Luxembourg: Boost to Employee Sickness Rights

The rules concerning the maintenance of the employment contract and the gradual return to work after long-term sick leave have recently been amended by law.

These significant amendments, as detailed below, went into effect on January 1, 2019.

Right to sick pay paid by the National Health Fund extended to 78 weeks

Until December 31, 2018, the right to financial compensation (or sickness benefit) in the event of incapacity for work was limited to a total of 52 weeks over a reference period of 104 weeks. To this extent, all periods of incapacity for work due to illness, occupational disease, or accident at work during the reference period were taken into account. Since January 1, 2019, the right to sickness benefit paid by the National Health Fund (Caisse Nationale de Santé) has been limited to a total of 78 weeks over a reference period of 104 weeks, replacing the former limit of 52 weeks.

However the employment contract is automatically terminated at the end of the 78-week period if the employee is still not fit to work.

Salary maintenance by the employer for a reference period extended to 18 months

An employee who is unable to work was previously entitled to the full maintenance of his or her salary and other benefits paid by the employer as a result of his or her employment contract until the end of the calendar month in which the 77th day of incapacity to work occurs over a 12-month reference period. This rule remains in place, but the law now extends this reference period from 12 successive calendar months to 18 successive calendar months. The extension of the reference period will reduce employers’ obligations and transfer the cost to the National Health Fund, which pays for a longer duration of sickness (see above). The average employer contribution rate will thus be reduced from 1.95 percent to 1.85 percent.

Implementation of a new regime for a gradual return to work for therapeutic reasons

The law now allows employees who are unable to work to apply to the National Health Fund for a gradual return to work for therapeutic reasons, provided that the following conditions are met:

• The employee has a medical certificate issued by his or her treating physician;
• The employer consents to the gradual return to work;
• The gradual return to work is likely to improve the employee’s state of health; and
• The employee’s incapacity for work covered at least one month out of the three months preceding the request.

During the period of gradual return to work, the employee is entitled to sickness benefits. This means the employee is fully covered by the National Health Fund, even if he or she works part-time for the employer as part of a gradual return to work.

Comment

These new provisions, which aim to strengthen employees’ rights in the event of long-term incapacity by increasing their rights to financial compensation, have generally been welcomed by employers.

Written by Harmonie Méraud and Anne Morel of Bonn Steichen & Partners and Roger James of Ogletree Deakins

© 2019 Bonn Steichen & Partners and Ogletree, Deakins, Nash, Smoak and Stewart, P.C.