HOMEWORKING IN LUXEMBOURG
Homeworking is a work organization that enables the employee to perform his work from home in a more flexible way, while guaranteeing his employer the proper performance of the employment contract. This way of working is the exception.
More specifically, homeworking is characterized by the performance of work :
- Through means using information and communication technologies (ICT)
- At the employee's home or in a work space different from the employer's (coworking space for example);
From the legislator's point of view, one of the objectives of this formula is to reduce road traffic for cross-border commuters going to and from Luxembourg and to reduce the stress and pollution linked to transport and traffic jams. The employee can find a better balance between professional and personal life. The employee would then be more efficient and available.
The legal framework
Homewoks is governed by the provisions of the Labour Code and more recently by the agreement of the social partners (OGBL, LCGB and UEL) of 20 October 2020 on the legal regime of telework, which was declared to be of general obligation by the Grand-Ducal regulation of 22 January 2021. This agreement is binding for all employers and employees.
Whether it is stated in the initial employment contract or in an amendment, the employee and the employer decide together, by mutual agreement, on the telework formula.
Since it is a specific work system, different mentions related to telework must appear in the employment contract or the rider, in addition to the usual mentions:
- The place where the employee is teleworking;
- An exhaustive description of the employee's functions and tasks, as well as the different objectives he/she has to achieve;
- The classification of the teleworking employee under the collective agreement, if any;
- The hours or days of the week dedicated to telework and when the teleworker must be reachable;
- The work tool made available to the employee, which must be maintained by the employer;
- Information about the insurance coverage provided by the employer in case of disappearance or damage of the equipment due to water damage, fire or theft.
- The amount that the employer will pay for the costs directly caused by the telework (in the form of a monthly lump sum to be agreed upon in writing). This amount must be coherent and proportional to the expenses incurred by the employee (we generally observe an amount of about 25€ per month).
The employee is not obliged to accept a telework proposal and its refusal does not imply a dismissal.
If the telecommuting employee then wishes to return to a traditional work arrangement, both parties to the contract must agree and an amendment must be made to the contract in order to set out the new terms (place of work, working hours, working conditions).
The teleworking employee is subject to the same obligations and benefits from the same rights as if he/she was working in the company's premises.
In addition to the usual rights and obligations, the teleworker must :
- Manage the organization of his/her work;
- Maintain contact with colleagues;
- Respect the company's rules regarding data protection;
- Respect health and safety measures;
- Comply with the rules established by the employer;
- Inform the employer if the equipment provided is not working properly, to take care of the equipment provided;
- Remain informed of the various news that affect the company (current life, employer's situation).
- Establishing a discipline and a framework for work
Telewoking can be beneficial for employees:
- Better balance between professional and personal life
- Saves time and transportation costs
- When the employee is able to impose himself a strict work discipline, better concentration and productivity (no disruptions related to open space, for example)
But also disadvantages :
- Loss of motivation, feeling of lonelyness
- Difficulty to organize and work assiduously from home
Like the employee, the employer must respect certain rules, namely
- Provide, if necessary, a compliant equipment necessary for telework and to cover the repair costs;
- Finance the expenses related to telework (e.g. personal telephone);
- Respect the employee's privacy;
- Provide compensation to the employees in case of loss of benefits
- Ensure monitoring of telecommuting employees
For companies, telecommuting can allow to :
- Save on variable office costs and running costs (electricity, heating, cleaning)
- Reduce employee absenteeism (an employee can telework even if he/she feels sick or has a sick child). It has been found that companies that make extensive use of telework have lower absenteeism rates.
- To make work more flexible and to increase the motivation and involvement of employees (an employee can work more during a busy day or week)
- To recruit new employees who are sensitive to telework in their professional life
- Strengthen employee loyalty (an employee who is satisfied with his or her work organization will be less likely to look for another job)
The impact on the working relationship
Telework has an impact on the working relationship. While telework means more freedom for the teleworker, it requires the employee to be able to work autonomously and to take responsibility. It does not mean a loss of control for the employer who can :
- Prepare the organization of the telework (charter, internal rules)
- Set up feedbacks
However, in practice, it must be recognized that the employer's supervision of teleworking employees is generally more difficult (and more costly) to organize.
The tax framework
Bilateral tax treaties between Luxembourg and various third countries aim to eliminate double taxation. According to the international conventions against double taxation, employees are in principle taxed in the state where the profession is exercised. However, adjustments to these arrangements have been put in place to encourage teleworking. Thus, agreements have been signed which set a threshold not to be exceeded:
- Belgium: maximum 34 days per year outside Luxembourg
- Germany: maximum 19 days per year outside Luxembourg
- France: maximum 34 days per year outside Luxembourg
If the threshold is exceeded for these countries, then all the days worked outside Luxembourg are taxable in the country of residence.
Example: a Belgian cross-border worker employed by a Luxembourg company and who occasionally works outside Luxembourg is still taxed in Luxembourg if the activity carried out in Belgium does not exceed 34 days. If, on the other hand, he works 35 days in Belgium, then he becomes taxable in Belgium for these 35 days and not for one day.
The telework system can nevertheless have some limits:
- Risk of breaking social links ;
- Insecurity regarding computer data leaving the company's premises ;
- Problems of taxation ;
- Difficulty for the employer to assess the employees performance ;
- Difficulty in transmitting know-how from one employee to another ;
- Decrease in productivity for some employees ;
- Legal and fiscal constraints for border workers who may have difficulties in demonstrating that they have remained below the social and fiscal thresholds mentioned in the previous paragraphs.
The employer and the teleworker must keep accurate track of annual telework days through a signed log.
In particular, the employer and the teleworkers must pay special attention to non-residents so that they do not exceed the threshold of the number of days allowed according to their country of residence.
Otherwise, there would be impacts on the company:
- Company taxation: exceeding the authorized days may constitute a permanent establishment in the teleworker's country of residence. The company would then have to fulfil the tax obligations of the country in question.
- Social charges: the employee exceeding the threshold would be affiliated in his country of residence. This affiliation would lead to a higher cost of employer charges.
Employers who would risk making false declarations would incur heavy sanctions (fines, prison sentences).
On the other hand, the employee who exceeds the number of days authorized by the social security regulation will be affiliated in his country of residence with an adaptation of the social contributions for the employee part and possibly the loss of family allowances. This will also have an impact on the employee's personal tax situation.
Luxembourg and homeworks
The context of the fight against the spread of Covid has propelled Luxembourg towards a generalization of telework for a good number of companies during the March 2020 containment. 53% of the jobs were teleworkable. The context of Covid has allowed agreements to be signed so that teleworking by a frontier employee has no tax implications and so that these teleworkers remain affiliated to the Luxembourg social security system. Exchanges are currently underway at European level to find a common solution to telework and on the possibility of raising the 25% threshold currently provided for to 49% in the European regulation. This would make it possible to have recourse to telework up to 2 days per week on average without changing the social security affiliation.