Respectively management adviser and legal adviser at the Chamber of Employees (CSL), Johana Soares Lapeira and Nathalie Moschetti detail the rules to be observed, for employers and employees alike, when it comes to changes in working conditions.
The CSL will hold a conference on the subject .
Paperjam: What are the general principles of Luxembourg law to be aware of when it comes to changes in working conditions?
Nathalie Moschetti and Johana Soares Lapeira: Labour law is based on a fundamental principle: the employment contract cannot be modified unilaterally by the employer if the change is substantial and unfavourable to the employee.
The main principles to bear in mind are:
1. The distinction between substantial and ancillary changes: only substantial changes (i.e. relating to essential elements of the contract) require either the employee’s agreement or compliance with a specific procedure by the employer.
2. Flexibility clauses: before of such clauses when signing the employment contract: by agreeing to them, the employee gives his employer full power over the element concerned.
3. Express acceptance by the employee: if the employee signs an amendment to their employment contract accepting the new conditions, this means that they formally approve the change. Their agreement is then considered express and can no longer be challenged, unless there is a defect in consent (error, fraud or violence).
4. Tacit acceptance by the employee: if an employee continues to work under the new conditions for a prolonged period, they are deemed to have accepted these changes.
5. Staff delegates: staff delegates may not be the subject of a change to an essential clause of their contract of employment.
What is the difference between a “substantial” and “incidental” change to the contract of employment?
A change is said to be substantial when it relates to an essential element of the employment contract, i.e. an element that was decisive when the contract was concluded.
Here are a few examples:
—attempts to reduce pay: any reduction in basic salary or perquisites
—change of qualification: demotion or assignment to a lower position
—change of place of work: if the contract does not contain a flexibility clause or mobility clause
—adding a non-competition clause: restricting the employee’s freedom after the end of the contract
—change in working hours: if it causes a significant disruption for the employee
Any substantial change requires either the employee’s agreement or compliance with the legal procedure for revising the employment contract (art. L. 121-7 of the Labour Code).
On the other hand, a change is said to be incidental when it does not affect a determining element of the contract or when it was anticipated when the contract was signed through the insertion of a flexibility clause (for example: “The place of work may vary according to the company’s needs”).
Here are a few examples of incidental changes:
—a change of office within the same company, if the general place of work remains the same
—an internal reorganisation that does not change the employee’s qualification or remuneration
—a change in working hours if the contract explicitly provides for flexibility in their arrangement
The employer may impose an incidental change without any particular procedure, unless the employee can demonstrate that it has a significant impact on his working conditions.
What elements of the employment contract cannot be changed without the employee’s consent?
The employer may not unilaterally modify the following elements of the employment contract without the employee’s consent.
pay: any reduction, whether in basic salary or fringe benefits, is subject to the employee's consent
professional qualification: a professional downgrading is a substantial change requiring the employee’s consent
place of work: a change of site may be an essential change if the contract does not provide for a mobility clause
working hours: any significant change to working hours must be accepted by the employee, unless a flexibility clause is included in the contract
addition of a restrictive clause: for example, the introduction of a non-competition or confidentiality clause that would limit the employee’s rights after the end of the contract
If a substantial change is imposed without complying with the legal procedure, the employee may refuse it and apply to the competent bodies to have it declared null and void.
What are the employer’s legal obligations before imposing a change on employees?
The employer must first distinguish whether or not the change is to the employee’s disadvantage, and whether or not the change relates to an essential element of the employment contract.
Any modification of an essential clause of the employment contract to the detriment of the employee constitutes a substantial modification. In such cases, the employer is required to comply with the legal procedure for revising the employment contract. This procedure, which is similar to a redundancy procedure, requires the employee to be formally notified by registered letter or by hand delivery against acknowledgement of receipt. In companies with more than 150 employees, a prior interview is also required.
The letter convening the prior interview states that the employer is planning to change an essential element of the employment contract. The purpose of the interview is to set out the reasons for the planned change and to hear the employee’s explanations. Non-compliance with the prior interview gives rise to the payment of damages equivalent to one month’s salary. After the meeting, the employer must inform the employee of the change by registered letter or by hand delivery against receipt. This letter shall also indicate the period of notice after which the change will take effect.
The change with immediate effect may only be used in the event of serious misconduct on the part of the employee or other fact implying the need for this change without delay. Grave misconduct is any act or fault that immediately and definitively makes it impossible to maintain employment relations.
A change that is not motivated by a serious reason must be made subject to the application of a notice period, the length of which depends on the seniority of the employee, giving them time to reflect and ask for the reasons within a period of one month, the employer being obliged to respond within the same period.
If the company has fewer than 150 employees, the employer does not have to summon the employee, but informs them of the change by registered letter or by hand delivery against receipt. This letter must also specify the period of notice after which the change will take effect.
In the event of an immediate change, the letter must specify the serious reasons justifying such a change.
What about salary changes?
"Any reduction in pay, whether it concerns basic pay or bonuses and benefits, requires either the employee's express agreement or compliance with the procedure for revising the employment contract.
A change imposed without agreement may be considered to be a fault on the part of the employer and may be challenged before the competent courts.
How does the legislation protect employees against disguised pay cuts?
"There is no specific legal provision on this subject. However, the procedure for revising the employment contract must be applied to any change in the method of calculating salary that would result in an unjustified reduction in total remuneration.
If an employer attempts to reduce pay indirectly by altering bonuses or changing the method of remuneration without maintaining the level of pay, the employee can challenge this change, as we will explain below.
What are the rules on changing working hours or the place of work, for example in the case of teleworking?
"A significant change in working hours or place of work is considered to be a substantial change requiring the employee's agreement, unless a flexibility or mobility clause is included in the contract.
Working hours means from what time to what time the employee must work during the day; it therefore refers to the distribution of daily working hours over the day; in a broader sense, working hours may also include the distribution of weekly working hours over the working days of the week.
With regard to weekly working hours, however, refusal by a full-time employee to work part-time is neither a serious reason nor a legitimate reason for dismissal.
The same applies to a part-time employee who refuses to accept or return to full-time work.
With regard to teleworking, the employee and the employer freely choose the teleworking arrangement, taking into account, where applicable, the provisions in force at the level of the sector or company concerned, as soon as the employee starts work or at a later date.
An employee's refusal of a teleworking offer made by his employer does not in itself constitute grounds for terminating his employment contract. Nor can the refusal justify recourse to the procedure for amending the employment contract to impose this form of work.
If the employee and the employer enter into an agreement providing for telework, they shall define therein the place of telework or the arrangements for determining that place.
How can an employee oppose a change to their working conditions if it’s deemed to be abusive?
If the employer does not comply with the forms and time limits of the legal procedure for amending the employment contract, the amendment is null and void.
The employee may apply to the courts for the amendment to be annulled. Consequence: the employment contract is maintained under the old conditions, no damages. However, it is important for the employee to come forward and protest. If they can, they should even refuse to work under the new conditions. Failing that, working under the new conditions may be considered tacit acceptance.
If the employer has notified the change by registered letter, the employee must request the reasons for the change within one month of receipt of the letter. If they dispute these reasons and refuses the change, they have several options.
First option. The employee asks their employer to maintain their previous working conditions by registered letter.
The employer will either accept or refuse. In the latter case, the employee can apply to the employment tribunal to request that their former working conditions be maintained, that the employment contract be maintained. The court will analyse the reasons for the change in order to reach a decision. If the employee leaves their job, under article L.121-7 of the Labour Code, termination of the employment contract as a result of the employee’s refusal to accept the change constitutes dismissal. The employee may therefore apply to the Labour Court to have the dismissal deemed unfair. The court will analyse the reasons for the change in order to reach a decision. If the grounds are valid, the dismissal is justified. The employee is entitled to nothing and no longer has a job. If the grounds are unfair, the dismissal is unfair. The employee is entitled to damages, but no longer has a job. The employee is entitled to unemployment.
Second possibility. The employee may also simply come to work under the old conditions. The employer can then take the initiative to terminate the employment contract: a dismissal for insubordination.
The employee can contest this dismissal, which originates from the modification of his employment contract, itself abusive. The court will analyse the reasons for the change in order to reach a decision. If the reasons are valid, the dismissal is justified. The employee is entitled to nothing (apart from possible unemployment benefit) and no longer has a job. If the grounds are unfair, the dismissal is unfair. The employee is entitled to damages, but no longer has a job.
How are contract changes regulated in the event of a merger, restructuring or company takeover?
The Labour Code provides for employees’ rights to be maintained in the event of a company transfer between a transferor and a transferee. The rights and obligations resulting for the transferor from an employment contract or employment relationship existing on the date of the transfer are, as a result of this transfer, transferred to the transferee.
When a company is merged, restructured or acquired, the employment contract is therefore transferred to the new employer under the conditions applicable at the time of the transfer. The transfer is neither a reason for dismissal nor a reason justifying the modification of the employment contract.
Are changes to working conditions regulated differently for fixed-term contracts and open-ended contracts?
No, the same procedure must be followed by the employer.
What advice should be given to employees who wish to negotiate a change to their working conditions, rather than having to endure it?
It’s important to find out about your rights as soon as you start work, in particular by checking whether your employment contract contains any contractual clauses such as a flexibility or mobility clause.
It is also advisable to check whether there is a collective agreement that may provide for a salary scale so that you can negotiate your salary more effectively from the outset, as it is often difficult to readjust it afterwards.
It is essential not to sign anything in haste and, if in doubt, to consult the staff representatives or seek advice from a trade union. To protect yourself, it is advisable to keep all written exchanges and to ask that any promises made by the employer (pay rise, bonus, change to part-time working, etc.) be formalised in writing to avoid any subsequent disputes.
This article in French.