Covid-19: Short-time work scheme

The right to short-time work has been extended and the application process facilitated.

In order to support companies and employees impacted by the Covid-19 crisis and accompany them through this period of economic recovery, special rules on short-time working have been implemented until 30 June 2021. It is to be expected that the procedure will be adjusted depending on the evolution of the health crisis.

The following measures apply, depending on the type of sector and business:

1. 1. Businesses active in the industrial sector will continue to benefit from the short-time working scheme due to economic problems in order to be able to react to disruptions on international markets. By applying for the short-time working scheme due to economic problems, industrial businesses undertake not to terminate employment contracts for economic reasons.
2. 2. Businesses identified as vulnerable sectors, active in the HORECA, tourism or event sectors, benefit from an accelerated access to the short-time working scheme due to structural economic problems. No limit has been set regarding the number of employees entitled to the short-time working scheme. In case of proven need, these companies are allowed to terminate employment contracts for economic reasons up to a maximum limit of 25 % of their staff (in relation to the total workforce as at 30 June 2020) until 30 April 2021. Common law provisions of the Labour Code concerning collective redundancies remain fully applicable. Priority to re-employ dismissed employees will apply in the event of a return to better fortune.
   
   As of 1^st May 2021, such businesses may benefit from an accelerated access to the short-time working scheme due to structural economic problems up to a maximum of 50% of the total number of normal monthly working hours, provided that no redundancies were made for economic reasons. The normal number of working hours may not exceed 40 hours per week and per salaried worker. In the event that these businesses are forced to close down again following an administrative decision, they will once again benefit from unlimited short-time working during the period where the business is closed.
3. 3. Other businesses impacted by the pandemic crisis are eligible to short-time working due to structural economic problems by using the accelerated procedure, provided that they do not terminate employment contracts for economic reasons. In such case, the number of inactive working hours may not exceed 15% of the total number of monthly working hours of the business. As of 1^st May 2021, the number of inactive working hours may not exceed 10 % of the total number of normal monthly working hours of the business. Anyway, the standard number of working hours may not exceed 40 hours per week and per employee.
4. 4. The implementation of a prior recovery plan (for small businesses employment less than 15 persons) or a job protection plan (for business employment more than 15 persons) is required in case (a) businesses active in vulnerable sectors (HORECA, tourism, events) intend to terminate more than 25 % of their employment contracts (as of 30 June 2020) or (b) businesses, irrespective of the sector, intend to terminate employment contracts or whose total number of inactive working hours exceed 15% (10% as of 1st May 2021) of the total number of monthly working hours of the business. These plans must receive a favourable opinion from the Economic Comittee and job protection plans must be approved by the Minister of Labour.

Employees concerned

Short-time working scheme applies to employees (on permanent and fixed-term contracts) who are not covered by a certificate of incapacity for work and who can no longer be employed at all or can no longer be employed on a full-time basis due to the company being no longer able to ensure the normal operation of its business.

Application

To benefit from the short-time work scheme the employer must submit an initial application via the platform MyGuichet.lu between the 1^st and the 12^th day of the month preceding the period of the request for short-time working. Such application needs to be countersigned by the staff delegation or by the concerned employees in the absence of staff delegation. Such application must be renewed on a monthly basis.

A balance will be made on a monthly basis according to a detailed statement to be issued by the employer after the end of each month with the exact inactive hours and the salary and compensatory allowances effectively paid to each concerned employee. Employees must countersign their own balance confirm payment of the indemnity. The legal timeline to submit such statement has been extended to 3 months.

Payments and reimbursements

Under the short-time work scheme, the employer pays each employee:

• the salary due to the employee for every hour worked, including
• a compensatory allowance equal to at least 80% of the normal gross salary of the employee for inactive hours.

Employers also have to continue to pay the following to the competent authorities:

• social contributions and withholding tax on salaries paid for hours worked;
• social contributions and withholding tax on the compensatory allowance paid for inactive hours, with the exception of contributions for (i) accident insurance and (ii) family benefits.

The State reimburses the employer with the compensatory allowance paid to each employee for inactive hours up to a maximum rate of 250% of the social minimum monthly wage for non-qualified workers (i.e. EUR 5,504.83, index 834,76). The allowance may not be lower than the rate of the social minimum wage for non-qualified workers (i.e. EUR 2,201.93, index 834.76).