 2017 the minimum wage:

  • for unskilled employees will amount to 1,998.59 EUR (instead of 1,922.96 EUR); and
  • for skilled employees will amount to 2,398.30 EUR (instead of  2,307.56 EUR).

As a result employees benefitting from minimum wage will see their remuneration increased by 3.9%.

2 Reform of working time legislation

The law dated December 23, 2016 (hereinafter the “New NAP Law”) will succeed to the law dated February 12, 1999 (the “NAP Law”) which has implemented a national action plan for employment.

The Labour Code fixes working hours at 40 hours per week which can be extended under certain conditions to 48 hours per week. Nevertheless, flexible options are granted to the employer, who is notably entitled to implement a working hours plan (Plan d'Organisation du Travail, hereinafter “POT”), fixing the working conditions during a reference period (the “Reference Period”) by taking into consideration both the normal and also exceptional and unexpected activity of the business. During the Reference Period, which was under the NAP Law fixed to one month or 4 weeks, the employees can work beyond the threshold of 8 hours per day and 40 hours per week, under the condition that the average weekly working hours are not exceeding 40 hours. Moreover, such POT must be approved by the staff representatives.

One of the major amendments introduced by the New NAP Law, is the extension of the Reference Period to 4 months. However such extension has only to be considered as an option for the employer. Thus, companies having already  implemented a POT with a Reference Period of 1 month can continue under such regime or chose to adopt a longer Period of Reference.

To be noted that in case of amendment of the duration of the Reference Period, the staff delegation (or the employees if no delegation is set up) shall be informed and consulted.

Such extension of the Reference Period will under certain conditions have a beneficial effect  for the employees concerned by the POT as they will be granted additional holidays (1.5 day off if the Reference Period is comprised between 1 and 2 months, 3 days off if the Reference Period is comprised between 2 and 3 months, etc.).

The New NAP Law also introduces some innovations with regard to working time, indeed, even under a POT, working hours cannot exceed certain thresholds. Therefore, if the Reference Period does not exceed one month, the standard thresholds mentioned above will apply (i.e.: maximum of 48 hours per week which corresponds to an increase of 20% of the normal working hours), nevertheless should the Reference Period be higher than one month, the monthly working hours cannot exceed:

  • 12.5% (i.e.: an average of 45 hours per week) should the Reference Period be comprised between 1 and 3 months; and
  • 10% (i.e.: an average of 44 hours per week  should the Reference Period be comprised between 3 and 4 months.

Should the aforementioned limits be exceeded, any additional hour will be considered as overtime and shall be paid accordingly.

Finally, should a company be under the regime of a collective bargaining agreement setting forth the duration of the Reference Period, such duration will, despite the New NAP law, remain unchanged until a denunciation of the collective bargaining agreement occurs. However, if an applicable collective bargaining agreement remains silent about the duration of the Reference Period, the maximum duration of such period cannot exceed one month and this until the expiration of the collective bargaining agreement or renegotiation.

The New NAP Law is an opportunity for employers having a cyclical business activity; nevertheless before implementing such new regime, the company shall determine if efficient cost saving can be made.

3 Equal treatment expressly recognized in the Labor Code

The labor code (the “Code”) has been amended by a law dated December 15, 2016 and now includes a Chapter V entitled “Equal Treatment Between Men and Women”.

Article L. 225-1 of the Code provides that the employer has to grant equal pay for work of equal value.

Shall be considered as remuneration the salary as well as any advantages granted in cash or in kind, directly or indirectly to the employee.

Prior to the amendment of the Code, reference was made to a Grand Ducal Regulation dated July 10, 1974 and to articles L.241-1 and L-241-2 prohibiting gender discrimination.

Nevertheless, despite those provisions, unequal treatment between men and women is a reality which must be considered; the comments of the draft bill indeed refer to a remuneration inequality of 8% in disfavor of women in Luxembourg.

The recognition of the principle of equal treatment between men and women is therefore an essential step even if it is always difficult for employees to prove the inequality because evidence of an identical position, identical tasks and competences has to be produced.