Residence permit in Luxembourg for temporary Intra-company transfers (ICT)

Besides introducing a new regime for certain investors, the law of 8 March 2017 (modifying the law of 29 August 2008, the “Law of 2008”) foresees a new status for third-country nationals (“TCN”) in the case of temporary Intra-company transfer (“ICT”). This new law implements the Directive 2014/66/EU on the conditions of entry and residence of TCNs in the framework of an intra-corporate transfer (“Directive 2014/66/EU”)

An Intra-group temporary transfer is defined, by the Law of 2008 (in identical terms to the definition provided by the Directive 2014/66/EU), as the temporary secondment for occupational or training purposes of a TCN who, at the time of application for an intra-corporate transferee permit, resides outside the territory of the Member States, from an undertaking established outside the territory of a Member State, and to which TCN is bound by a work contract prior to and during the transfer, to an entity belonging to the undertaking or to the same group of undertakings which is established in that Member State, and, where applicable, the mobility between host entities established in one or several second Member States.

This new regime applies to qualified executives, experts and trainees (as defined by the Law of 2008).

The application is filed by the host entity that shall, among others:

  • provide proof that the host entity and the company established in the third country belong to the same undertaking or group,
  • provide evidence of employment within the same company or group from 3-12 months (for managers and experts) and 3-6 months (for trainees)
  • provide a work contract containing certain information on the details of the transfer and the work conditions (e.g. duration, location, remuneration, required qualification, etc…)

The authorisation of stay as ICT is granted for a minimum of 1 year up to the duration of the assignment (however max. 3 years). For trainees, the authorisation of stay is limited to 1 year maximum.

A new application by the same TCN for an ICT work permit is possible, however only after a period of 6 months after the end of the validity of the ICT work permit and the new application.

Once issued, this authorisation to stay gives an employee and his/her family members the right to reside and to work in Luxembourg. The authorization of stay of the family members expires simultaneously with the ICT work permit.

With regard to intra-EU mobility, the ICT regime foresees the following:

For short term mobility:

A TCN that holds a valid ICT work permit of another EU country is entitled to work in Luxembourg in a company part of the same group for a period of up to 90 days in any 180-day period, provided certain notification requirements are fulfilled.

For long-time mobility:

A TCN that holds a valid ICT work permit of another EU country may also be authorized to work in Luxembourg in a company part of the same group for a longer period than 90 days. Such authorization is however subject to a separate authorization and a simple notification to Luxembourg authorities is not sufficient. In certain cases, the TCN may already start working in Luxembourg also before the Luxembourg authorities have decided upon the application.

 

Labour law reform: What changes with the law of 8 April 2018

The law of 8 April 2018 has just made a few changes to the Luxembourg labour law.

The objectives of the legislator, within the law, are as follows (bill 7086, explanatory statement):

  • better protect the rights of employees;
  • improve the efficiency of the employment measures by fostering integration in the labour market including some of the most vulnerable categories of unemployed workers
  • ensure wider knowledge of the labour market development, thus allowing the implementation of better targeted policies

The main reforms initiated in the framework of this bill relate to the following points:

  1. Equal treatment for an employee who resigns for serious misconduct on the part of the employer and for the employee unfairly dismissed for serious misconduct
  2. New conditions for access to temporary reemployment assistance and in case of reemployment after a professionalisation internship
  3. New regulations for the full salary continuation of the sick or injured employee

1. Equal treatment for an employee who resigns for serious misconduct on the part of the employer and for the employee unfairly dismissed for serious misconduct

This amendment is consequential to two decisions of the Luxembourg Constitutional Court. The Constitutional Court indeed came to the conclusion that article L.124-6 of the Labour Code made a difference between an employee who resigned for serious misconduct on the part of their employer and the employee who was dismissed for serious misconduct and for whom that dismissal was declared abusive by the courts.

Indeed, prior to the reform, the Labour Code did not stipulate that the employee resigning for serious misconduct on the part of the employer, when that resignation was recognized as justified by the misconduct on the part of the employer, was entitled to receive compensation in lieu of notice and severance pay.

The same employee will now also be entitled to request from the President of the Labour Court authorization to receive on a provisional basis allowance for full unemployment, until a decision has been taken on the appropriateness of their resignation.

Example:

An employee with seniority of 6 years resigns with immediate effect for non-payment of wages by their employer.

A judicial claim is issued by the employee and the Labour court considers that the resignation by the employee for serious misconduct on the part by the employer is justified.

Before the reform: the employee was entitled to compensation for the material and moral damage caused by the fault of the employer.

After the reform: the employee is entitled to compensation for the material and moral damage caused by the fault of the employer as well as compensation in lieu of notice (4 months’ salary) and severance pay (1 month’s salary).

In addition to this reform relating to the resigning employee’s situation, there are also 2 other points to add:

  • The employer’s obligation to reimburse the unemployment benefits received by the employee for the time period(s) covered by the wages or allowances the employer is liable to pay in accordance with the judgment or ruling.
  • Non-invocability against the State of a potential transaction between the employee and the employer in order to avoid a judicial procedure. It was indeed common for the employee and the employer to conclude a transaction together whereas the Employment Fund was not reimbursed for the unemployment benefits paid to the employee.

In this case, following the reform, if a withdrawal from the employee occurs and if it results from a transaction concluded between the employer and the employee, each of them will be required to reimburse to the State half of the unemployment benefits that the employee will have been authorised to receive provisionally.

2. New conditions for access to temporary reemployment aid and in case of reemployment after a professionalisation internship

As a reminder, the purpose of the granted aid is to encourage the employees being subject to dismissal on economic grounds or under the immediate threat of being  subject to such dismissal to accept a lower-paying job.

However, it was found that the possibility of having recourse to that aid had resulted in certain abuses by taking the form of a wage subsidy.

The direct consequence is that, after expiry of the payment period for reemployment aid, the wages actually paid by the employer were still far from reaching the wages including the reemployment aid.

Therefore, people had often only the choice between accepting wages which corresponded neither to their skills nor to the quality of the work performed, and leaving the job.

To avoid such situations, the reform of reemployment aid consists in getting the employer to pay ‘realistic’ wages which, if lower than the wages earned previously, however has to take into account the experience and skills of the employee benefiting from the reemployment aid whose goal is to reduce the difference which can exist between the remunerations in question.

As the aid is granted for 48 months, that period of time should bring closer the new wages paid by the employer to the wages earned previously. Yet this is not possible if the difference is too important, hence the need to limit the amount paid as reemployment aid to half of the wages paid by the new employer (article 541-10 (3) of the Labour Code).

Another reform deals with the reimbursement by the State of a part of the wages after a professionalisation internship.

Indeed, the law of 20 July 2017 amending the Labour Code had extended the benefit of the professionalisation internship to job seekers between 30 and 45.

This having been said, that reform had also allowed the very same persons’ employers to benefit from financial assistance in case of employment resulting from a professionalisation internship.

The reform limits that aid (minimum reimbursement of 50% of the wages for 12 months) for job seekers who are at least 45 years old and who will get hired on the basis of an open-ended contract as the result of a professionalisation internship.

3. New regulations for the full salary continuation of the sick or injured employee

The reform which had resulted in the unique status had created legal uncertainty that the reform has clarified.

That legal insecurity had indeed led a large number of employees to pursue legal remedies regarding the calculation of the amount owed again in the case of absence due to illness.

The reform has then taken care to state precisely the rules for calculating the maintenance of the wages in the event of sickness of the employee.

So the reform introduces a distinction between :

  • the employees who have their schedule at the beginning of the month ;
  • the employees who do not have their schedule at the beginning of the month ; and
  • the employees whose pay depends on assignments, productivity, percentage, turnover or is subjected to wide variations ;

and provides, for each of these categories, a precise definition of what one should understand by full salary continuance and the elements that should be taken into account for the calculation of the remuneration owed to the employee in such cases.

In this respect, one has to conclude that this bill expressly clarifies that the non-periodic benefits, bonuses, performance bonuses, incidental expenses incurred and overtime are not taken into account in that calculation (article L. 121-6 (3) paragraph 11).

 

Overtime hours: Do employees have the right to refuse to work overtime?

The fact that an employer makes their employees work overtime is subject to a special regime (Articles L. 211-22 et seq. of the Labour Code).

Indeed, overtime working is permitted only in exceptional cases and may require prior notification to the ITM (article L. 211-23 of the Labour Code). The employer must also keep a special register containing, among others, the indication of overtime worked by the employees (article L. 211-29 of the Labour Code).

That being said, are employees obliged to work overtime at the request of their employer?

A judgment dated October 28, 2013 provides an example.

In 2010, a company had to deliver an important order to its most important client (company T) and had put an employee (employee M) in charge of that order.

After the order was delivered to the company T, the latter called back at 3:45 pm to report a problem with the water main. The hierarchical superior of M had then asked the latter to go off to handle repairs for the client.

Employee M had refused on the double grounds that he did not have the time as he went off-duty at 4:30 pm and as he was not in a position to repair the breakdown. Despite his hierarchical superiors’ insistence, employee M remained categorical about his refusal.

Therefore, the employer made the decision to dismiss employee M with immediate effect, on the pretext that this type of refusal had already occured in the past (about 10 times according to the employer).

In the first instance, the court had found that an isolated event (the reproaches related to the previous refusals having been too vague) could not justify a dismissal with immediate effect, by quoting the formulation of the constant jurisprudence:

« The employee’s refusal to work overtime on the evening of June 8, 2010, even though it may have embarrassed the employer, does not constitute a refusal to work or an insubordination, therefore a serious misconduct… »

That decision had been upheld on appeal by an order dated March 12, 2015 also finding that the dismissal in question was unfair (however on a slightly different ground, as the employee had provided a certificate from a medical practitioner which showed that he had an appointment, in the evening at 6:30 pm, with his medical practitioner in France (75 km from the headquarters of the company which demanded repairs).

Unjustified Absence : When does the employer have the right to dismiss a worker?

In case of sickness, the employee is required to inform the employer on the first day of sickness. Furthermore, they must provide the employer, within no more than 3 days, with a sickness certificate that indicates their inability to work as well as the foreseeable duration of the sickness.

A decision of the Court of Appeal dated 20 June 2016 gives a practical example how this rule is applied.

In that case, an employee, having learned of the passing of her father, absented herself from her workplace on a Saturday. The employer was informed of the absence indirectly by a work colleague of the latter and by the husband on the same day. An extraordinary leave had been requested (due to the death, article L. 233-16 of the Labour Code) as well as a 3 additional days’ ordinary leave.

However, at the end of the ordinary leave, the employee did not report to work for 3 consecutive days (January 28, 29 and 30), without informing the employer.

On the 4th day of absence (January 31), the employer received a sickness certificate for 3 days (indicating an inability to work from January 30 to February 2).

Following these absences, considered as unjustified by the employer, the latter proceeded with a dismissal with prior notice.

In the first instance, the court had declared that the dismissal was unfair on the ground that “by dismissing… – even with prior notice – solely on the ground that she returned three days late from the funeral of her father, lateness whose origin was brought to his attention by a certificate dated…, [the employer] acted in an unduly manner and with a blameworthy ease, the employee having been in his service for more than 6 years without receiving any warning.”

On appeal, the Court of Appeal recalled the legal rule:

The employee is contractually obliged to work the schedule days. In case of sickness, they are required to inform their employer from the first day of sickness. In case of impediment for another reason, they are also required to inform their employer about their impediment and they cannot merely explain their several-day absence upon their return.

The Court of Appeal noted again that, during the three days’ unjustified absence, the employer was without news from the absent employee.

In these circumstances, the Court of Appeal has considered the dismissal with prior notice as justified.