Changes to Partial Unemployment Scheme Unveiled for 1st Half of 2021

During its extraordinary meeting on Thursday, Luxembourg's Economic Committee, under the co-chairmanship of Deputy Prime Minister and Minister of Labour, Employment and the Social and Solidarity Economy, Dan Kersch, and Minister of the Economy, Franz Fayot, discussed the government proposal relating to the modalities of application of the partial unemployment scheme for the first half of 2021; the proposal garnered a broad consensus among the social partners.

The first major change concerns the basis on which partial unemployment benefits will be calculated. Until now, these have been assessed on the basis of full-time jobs; from 1 January until 30 January 2021, the allowances to be paid will be based on the number of hours not worked by the employees concerned.

The terms of application for the first six months of 2021 will be defined in two distinct three-month periods, assuming that the health situation improves by 1 April 2021. There are four cases depending on whether the applicant company is from an industry or sector considered vulnerable (e.g. hospitality, tourism and events) and whether or not the company wishes to proceed with redundancies:

1. Access conditions applicable from 1 January to 31 March 2021

- Industrial companies will continue to benefit from the cyclical partial unemployment scheme in order to be able to react to disruptions in international markets. By applying the partial unemployment scheme from a cyclical source, industrial companies undertake not to make redundancies for economic reasons;

- Companies in the hospitality, tourism and events sectors will be able to benefit from accelerated access to structural partial unemployment, without limiting the number of employees who are entitled to it. In case of proven need, these companies will be able to resort to redundancies within the maximum limit of 25% of their employees calculated on the workforce as of 30 June 2020 and until 31 March 2021;

- Companies affected by the health crisis, other than industrial companies and those in vulnerable sectors, may also have recourse to partial unemployment from a structural source via the accelerated route, provided that they do not make redundancies. In this case, however, the number of working hours lost may not exceed 15% of the total normal monthly working hours of the company. Normal working hours may not exceed 40 hours per week and per employee;

- The demands of companies in vulnerable sectors laying off more than 25% of their workforce, industrial companies and companies from other sectors affected by the crisis, which should nevertheless also proceed with layoffs or which should exceed the percentage fixed in point, can only do so on condition that these companies provide a recovery plan for small companies with fewer than fifteen people, respectively in the form of a job retention plan in accordance with the Labour Code for companies with more than fifteen employees.

2. Access conditions applicable from 1 April to 30 June 2021

Regarding the period after 31 March 2021, the following modalities have been retained in a context of gradual exit from partial unemployment, while specifying that in the event of a worsening of the health situation, these modalities may, at any time, be adapted accordingly:

- Industrial companies will continue to benefit from the cyclical partial unemployment scheme in order to be able to react to disruptions in international markets. By applying the short-time working regime from a cyclical source, industrial companies undertake not to make redundancies for economic reasons;

- Companies in the hospitalitya, tourism and events sectors will be able to benefit from accelerated access to structural partial unemployment up to a maximum limit of 50% of the total normal monthly working hours of the company, provided they do not not proceed to make dismissals for reasons not inherent to the person. Normal working hours may not exceed 40 hours per week and per employee;

- Companies affected by the health crisis, other than industrial companies and those in vulnerable sectors, may also have recourse to the structural partial unemployment scheme through the accelerated route, provided that they do not make redundancies. In this case, however, the number of working hours lost may not exceed 10% of the total normal monthly working hours of the company. Normal working hours may not exceed 40 hours per week and per employee;

- Companies in vulnerable sectors, industrial companies and companies from other sectors affected by the crisis, which should nevertheless proceed with redundancies or which should exceed the percentage fixed in point, can only do so provided that these companies provide a recovery plan for small companies with fewer than fifteen people, respectively in the form of a job retention plan in accordance with the Labour Code for companies with more than fifteen employees.