In light of the Covid-19 outbreak, the right to short-time work has been extended and the process facilitated.

Main conditions

Short-time work applies in principle to all sectors of the economy if the causes invoked are directly related to the Covid-19 outbreak. More specifically, it may apply to employees who can no longer be employed, either at all or full-time, when the business is no longer able to ensure the normal functioning of its activity

  • because its supplier of raw materials is no longer able to deliver or supply the full volume required as a result of the Covid-19 outbreak, or if there is a substantial drop in orders from customers or users as a result of the Covid-19 outbreak; or
  • because of staff absences as a result of external decisions in respect of the Covid-19 outbreak, or if one or more of the departments of the business are at a standstill.

As a counterpart to the benefit of short-time work measures, employers commit not to dismiss employees for economic reasons until further notice.

In addition, prior information and consultation of the staff delegation (if any) is required.

Employees concerned

All employees holding an employment contract are eligible for the short-time scheme (permanent, fixed-term, temporary, apprenticeship, etc.). However, employees on sick leave covered by a medical certificate are excluded.

Payments and reimbursements

Under the short-time work scheme, the employer pays each employee:

  • the salary due to the employee for every hour worked, including
  • a compensatory allowance equal to at least 80% of the normal gross salary of the employee for inactive hours.

Employers also have to continue to pay the following to the competent authorities:

  • social contributions and withholding tax on salaries paid for hours worked;
  • social contributions and withholding tax on the compensatory allowance paid for inactive hours, with the exception of contributions for (i) accident insurance and (ii) family benefits.

The State reimburses the employer with the compensatory allowance paid to each employee for inactive hours up to a maximum rate of 250% of the social minimum monthly wage for non-qualified workers (i.e. EUR 5,354.97, index 834,76). The allowance may not be lower than the rate of the social minimum wage for non-qualified workers (i.e. EUR 2,141.99, index 834.76).

Advance reimbursements to employers are being implemented.


To benefit from the short-time work scheme the employer must submit an online application (via the business eSpace in and renew it on a monthly basis.

If the application is approved the employer will receive advance payments based on the number of employees concerned by short-time measures. A balance will be made on a monthly basis according to a detailed statement to be issued by the employer after the end of each month with the exact inactive hours and the salary and compensatory allowances effectively paid to each concerned employee. Such monthly statements shall be countersigned by the concerned employees and the staff delegation. The legal timeline to submit such statement has been extended to 3 months. The employer shall reimburse the State of any greater amount received than the allowance actually due to the employee.

Please note that the social partners (Luxemburg Ministry of Labour, Luxembourg Ministry of Economic Affairs, LCBG, OGBL and UEL) have agreed on 9th June 2020 that the short-time working scheme "COVID-19" will be changed into a scheme of short-time working due to structural economic problems as from the end of the state of crisis, i.e. 24 June 2020. This agreement also provides for simplified procedures for those economic sectors that are the most affected by the crisis.

In order to continue to support companies and their employees impacted by the COVID-19 crisis, special arrangements for short-time working remain in force until 31 December 2020.

This agreement, which applies to all businesses during this period of economic recovery, takes into account that certain economic sectors have been more severely impacted.

According to this agreement in force until the end of the year, the Luxembourg Government continues to pay the compensatory allowance of 80 % of salaries during periods of short-time working. Under certain specific conditions, the businesses concerned may terminate employment contracts.

Four possible options for concerned businesses:

The social partners have agreed on four possible options for businesses to benefit from the short-time working scheme during the economic recovery period:

1. Businesses active in the industrial sector will continue to benefit from the short-time working scheme due to economic problems in order to be able to react to disruptions on international markets . By applying for the short-time working scheme due to economic problems, industrial businesses undertake not to terminate employment contracts for economic reasons.

2. Businesses active in the HORECA, tourism or event sectors benefit from a accelerated access to the short-time working scheme due to structural economic problems. No limit has been set regarding the number of employees entitled to the short-time working scheme. In case of proven need, these companies are allowed to terminate employment contracts for economic reasons up to a maximum limit of 25 % of their staff (in relation to the total workforce as at 30 June 2020) until 31 December 2020.

The social partners agreed that, in the event of a return to better fortune, businesses that terminated employment contracts for economic reasons have to, in the event of subsequent recruitment of employees, give priority to re-employ the employees that had previously been dismissed.

3. Businesses active in other economic sectors are eligible to short-time working due to structural economic problems by using the accelerated procedure, provided that they do not terminate employment contracts.

In such case, the number of employees on short-time work may not exceed 25 % of the total workforce (as at 30 June 2020) for the months of July and August, 20 % for the months of September and October and 15 % for the months of November and December 2020.

In this context, "employee" refers to all employees that have been declared for short-time work during the current month, regardless of the number of hours of short-time working.

4. Businesses active in vulnerable sectors (HORECA, tourism, events) that terminate more than 25 % of their employment contracts (as of 30 June 2020) as well as all businesses, irrespective of the sector, that terminate employment contracts will have to submit a so-called "traditional" short-time working application due to structural economic problems.

It has been agreed that in these situations the short-time working scheme will only be granted if the businesses submit restructuring plans. These plans must take the form of a recovery plan (for small businesses with fewer than 15 employees) or the form of an employment protection plan (for businesses with more than 15 employees) in accordance with the provisions of the Luxembourg Labour Code.

Employees concerned

Please note that the short-time working scheme applies to employees (on permanent and fixed-term contracts) who are not covered by a certificate of incapacity for work and who can no longer be employed at all or can no longer be employed on a full-time basis due to the company being no longer able to ensure the normal operation of its business.

Temporary employment agencies are also eligible with regard to their employees whose employment contracts continue but who are no longer able to carry out their activity.

Please note that trainees are not eligible for the short-time working scheme.


Before submitting an application via the platform "", the employer has to confirm by declaration provided for this purpose on the website, that the employees, the staff delegation and, where applicable, the trade union organizations have been informed of the application for short-time working.

The applications for the short-time working scheme related to the economic recovery for September until the end of 2020 must be sent at the latest on the 12th day of the month preceding the period of short-time working requested (for example, at the latest on 12 September for the application for short-time working in October).

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.