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Collective Bargaining

The key levels of bargaining are at industry and company level, and the relative balance between the two varies from industry to industry. There are precise rules on what must be included in agreements and who can sign them. Luxembourg is also one of two EU states where pay goes up automatically in line with inflation.

The most important levels for negotiations in Luxembourg are at industry and company level. Industry level agreements initially apply only to those companies, which belong to the employers’ associations which have signed the agreement but are often extended by the government to the entire sector (see below). Company level agreements apply only to the company concerned.


Since the legislation on collective agreements in 2004 (Loi du 30 juin concernant les conventions collectives de travail), it has also been possible for representative unions and employers at national level to reach agreements in the area of social dialogue. This primarily allows the national implementation of European measures – either directives or agreements between unions and employers at European level, but is also possible to reach agreements in other areas such as working reductions, training, atypical working, non-discrimination, bullying and harassment (including sexual harassment) and stress.


In practice, there are many more company-level than industry-level agreements. In 2018, 104 company agreements and amendments to company agreements were registered with the Inspectorate of Labour and Mines, in 2018, compared with only 15 agreements and amendments at industry level.[1]  The position is similar in earlier years: 2017 – 63 company and seven industry agreements; 2016 – 81 company and 12 industry; and 2015 – 114 company and eight industry.


However, the relative importance of the two levels of agreement varies from industry to industry, and there is generally no link between industry-level and company-level settlements.[2] In banking and insurance for example, there is a single industry agreement for the banks and another for insurance. Other industry-level agreements cover construction and civil engineering, bus drivers, hospital establishments, heating and ventilation installers, temporary agency workers and the social sector. However, in the retail sector, each of the main groups, such as Auchan, Cactus, H&M, Match and Villeroy & Boch, has its own company agreement and, as in many other industries, there is no industry agreement.


Where they exist, industry-level agreements can be extended to cover all the employers and employees in the industry concerned, provided certain conditions are met. The initial request can come from either the unions or the employers. It is examined in a joint committee of the National Conciliation Service (ONC) and, if the proposal is supported, it then goes to the president of the ONC and to the minister of labour who takes the final decision. In practice, this happens frequently, and most industry-level agreements are extended, as both employers and unions are keen to avoid being undercut by competitors paying lower wages. On 29 January 2020, there were 26 industries or occupational groups covered by agreements that been made generally binding – from banks to river transport.[3]


Overall, a 2013 study by the national statistics office statec indicated that 59% of all employees in Luxembourg were covered by collective agreements in 2010, although there were substantial differences between industries. Coverage was 100% in public administration, although, in precise legal terms, the pay and conditions of civil servants and others working in public administration are not governed by collective agreements. Coverage was almost as high, at 87%, in both education and in health and social services. Looking at the private sector, coverage was lower at 55% overall. It was 70% in construction, where there are a number of industry agreements, but only 38% in retail and wholesale, where there are no industry agreements. The lowest level of coverage, at 12%, was in hotels and catering.[4] There have been no subsequent studies on the level of coverage since the 2013 statec analysis.


Following the abolition of the legal distinction between manual and non-manual employees in 2008, employers can now only sign agreements for all their employees.

The system is designed to encourage consensus and agreement. Employers are obliged to begin negotiations if asked, either individually or through their employers’ associations. If they refuse to do so or if the negotiations break down without agreement, the issue is referred to the national conciliation machinery, which in some cases involves arbitration. This means that before industrial action can be taken both sides must first have tried to negotiate a settlement and, if that has failed, to have sought external conciliation.


There is also a highly developed social dialogue structure, with several separate advisory bodies. The CES, made up of 18 union and 18 employer representatives, together with three members nominated by the government, has a role in organising support for social dialogue at national level, as well as providing advice to the government when asked. The tripartite coordination committee (CCT), with four members each from the employers, unions and government, has a role in building consensus between employers and unions, as well as a specific role in decisions on uprating pay in line with inflation (see below).


Who negotiates and when?


The 2004 legislation formalised the situation to ensure that only representative unions can negotiate and sign collective agreements (see section on unions for definition of representativeness). It provides for a negotiating committee on the union side, made up of unions who are nationally representative, plus unions who are representative in that particular industry. These unions must be part of the negotiating committee, as must any other union which has got the support in elections for employee representatives of at least 50% of the employees covered by the collective agreement under negotiation. Unions who do not meet these conditions can be admitted into the negotiating committee, but only if the unions already present unanimously agree to do so.


Ideally all the unions involved should sign the agreement. However, if this is not possible, the agreement can be signed by one or more of the unions, provided that they also invite the other unions to sign. If the other unions are unwilling to sign, the unions wanting to do so can go ahead, provided that individually or together they have the support of at least 50% of the employees covered by the agreement, as shown in the most recent election for employee representatives.


On the employers’ side agreements, which must be in writing and must be registered with the labour ministry, can be reached by individual employers and employers’ associations.


Collective agreements can last between six months and three years. Typically, they are for two to three years.


The subject of negotiations


The agreements cover the whole range of industrial relations issues, including both pay and working conditions. The 2004 legislation sets out a range of issues which must be included in the agreement and, as well as pay, working time and holidays, agreements must cover the level of premia for night work, additional payments for particularly difficult or unpleasant work, the mechanisms for ensuring equal pay and the way that sexual harassment and bullying will be tackled.


Pay in Luxembourg, as in neighbouring Belgium, is indexed, rising in line with prices. When prices rise (or fall) by 2.5% over the previous six months, pay is increased (or decreased) by the same amount. Employers are obliged to do this automatically, and the price index is published monthly by the national statistical office statec.


As well as the topics, which are dealt with at industry or company level, the legislation allows for social dialogue agreements at national level, as noted above. This possibility has been used to implement two agreements reached at European level in Luxembourg. These cover teleworking (2006) and violence and harassment at work (2009).


Luxembourg also has a national minimum wage, which as well as setting a basic minimum rate, also provides a 20% higher rate for more highly skilled workers. The minimum wage is linked to the price index in the same way as other agreements and the level of the national minimum wage must also be reviewed at least every two years.

[1] L’inspection du travail et des mines: rapport annuel 2018,2017.2016, 2015 https://itm.public.lu/fr/publications.html  (Accessed 14.04.2020)  

[2] Luxembourg: an instance of eroding stability? By Adrien Thomas, Vassil Kirov and Patrick Thill, in Collective bargaining in Europe: towards an endgame, edited by Torsten Müller, Kurt Vandaele and Jeremy Waddington, ETUI, 2019

[3] Liste des conventions collectives, L’inspection du travail et des mines, 29 January 2020 https://itm.public.lu/fr/conditions-travail/convention-collectives/liste.html (Accessed 14.04.2020)

[4] Regards 06 sur la couverture des conventions collectives de Travail, by Jean Ries,  April 2013, Statec http://www.statistiques.public.lu/catalogue-publications/regards/2013/PDF-06-2013.pdf

L. Fulton (2021) National Industrial Relations, an update (2019-2021). Labour Research Department and ETUI (online publication). Online publication available at http://www.worker-participation.eu/National-Industrial-Relations.