The Chamber of Deputies of the Grand-Duchy of Luxembourg adopted on 10 August, 2018 the law on the maintenance of the employment contract and the gradual return to work in the event of a long-term incapacity (“the Law”). The modifications hereunder detailed will enter into force on 1 January, 2019.
1) Right to sick pay paid by the National Health Fund extended to 78 weeks
The entitlement to a financial compensation (or sick pay) during a period of inability to work is currently limited to a total of 52 weeks over a reference period of 104 weeks. To this extent, all the periods of incapacity for work due to illness, occupational illness or accident at work, which occurred during the reference period, are taken into account.
As of 1 January 2019, the right to sick pay paid by the National Health Fund (“Caisse Nationale de Santé” or CNS) will be limited to a total of 78 weeks over a reference period of 104 weeks, replacing the current limit of 52 weeks.
The employment contract will therefore be automatically terminated at the expiry of the 78- week period.
2) Maintenance of the salary by the employer during a reference period extended to 18 months
An employee who is unable to work is entitled to the full maintenance of his salary and other benefits paid by the employer and resulting from his employment contract until the end of the calendar month in which the 77th day of incapacity for work occurs over a reference period of 12 months (article L.121-6 of the Labour Code).
The Law extends this reference period from 12 successive calendar months to 18 successive calendar months.
The extension of the reference period will result in reducing the employer’s obligations and transferring the cost to the National Health Fund. The average employer contribution rate will thus be lowered from 1.95% to 1.85%.
3) Implementation of a new regime of gradual return to work for therapeutic reasons
The Law allows employees who are unable to work to apply to the National Health Fund for a gradual return to work based on therapeutic reasons (article 14 of the Social security Code).
The conditions are the following:
- the employee needs a medical certificate issued by his doctor;
- the employer must consent to the gradual return;
- the gradual return to work is likely to promote the improvement of the employee’s state of health.
- the employee has been unable to work for at least one month out of the three months preceding the application (article 14 bis of the Social security Code).
During the period of gradual return to work, the employee will be entitled to sickness benefits, it being specified that the reference period for the right to sickness benefits is extended by the Law from 52 weeks to 78 weeks. In other words, the employee will be fully covered by the CNS, even if working part-time for the employer as part of a gradual return to work.
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