Global Compliance Desk – Luxembourg
Optional Time Savings Account for Private Sector Employees
Luxembourg has introduced a system of time banking for private sector employees, intended to enhance flexible working and improve work-life balance. The law dated April 12, 2019, implementing a legal framework for the implementation of a time savings account (TSA), entered into force on April 28, 2019.
Establishment of Time Savings Account
The implementation of a TSA is only possible if foreseen by a collective bargaining agreement or a national or sectorial inter-professional agreement. The Law provides that for companies in which the collective bargaining agreement has been concluded before the entry into force of the Law and provides for a TSA, the concerned rules remain applicable during the whole period of validity of the relevant collective bargaining agreement. The TSA is an optional system and it is not mandatory for an employee to use it.
Stacking Credit in a TSA
A Time-Saving Account is individually distributed and is denominated in hours of work. Every employee has to give a written request in order to get his or her account credit, by:
- Additional leave days granted above the 26-day legal holiday allowance;
- Additional leave days generated by the use of a reference period longer than a month as part of a work organization plan, as well as any excess balance of hours resulting from these reference periods or from use of a flexible schedule;
- Overtime;
- Compensatory rest days resulting from Sunday work;
- Compensatory rest days if an official public holiday falls on a Sunday;
- A maximum of 5 days’ leaves the employee was not able to take during the calendar year as a result of illness, maternity leave or parental leave with aim of this leave being taken after 31 March of the following year.
The maximum time credit in the TSA is 1800 hours.
When an employee is using the leave accumulated in the TSA, he or she will be considered to be on paid leave and the employer is required to keep the absent employee’s position open, or if this is impossible, ensure they can return to a similar position appropriate to their qualifications and with a salary that is at least equivalent.
Time-Saving Account Usage
An employee can get to use the hours banked in the time-saving account on submitting a written request to the employer. The request to use to banked time usually is as per the employee’s wish but the employer needs to see whether the said usage does not conflict with work requirements or other employees requested time off.
In any event, if an employee asks to use his or her TSA hours, the leave period must be scheduled at least one month in advance, unless the social partners have agreed a different time period depending on the duration of the leave requested.
If the employee falls ill while using leave accumulated in the TSA, days of sickness corroborated by a medical certificate are not considered to be days of leave debited from the TSA and are re-credited. The same principle applies to other types of ‘extraordinary’ leave (paternity leave, relocation leave, etc.).
Time Saving Account Liquidation
The TSA will be closed and the balance in leave days at the time of closure will be transferred to the employee in the form of a compensatory payment in case of the below circumstances:
- In case of death, physical inability, or declaration of bankruptcy of the employer, the business ceases;
- When the employee turns 65 and becomes entitled to an old-age pension leading to automatic termination of the employment contract;
- Automatic termination of the employment contract in the circumstances set out in article L.125-4 of the Labour Code (detailed provisions relating to entitlement to invalidity benefit, maximum paid sick leave, the treatment of disabled workers and workers who are redeployed);
- Termination of the employment contract on the initiative of one of the parties to it, or by mutual agreement;
- On the death of the employee.
Employer’s Responsibility
A proper system has to be put in place by the employer in order to have a proper and detailed administration of the Time Savings Account. The employer must ensure that employees can always consult their TSA balance and through the production of a monthly statement, ensure that the TSA is being credited is in accordance with their initial wishes.
Finally, in terms of information and consultation, the employee delegation will be responsible for monitoring the establishment and correct administration of the TSA.
