On 20 June 2019, the European Parliament and the Council of the European Union approved Directive (EU) 2019/1152 on transparent and predictable working conditions in the European Union (the “Directive”). The objective of this Directive is “to improve working conditions by promoting more transparent and predictable employment while ensuring labour market adaptability”[1]. Luxembourg, like all Member States, was required to implement the Directive by 1 August 2022. On 7 September 2022 therefore (with a slight delay), the legislator tabled Bill of Law no. 8070 (the “Bill”).
Below we have summarised the most significant changes that employers will face under the current version of the Bill[2]:
1. New clauses to be included in employment contracts
The Labour Code currently contains a number of provisions that must be included in employment contracts. The Bill adds new ones, such as:
- the principle that, in the absence of a fixed or predominant place of work, the employee is free to determine their place of work;
- the arrangements for the payment of overtime;
- the distinction between base pay and supplementary pay;
- the rules for terminating the employment contract;
- the conditions of probationary periods;
- the right to training; and
- the identity of the competent social security bodies.
2. Clarifications on the author of the employment contract
The Bill provides that the obligation to draw up the employment contract and provide it to the employee in accordance with the Labour Code lies with the employer.
3. Strengthening of rights to transition from one form of work to another
Under the Bill, an employee will now have the right to request in writing, once a year, to change from a fixed-term contract to an open-ended contract, from part-time to full-time work, and vice versa, while maintaining all other employment rights and obligations. Here, the principal new development is that the Bill also introduces the right to receive a reasoned response to such a request. However, an employee must meet certain conditions in order to enjoy this right.
4. Restriction of exclusivity clauses
The Bill provides that any clause prohibiting an employee from exercising another employment relationship with one or more employers outside normal working hours is null and void. Any clause or act of the employer that directly or indirectly penalises the employee for such multiple employment is also null and void.
However, in principle, this prohibition does not apply if the combination of activities is objectively impossible, e.g. for reasons of health and safety at work, protection of business confidentiality or prevention of conflicts of interest.
5. criminal sanctions for non-compliance with legal provisions
Employers that fail to comply with the new obligations are liable to criminal penalties ranging from EUR 251 to EUR 5,000 for natural persons and EUR 500 to EUR 10,000 for legal persons. These fines are incurred for each employee concerned by the employer’s failure. In the event of a repeat offence within two years, they may be increased to twice the maximum figure.
It remains to be seen what comments will be made by the Labour, Employment and Social Security Committee (Commission du Travail, de l'Emploi et de la Sécurité sociale), the next entity slated to give an opinion on the Bill. As the legislative process is just beginning, it is difficult to know at this stage exactly when and in what form the Bill will be adopted. That being said, employers will in any cases have to update their employment contract templates for new recruits. Existing contracts will not need to be amended and no addendum will be required. However, employees whose employment contracts predate the future law’s entry into force will be entitled to request a written document that complies with the new provisions, in which case the employer will have to provide it within two months.
[1] Directive (EU) 2019/1152 of the European Parliament and of the Council of 20 June 2019 on transparent and predictable working conditions in the European Union, Article 1.
[2] As filed on 7 September 2022.
