Adoption of New Secondment Act

On 9 December 2020, the Luxembourg Parliament adopted a new secondment act, the purpose of which is to transpose into national law Directive (EU) 2018/957 of the European Parliament and of the Council of 28 June 2018 amending Directive 96/71/EC concerning the posting of workers in the framework of the provision of services (the "Directive").

The Directive is intended to aid in the fight against employment fraud and social dumping. The new secondment act (the "Act") transposes the Directive by introducing inter alia the following modifications to the Labour Code (1): 

- The Act modifies Article L.010-1 of the Labour Code, which lists the mandatory provisions of Luxembourg law, to include the following items: 

the accommodation conditions of workers when the employer provides accommodation for workers away from their usual place of work;
allowances for or reimbursement of travel, accommodation and/or food expenses of workers away from home for professional purposes. 

The Directive extended the core conditions identified in Directive 96/71/EC as being of the utmost importance when seconding workers and stressed the need for employers to provide appropriate housing for posted workers and reimburse their accommodation, food and travel expenses. Therefore, as from publication of the Act, companies posting employees to Luxembourg will have to provide them with appropriate housing and cover their expenses. 

- The reference in Article L.010-1(2) of the Labour Code to the “social minimum salary” (“salaire social minimum” or “SSM”) is replaced with a reference to “minimum salary rates as well as to all components of salary fixed by a statutory, regulatory or administrative provision or by a collective bargaining agreement or inter-professional agreement declared to be generally binding”. 

This modification is intended to broaden the reference base used to determine salary in order to ensure that seconded workers on minimum wage benefit from the highest applicable pay rate with reference to local wages and wage components.

The pay of seconded workers will however still be indexed with reference to the SSM or to minimum wage rates provided for by generally binding collective bargaining agreements. 

- The Act states that, henceforth, temporary employment agencies are required to guarantee to seconded temporary workers employment conditions that are identical to those of local temporary workers. In this regard, the host company must inform the temporary employment agency of the employment and salary conditions it applies to its workers.

Prior to these modifications, Directive 96/71/EC stated that Member States could decide whether to guarantee the application of provisions of national law to seconded temporary workers. This is now mandatory. 

- A new paragraph (2bis) has been added to Article L.141-1 of the Labour Code, stating that a temporary employment agency established outside the territory of the Grand Duchy of Luxembourg may second an employee to a host company established outside the territory of the Grand Duchy of Luxembourg that is temporarily carrying out activity in Luxembourg, provided there is a service agreement in place between the temporary agency and the host company. 

In other words, temporary employment agencies established outside Luxembourg that supply workers to non-Luxembourg-based companies carrying out work in Luxembourg will now fall under the scope of the Luxembourg secondment rules. These provisions also apply to a company established outside the Grand Duchy which, in the framework of a temporary lending of personnel, supplies workers to another non-Luxembourg-based company that carries out work in Luxembourg. 

- The Act modifies Article L.141-2 of the Labour Code, which now states that any company that seconds an employee to Luxembourg for more than twelve months will be subject, as from the thirteenth month, to all applicable legislative, regulatory and administrative provisions, as well as those resulting from collective bargaining agreements declared to be generally binding.

 However, provisions on the procedures, terms and conditions applicable to the termination of employment contracts as well as non-compete provisions and complementary pension schemes are expressly excluded. 

In addition, it should be noted that this twelve-month period may be extended to eighteen months if the employer or the seconded employee notifies the Inspectorate of Labour and Mines (“ITM”) prior to expiry of the twelve-month term, through the ITM’s e-Détachement platform. 

- In order to comply with the Directive, the Act provides for the establishment of an official national website on which all information about employment conditions must be published. This new requirement is intended to enhance transparency and ensure access to information for both companies and posted workers. 

- Finally, new Title IX on “Accommodation conditions for employees away from their usual place of work” has been added to Book II of the Labour Code, providing notably for the standards that housing for posted workers should meet in terms of safety, hygiene and cleanliness. 

In addition, an obligation is introduced for the host company to notify the seconded employee's employer if it is informed by the ITM that the employee is not properly housed. The host company can be fined for failure to fulfil this obligation (between EUR 1,000 and EUR 5,000 per seconded employee). 

For its part, the employer of the seconded employee(s) must keep a register containing various items of information relating to the employee(s), notably the place of accommodation, the cost of the housing and the period of occupancy. 

These are the main changes introduced by the Act, which will enter into force in the coming days, following its publication.

(1) The Act expressly excludes the transport sector from its scope of application.