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COUNTRY OVERVIEW

There is employee board-level representation in large companies and those with substantial state involvement in Luxembourg. The issue of the European company is of interest, as Luxembourg could potentially be the base for future European companies. The proposed legislation implementing the directive produced detailed comments from both unions and employers but there was no widespread public debate.

For further information on the SE legislation, such as the choice of SNB members, click on the more button.

Companies which have more than 1,000 employees, or which are more than 25% state owned, or which receive state aid for their main business must have employee representatives at board level. They generally have a third of the seats.

The introduction of the concept of the European company also provoked interest in Luxembourg, in view of its existing position as the headquarters of a number of major companies already operating across Europe. As the government stated in its background comments on the draft text presented in January 2005, “”the European Company could be an interesting instrument for attracting companies into the Luxembourg economy”.

Both unions and employers were directly consulted in June 2004 on the proposed legislation on the transposition of the directive on employee involvement in European companies. Both responded the following month and their comments were taken account of in the draft text presented in January 2005. In addition the formal consultation after the draft text had been presented involved the elected chambers representing employees and employers and both sides made comments on the text.

Despite this extensive involvement in the draft text by both unions and employers and more general representative bodies, there was no public debate. One reason for this was that, as the government’s own comments in January 2005 made clear, the directive did not “introduce any fundamentally new concepts into Luxembourg labour law, either in terms of the general approach or the techniques used”.

Form of transposition

Directive was transposed by law in August 2006 almost two years after the October 2004 deadline

The directive on employee involvement in European companies was transposed through the following legislation passed on 25 August 2006 and published in the Official Journal on 31 August 2006: Law of 25 August 2006 1. Supplementing the European Company (SE) statute with regard to the involvement of employees and 2. Amending the amended law of 6 May 1974, which instituted mixed committees [works councils] in private sector companies and organised the representation of employees in limited companies (Loi du 25 août 2006 1. complétant le statut de la société européenne (SE) pour ce qui concerne l’implication des travailleurs et 2. modifiant la loi modifiée du 6 mai 1974 instituant des comités mixtes dans les enterprises du secteur privé et organisant la représentation des salariés dans les sociétés anonymes).

Separate legislation adapting company legislation in Luxembourg to the Regulation on European companies was passed on the same day – 25 August 2006.

Special negotiating body (SNB)

Selection of national members

Luxembourg SNB members are appointed by the employee delegations – the elected representatives of the employees. If there is no employee delegation SNB members are elected by the employees directly.

The legislation sets out in detail how members of the SNB from Luxembourg are appointed. They are elected by the employee delegations, the employees’ elected representatives, who should exist in all companies where there are at least 15 employees. The arrangements vary, according to whether or nor there is a single employee delegation, or separate delegations for manual and non-manual workers. There should be separate delegations for these two groups in companies employing more than 100, where at least 15% of the workers are either manual or non-manual, although the delegates can decide to form a single delegation if they choose.

Where there is a single employee delegation, SNB members are elected by it on the basis of a simple majority. Where there are separate manual and non-manual delegations, the first SNB member is elected by the group representing the majority of the workforce (the first two if this group makes up more than two-thirds of the employees), with the deputy/deputies being chosen by the other group. The remaining SNB members from Luxembourg are elected by members of both delegations on the basis of a simple majority.

Where there is no employee delegation, SNB members from Luxembourg are elected directly by all employees (Article 4).

External trade union representatives

External union representatives can be SNB members in Luxembourg.

The Luxembourg legislation specifically states that SNB members may be chosen either from “among employees, or from among representatives of trade union organisations”, although these need to be unions which are either ‘nationally representative’ or ‘representative at industry level’ (Article 4). Nationally representative unions must be active in a majority of the country’s economic sectors and have at least 20% support in the elections for chambers of labour – the bodies representing employees. To be representative at industry level a union must have the support of 50% of the votes in the chamber of labour covering that industry.

Financing of experts

Funding limited to a single expert.

The legislation limits the costs to a single expert. It also states that they are limited to the direct costs in participating in the meeting (Article 5).

Standard rules under the fallback procedure

Allocation of national seats on SE representative body

Luxembourg members of the SE representative body are chosen in the same way as Luxembourg members of the SNB – by the employee delegations – the employees’ representatives. If there is no employee delegation there are direct elections.

Luxembourg members of the SE representative body, known in the Luxembourg legislation as the representative body (l’organ de représentation) are chosen in the same way as Luxembourg members of the SNB: by the employee delegation/s or by direct election if there is no employee delegation. The arrangements for voting, which vary according to whether there is a single employee delegation for all employees, or separate delegations for manual and non-manual workers, are the same as those for Luxembourg members of the SNB (see section on SNB).

There is, however, one difference: external trade union officials may not be members of the representative body. They must be chosen from “among the employees” (Article 10).

Budget of representative body

The company should bear the costs of the representative body, including one expert for each nine members of the representative body.

The company is obliged to bear the costs of the representative body, so that it can “function in an appropriate manner”. The costs to be borne by the company also include the expenses of “one expert for each tranche of nine members of the representative body”, although these costs are limited to the direct costs in participating in the meeting (Article 11).

National procedure for the allocation of board seats

Employee representatives at board level from Luxembourg are chosen by the employee delegations –the elected employee representatives.

The legislation includes rules for the choice of employee board-level representatives from Luxembourg. They are to be elected by the employee delegation or delegations – the employee representatives who should be elected in all companies with 15 or more employees. The employee board members should be elected by the employee delegation/s in a secret ballot, and the number of manual and non-manual board members should be in proportion to the number of manual and non-manual employees. There is no mechanism for choosing employee board-level representatives where there is no employee delegation (Article 13).

Misuse of procedures and structural change

Misuse of procedures

There should be new negotiations if in the year following the establishment of the SE the representative body can show that the purpose of the SE was to deprive employees of their rights.

If, in the year following the registration of an SE, the representative body can show that the establishment of the SE was an abuse of procedures and the intention had been to deprive employees of their right to be involved, new negotiations take place. This new negotiation can be called for either by the representative body, or by representatives of employees who have been brought into the SE (Article 18).

Structural change

The Luxembourg legislation does not provide for renegotiation after structural change, other than in the year after the establishment of the European company, where it can be shown that the SE was established to deprive employees of their rights.

There is no automatic right to renegotiate the agreement if there are changes in the structure of the SE, except in the year after the establishment of the company, where it is clear that the procedures were misused. This means where it is clear that the purpose of establishing the SE was to deprive employees of their rights to be involved in company decision making.

Position of trade unions and employers

Unions and employers were consulted in detail on the introduction of the legislation. For the unions the main concern was that the plans were too restrictive in terms of the numbers of employee representatives and the resources available to the employee side. The employers feared that they could be used to extend employee involvement at board level.

Unions and employers were involved in the discussions on the transposition of the directive on employee involvement in European companies into Luxembourg law. This occurred both directly – the main bodies were sent a copy of the draft text – and indirectly – the chambers representing employees and employees were consulted on the proposed legislation.

The view of the unions, as shown in the comments of the chamber of private sector non-manual employees (CEP-L), were: that the before and after principle of the directive, in terms of employee involvement at board level, did not go far enough, as companies could continue to avoid employee involvement; the number of employee in the representative body needed to be increased so that all companies could be represented; limiting the costs of experts to a singe expert was too restrictive; and the rights of members of the representative body to be have access to training were inadequate.

The view of the employers, as shown by the joint opinion from the Chamber of Commerce and the Chamber of Trades, were: that the mechanism for choosing employee representatives should be kept as simple as possible; and that there was a danger that the existing form of employee involvement in Luxembourg – “one of the most favourable to workers in Europe, and, as such in its current form a substantial disadvantage for companies registered in the Grand Duchy” could be extended through the legislation.

L. Fulton (2008) Anchoring the European Company in National Law - Country Overviews (online publication, prepared for worker-participation.eu)

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