On 15 April 2018, amendments came into effect modifying the provisions made for sick leave in Luxembourg’s Labour Code. Specifically, the changes concern article L.121-6(3) and affect the payment of salaries during periods of illness - with obvious implications for both Luxembourg’s employers and employees.
The amendments make distinctions between categories of employees claiming sick leave:
Working Hours Known: If employees who fall ill know their work schedule until at least the end of the calendar month which covers their sick leave, employers must pay their basic salary for that month - along with any bonuses or additional payments, and any pay any increases that might be due had the employee not been on leave. It is likely that the majority of employees will in Luxembourg will fall into this category.
Working Hours Not Known: If employees do not know their work schedule until at least the end of the calendar month covering their sick leave, different rules apply. In this context, employers must pay a daily amount equivalent to the employee’s average daily salary over the 6 months prior to their period of sickness.
Performance-related pay & piecework: Different rules also apply for employees on performance related pay, employed on a piecework basis, or receiving variable remuneration of any kind (salaries dependent on turnover, for example). In these contexts, employers pay sick pay a daily allowance based on the average daily salary of the previous 12 months of employment.
New employees who have been with their company for less than the 6 or 12 months mandated by the above regulations, will have their daily sick pay allowance calculated using the daily average for the length of time they have spent with their company.
Daily sick leave allowances are calculated using the following methodologies and considerations:
- Average daily salary should be established by first dividing an employee’s gross monthly salary by 173 hours (or by the monthly hours stipulated by collective agreement or employment contract). That amount is then multiplied by the number of hours worked per day.
- Salary increases should be included in the calculation.
- Annual leave, sick leave, short-time working, and involuntary or temporary layoffs (such as those due to bad weather or accidents) are exempt from the calculation.
- Non-recurring benefits, performance bonuses, or incidental expenses (related to work hours or overtime) should not be taken into account.
The latest Labour Code amendments replace previous, more complex, case law in Luxembourg, which took into account overtime and overnight work, bank holidays and Sunday work over an undefined period of several months. Under the new rules, the most important consideration is whether or not the employee claiming sick pay had received their work schedule prior to becoming ill. Employers should remember that the amount of money reimbursable to a business by the authorities, is limited by a ceiling.
For more information on Luxembourg’s pay regulations, consult acitvpayroll’s Luxembourg Global Insight Guide...