NEWSFLASH | Draft Law on the Time-Saving Account

On June 25^th 2018 the Chamber of Deputies of the Grand-Duchy of Luxembourg issued a draft law 7324 (the “Draft Law”) implementing a time-saving account. The time-saving account will enable the employee to better manage their working time and overtime, as well as to take time off when considered appropriate.

1. Beneficiaries

Any employee bound to an employer by an employment contract and who has given at least two years of service can benefit from a time-saving account.

1. Implementation

The implementation of the time-saving account may result:

• from a collective agreement or
• from a sectoral or national agreement on inter-professional social dialogue: a mutual agreement is required between the employer and the staff delegation, in addition to a notification of the agreement to the Minister of Labour.

3. Crediting of the time-saving account

The time-saving account is held and compiled in hours. The following time can be credited onto the time-saving account:

• additional days of leave granted as part of the setting up of a work organisation plan with reference periods exceeding one month;
• time worked in excess at the end of the reference period or resulting from a flexitime arrangement;
• overtime;
• time off granted in compensation for work performed on Sunday;
• time off granted in compensation when a statutory holiday falls on a Sunday;
• days of leave granted in excess to the statutory minimum to the extent that the corresponding days of leave have not been taken in the current year and have been granted in accordance with an employment contract or collective agreement;
• a maximum of five days per year of paid recreational leave that could not be taken during the calendar year for reasons of illness of the employee, maternity leave or parental leave with a view to be able to take them after the 31^st of March of the following year and to avoid them to lapse.

The hourly balance of the time-saving account is limited to 1800 hours.

1. Use

The use of the time-saving account must be granted by the employer upon written request of the employee, and fixed at least one month in advance.

The employer may refuse the request because of operating needs or the legitimate wishes of other employees.

1. Status of the employee during the leave

The leave taken by the use of the rights accumulated on the time-saving account shall be assimilated to actual working time for the determination of the employee’s annual leave and seniority.

During the period of use of the employee’s rights acquired on the time-saving account, the employee is considered as being on paid leave.

The employer is required to maintain the absent employee’s position or, if it is not possible, a similar position.

1. Employer’s obligations

The employer must:

• set up a system ensuring the actual and detailed maintenance of the time-saving account;
• ensure that individual consultation of the employee is guaranteed at all times;
• ensure that the employee can check on a monthly basis the correct provisioning of the time-saving account;
• fully fund his/her liabilities resulting from the crediting by employees to the time-saving account, increased by the social security contributions and adjusted to the cost of living as the case may be.

However, it is the responsibility of the staff delegation to control the implementation and the correct execution of the time-saving account.

1. The Employment Fund shall guarantee, up to a ceiling equal to twice the reference minimum social wage, the claims resulting from the liquidation of the time-saving account in the event of:

• bankruptcy of the employer;
• judicial opening of collective proceedings based on the insolvency of the employer;
• recording by a court of the permanent closure of the company or establishment of the employer;
• continuation of the business by the bankruptcy trustee.

In addition, claims resulting from the liquidation of the time-saving account shall be guaranteed and covered by the super-privilege which gives priority in terms of payment in case of bankruptcy.

1. Liquidation

The balance of the days of leave appearing on the employee’s time-saving account shall be settled by the employer with a payment of a compensatory allowance resulting from:

• termination with immediate effect of the employment contract as a result of death/incapacity of the employer, bankruptcy of the employer, eligibility of the employee to an old-age pension, disability of the employee, expiry of the employee’s rights to sickness benefits, external reclassification of the employee, when an employee no longer qualifies as being handicapped and when a handicapped employee is oriented to the labour market;
• termination of the employment contract at the initiative of one of the parties or by mutual agreement;
• death of the employee (the compensatory allowance will be paid to the beneficiaries).

The compensatory allowance must be equal to the monetary conversion of all acquired rights multiplied by the hourly rate in effect at the time of payment.