The current ever evolving situation in connection with COVID-19 has resulted in many companies having to adapt their way of working to limit possible contagion. Various Luxembourg institutions are taking exceptional measures to address the difficult circumstances encountered by both the companies and their employees. Here is an overview of the recent decisions that we hope can be of help to you and your people.
In Luxembourg, the Council of Government introduced on 12 March 2020 a draft law intended to support SMEs affected by an unforeseeable and exceptional event of national or international dimension (such as a terrorist attack, volcano eruption or contagion such as the coronavirus for instance).
With this new law, SMEs are eligible to certain financial support, to the extent that the three criteria below are met:
1) the event has been acknowledged as having an harmful impact on the economic activity of certain companies in a given period;
2) the company is facing temporary financial difficulties;
3) and there is a causal link between those difficulties and the said event.
The eligible companies can benefit from an advance limited to the actual loss of income in the form of a recoverable advance from the State.
This aid scheme supplements the existing aid instruments which already apply in similar cases, such as investment in hygiene, guarantees towards credit institutions, partial unemployment.
Partial unemployment or short time work
This latest measure targets maintaining employment, and therefore avoiding dismissals in companies suffering from the negative economic impact of an event such as coronavirus. Partial unemployment in situations of force majeure provides that 80% of costs can be refunded from the Employment Fund relating to the unemployment hours.There are limits in terms of salary level (250% of minimum social salary for unskilled employees) and duration (1022 hours maximum).
It applies to all sectors of the economy and the authorities have waived the statutory deadline for making an initial application to the Comité de Conjoncture (Minister of Economy) via an ad-hoc form. Subsequently, monthly applications should be made if necessary to the Economic Committee's Secretariat by the 12th of the month preceding the month concerned.
Cross-border commuting to work
Restrictions apply at different borders (currently the case for the German and French borders) which may be extended to other borders in the coming days. The Luxembourg government has issued a specific work certificate (available in German and French on gouvernement.lu). Employers may complete this certificate to prove the employment relationship with their non-resident employee. Upon presentation of the form, commuters are exempt from border crossing restrictions.
It has also been announced that all travel between non-European countries and EU countries of the Schengen area will be suspended for 30 days from 17 March.
Home-Based Working (HBW)
Working from home can be imposed as a preventive measure for employees whose nature of work allows it. It is in compliance with the legal obligation (art 312-1 of Labour Code) for the employer to ensure the safety and health of employees in all aspects related to work.
When it comes to HBW, it is recommended to have a HBW policy or amendment to the employment contract in place. In the specific context of the coronavirus, HBW may be an occasional practice to address an unusual situation. In that context, completing your manual of procedures with relevant HBW rules while consulting with your Staff Delegation (or co-deciding for enterprises of more than 150 employees) can be a pragmatic approach.
In this context, an employer cannot force employees to take holidays, or unpaid leave, or use their time savings account, out of fear that the virus may spread across the organisation. When an employer asks his employees to stay home from work, then it is considered as a time-off without loss of pay. Employers have to maintain their salary.
Tax consequences of Home-Based Working (HBW) for cross-border workers
Non-resident taxpayers working from home might quickly exceed the threshold under which employees could remain fully taxable in Luxembourg. The double tax treaties between the border countries and Luxembourg define how to avoid double taxation.
French tax residents working more than 29 days outside of Luxembourg per year, German residents working more than 19 days per year and Belgian residents working more than 24 days per year, should be partially taxable in their country of residence. In ‘normal circumstances’ once the annual threshold in the country of residence is exceeded, this part of salary (namely the total number of days worked outside of Luxembourg) should be exempted in Luxembourg.
Discussions are currently ongoing between the Luxembourg government and the governments of border countries with a view to drawing their attention to the aforementioned conventions in the present crisis context.
For Belgium : it has been agreed that days spent in HBW due to Coronavirus will not be counted for the annual threshold of 24 days.
For France: some communications have been shared by politicians from the Grande Region confirming that France will also be flexible regarding HBW during this period. We are however still waiting for an official communication.
For Germany : it is assumed that no decisions have yet been taken.
Generally, employers should also ensure that employees do not exceed the social security threshold of 25% of activity in their country of residence as this would impact which country’s social security would apply. Due to the current exceptional circumstances, some employees may exceed the 25% threshold for this year. The short term increase of the workdays in the country of residence should in principle not be considered and correspondingly should not impact the country to which the employee is affiliated for social security purposes.
The French social security authorities confirmed this analysis and are no longer requesting an A1 certificate to cover this period.
Germany and Belgium : should be flexible but confirmations are still required.
However, if employees are quarantined because they are sick or came back from an infected area or have been in direct contact with a person infected with the coronavirus, they have to produce a medical certificate (French, Belgian and German medical certificates are all accepted) and the CNS will intervene as in cases of sick leave. The employer will advance the salary if the threshold of 77 sick days is not met. Similar to any sick leave, the employer will obtain a refund of 80% of the salary costs advanced directly via relief on the next social contribution invoice from CCSS (Centre Commun de la Sécurité Sociale).
Extraordinary leave for family reasons
Only people who have no other suitable option for childcare should use this exceptional measure. It is eligible to one parent at a time (whether cohabiting or divorced) for children under 13 years old on condition that the child has been affected by the closure of a child care or teaching structure.
The employee may request to benefit from this special leave by advising as quickly as possible his employer, completing and remitting a dedicated form to his employer and the Caisse Nationale de Santé (CNS). There is no need to indicate on the form a date for starting or ending the leave and the leave can be divided as necessary. However, the concerned employees must keep their employer informed about their effective working schedule during the whole special leave.
Thereafter, it is the employer that informs the social security institutions of the specific days.
Additional measures are currently being considered for disabled children and not have not yet been published.
What about pregnant women ?
Teleworking is recommended as a precautionary measure. If this is not possible, the employer can request a dispensation for pregnant women using a dedicated form (in French only). It will be valid on a temporary basis for a period of one month.
Hiring exams and health check-ups with STM and ASTF
They are cancelled and will be rescheduled at a later date.
Communicated by PwC Luxembourg
Publié le 20 mars 2020