LUXEMBOURG Law and Practice Contributed by: Romain Tiffon and Marie Bentley, ATOZ Tax Advisers
• at least seven employees within 30 days; or • at least 15 employees within 90 days. Employers must follow a specific statutory procedure, which includes the following. • Information and consultation – the employer must inform and consult staff representatives (staff del - egates and trade unions). • Negotiation of a social plan – the employer is required to negotiate a social plan with staff repre - sentatives and trade union representatives. This social plan sets out measures to address the con - sequences of redundancies. The social plan typically includes measures to mitigate the impact on employ - ees, and complements the statutory severance and termination protections. 4.5 Employee Representations Employee representation is mandatory once a statu - tory threshold is met. • Employers must organise the election of staff del - egates if they have employed at least 15 employ - ees during the 12 months prior to the elections. • Companies employing fewer than 15 employees are exempt from this obligation. Therefore, employee representation is not universal but becomes compulsory once the workforce reaches a certain size. Employees are represented by staff delegates, who are elected every five years and entrusted with repre - senting the workforce within the company. Their main role is to safeguard and defend employees’ interests, in particular regarding working conditions, job security and employment status, but also to act as an interme - diary between employees and the employer. Employers are subject to mandatory information and consultation obligations vis‑à‑vis employee represent - atives. Employers must inform and/or consult staff delegates on a range of matters, particularly those relating to working conditions, employment conditions and employee welfare. This establishes a continuous
obligation for management to engage with employee representatives on relevant issues. For companies employing at least 150 employees, the role of employee representatives is strengthened. The employer and staff delegates must jointly take decisions in certain areas. Examples include decisions relating to the introduction or application of techni - cal systems used to monitor employees’ conduct and performance. In these cases, employee participation goes beyond consultation and amounts to co-deter - mination. In addition to staff delegates, trade unions play a role in representing employees, notably by negotiating col - lective labour agreements. This adds a second layer of representation, particularly at sectoral or collective bargaining level. An employee is subject to Luxembourg taxation if they qualify as a Luxembourg tax resident or have Luxem - bourg-source employment income. For Luxembourg tax purposes, an individual is considered resident in Luxembourg if they have their domicile or permanent home in Luxembourg. Non-resident employees are taxed in Luxembourg on Luxembourg-source employ - ment income (eg, work physically performed in Lux - embourg), subject to applicable double tax treaties. Employment income is subject to progressive per - sonal income tax, withheld at source via payroll with - holding ( retenue d ’ impôt sur salaires ). The applicable progressive scale varies from 0% up to 42%. Howev - er, taking into consideration the solidarity surcharge, the effective maximum marginal rate applicable is of approximately 45% (ie, 42% base rate + 7% solidarity surcharge) for high income brackets. Taxable income includes salary and bonuses as well as benefits in kind (eg, company car, stock options under conditions), less social security contributions and certain allowances and deductions. 5. Tax Law 5.1 Taxes Applicable to Employees/ Employers
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