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In Luxembourg, the Council of Government introduced on 12 March 2020 a draft law intended to support enterprises 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 but also industries and self-employed people 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. The maximum amount of aid, which is a repayable advance is of 500,000 euros per company and includes restrictions towards some economic sectors. The bill of law is yet to be voted by the House of Representatives.
This aid scheme supplements the existing aid instruments administered by the Minister of Economy which already apply in similar cases, such as investment in hygiene, guarantees towards credit institutions, partial unemployment.
The CCSS (Centre Commun de la Sécurité Sociale) has initiated a series of measures to support companies and self-employed professionals facing a financially precarious situation.
The following measures applicable as from April 1st 2020 aim to support employers to better organize their cash flow in the coming weeks:
Suspension of the calculation of default interests for late payments;
Suspension of the initiation of proceedings for the forced collection of contributions;
Suspension of the enforcement of constraints by bailiff;
Suspension of fines to be pronounced against employers who are late in making declarations to the CCSS.
It goes without saying that all social security contributions remain due, the employer can nevertheless benefit from some flexibility when it comes to the management of payment of their social security contributions, without having to fear administrative sanctions.
These measures will continue until the CCSS finds that they are no longer necessary.
This latest measure targets maintaining employment, and therefore avoiding dismissals in companies suffering from the negative economic impact of an event such as coronavirus.
Repayment for 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 annually per employee). This applies to all economic sectors as long as the causes invoked are directly linked to the Coronavirus.
Two partial unemployment schemes are made available to companies :
1- for companies which are directly impacted there is an immediate eligibility for partial unemployment and an accelerated procedure. These are companies that have had to or still have to completely or partially cease their activities following a government decision (for example the ministerial decree of March 16, 2020). This includes cultural, social, festive, sporting and recreational activities as well as establishments belonging to the HORECA sector with the exception of the hotels which remain open. It is a similar situation for the building sector. Other governmental decisions may follow.
The application for reimbursement of the inactive work hours must be submitted online to ADEM. The procedure will be available in the coming days on ADEM's website. The concerned businesses will apply for reimbursement, which will be retroactive to March 16, 2020.The online application is not yet operational and we await further communication.
2- for the others: there is a monthly request protocol for a partial unemployment scheme in the event of force majeure linked to the coronavirus.
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. The company must renew its request on a monthly basis and inform of any changes. Subsequently, monthly applications should be made if necessary to the Economic Committee's Secretariat by the 12th of the month preceding the month concerned.
Restrictions apply at different borders and may be extended to other borders in the coming days. It is currently the case for the German, French and recently Belgian borders.
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 March 17.
There are however exceptions for countries which are not members of the EU but which are in the Schengen area, this is the case of Switzerland and Norway. There is also Great Britain which is not in Schengen, no longer in the Union, but still enjoys a preserved status until the end of the year.
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.
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 and France: it has been decided that as from Saturday, March 14, 2020, the days spent at home will not be taken into account in the calculation of the annual 24 or 29 days threshold for HBW. This measure is applicable until further notice.
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.
The Belgian social security authorities communicated that, from a Belgian perspective and for situations covered by the European Regulation 883/2004, they will exceptionally disregard any additional teleworking that is the result of the Belgian COVID-19 counter-measures during the period from 13 March 2020 until the end of these measures (currently set at 5 April 2020). Any additional teleworking as a result of the coronavirus pandemic during this period will therefore not impact the social security legislation that is applicable to the individual in question.
No official feedback from Germany yet but should follow soon.
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).
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. This extraordinary leave has been extended till the reopening of school and child care structures which is scheduled on April 19 and thus applies also to the period of Eastern Holidays.
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.
Please note that, the extraordinary leave for family reasons:
can be taken by people who have no other suitable option for childcare;
cannot be combined with other measures allowing parents to stay at home. If one of the parents benefits from partial unemployment, the second parent cannot benefit from special leave for family reasons, especially if it is a critical job.
In order to ensure that employers are reimbursed of the salaries continued to their employees in extraordinary leave for family reasons, the CCSS will settle an advance on sickness cash benefits. This will enable employers to be reimbursed for a substantial part of the salaries due to the concerned parents earlier than May 2020 as is commonly the case.
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.
They are cancelled and will be rescheduled at a later date.
We will keep you informed when the bills are voted for SMEs aid and special leave for family reasons.
Would you be interested about the new ways of working, please connect to our next online debate with our HR and tax specialists on 31st March at 10 am. Please do not hesitate to contact us if you wish to participate online and ask questions to our experts.
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