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The legal system of occupational redeployment[1] for employees who have been recognised as medically unfit or unable to perform their most recent job role leaves, in practice, very little room for manoeuvre for employers.
Indeed, once the conditions defined by the legislator are met, employers find themselves legally required to redeploy these employees internally within their undertaking, to a position suited to their remaining medical capabilities. The only way for employers to escape this obligation is to be able to justify the existence of “serious prejudice” which such redeployment would cause them; an concept interpreted so strictly by case law that it is very rarely accepted in practice.
Nevertheless, when setting the conditions governing the applicability of this obligation imposed on employers, the legislator intended to take account, on the one hand, of the size of the workforce employed by them and, on the other hand, of the effort already made by employers in employing employees who either already benefit from occupational redeployment (internal or external), or who have been recognised as having the status of disabled employee.
In this context, to determine, in particular, the size of the employer’s workforce, the legislator took into account the specific situation of employers operating an undertaking with “multiple establishments”.
In the absence of a statutory definition of this concept of “multiple establishments”, it must be noted that the Joint Occupational Redeployment Commission for workers unable to perform their most recent job role[2] (the “Joint Commission”) interpreted this concept in breach of the legal text itself, resulting in practice in the statutory obligation of internal occupational redeployment being applied to employers who should not have been subject to it.
Refuting the interpretation previously adopted by the Joint Commission, the case law of the Higher Council of Social Security has fortunately provided essential clarifications regarding the understanding of the concept of “multiple establishments”, while noting on that occasion that concepts in social security law are not the same as those in employment law.
Without carrying out an exhaustive analysis of the occupational redeployment system concerned, we highlight below the major case law referred to above, after addressing the key points of the general legal framework of occupational redeployment within which this case law fits.
Internal or external occupational redeployment of the employee
It was in response to a strict interpretation of the concept of invalidity[3], adopted by the Court of Cassation, that the legislator introduced, as from 25 July 2002[4], into the legislative framework a system of occupational redeployment for employees recognised as medically unfit or unable to perform their most recent job roles[5].
Indeed, the Court of Cassation held that invalidity could only be recognised where there is medical incapacity for any occupation in the general labour market. This de facto excludes from entitlement to an invalidity pension those employees who are recognised as medically unfit or unable to perform their most recent job role, while nevertheless remaining medically capable or fit to perform a job adapted to their remaining medical capabilities[6].
Through the system of occupational redeployment for these employees, the legislator pursued a twofold objective: to strengthen the social protection of these employees and to keep them in employment.
In pursuing this dual objective, the legislator intervened in the employment relationship between employers and employees affected by such medical incapacity, by imposing the obligation to proceed with their occupational redeployment (the “Occupational Redeployment”):
either internally, at the employer’s expense[7]: internal occupational redeployment consists of reassigning the employee to a position suited to the employee’s remaining medical capabilities, the employee remaining within the employer’s undertaking and still forming part of its staff (the “Statutory obligation of internal occupational redeployment”);
or externally, where internal occupational redeployment of the employee is not possible[8]: external occupational redeployment consists of redeployment on the labour market, taking into account the employee’s medically reduced work capacity. The employee’s employment contract terminates by operation of law as from the day on which notification is given of the Joint Commission’s decision ordering external occupational redeployment[9], and the employee is automatically registered, the following day, as a jobseeker with the Employment Development Agency (ADEM).
It should be noted here that case law has held that employers cannot rely on the aforementioned impossibility of carrying out internal occupational redeployment (such as, for example, the fact that a position suited to the employee’s remaining medical capabilities does not exist within the employer’s undertaking) in order not to proceed with it, because the legislator’s intention is precisely to impose this on them.[10] (only employees may rely on this impossibility).
Consequently, in practice, the obligation imposed on employers to carry out internal occupational redeployment may prove extremely onerous for them: even if the legislator has not explicitly required employers to create a position specifically adapted to the employee’s remaining medical capabilities, this is very often the practical consequence.
Statutory conditions for the obligation of internal occupational redeployment
As regards internal occupational redeployment of the employee in particular, the legislator has imposed[11], on employers, the statutory obligation to carry out such redeployment where, on the date on which the Joint Commission is seized and must decide on the employee’s occupational redeployment, the following two statutory conditions are cumulatively met:
the employer employs at least twenty-five (25) employees, and
the employer does not employ the number of employees benefiting from internal or external occupational redeployment within the limits of the rates provided for in Article L. 562-3 of the Labour Code, these rates varying depending on the employer’s undertaking. Employees benefiting from internal or external redeployment are assimilated to employees benefiting from the statutory status of disabled employees[12].
In order not to be legally obliged to carry out internal occupational redeployment of the employees concerned, the burden of proof lies with employers: they must prove that one of the two statutory conditions referred to above is not met.
“Serious prejudice”: a genuine escape route in practice?
The only possibility offered by the legislator to employers to escape their statutory obligation of internal occupational redeployment where it applies is to demonstrate, on the basis of a reasoned file, that such internal occupational redeployment would cause them “serious prejudice”[13], in order to be exempted from this obligation.
In the absence of a statutory definition of the concept of “serious prejudice”, case law has held that:
“Serious prejudice, that is to say significant and serious harm caused by an act detrimental to the employer’s interests, an act capable of serious consequences and adverse effects, must be understood, in addition to the case of bankruptcy, as meaning a reduction in productivity, an influence on competitiveness on the labour market, on economic competition, rationalisation and cost, and the benefit to the undertaking of special training for the employee concerned.”[14]
In practice, given this extremely strict interpretation, cases in which the employer can validly rely on such prejudice are rare, with the practical consequence that it is extremely difficult for employers to escape their statutory obligation to carry out internal occupational redeployment of the employee when the statutory conditions are met.
Major case law concerning employers operating an undertaking “with multiple establishments”
In view of the statutory conditions governing the statutory obligation of internal occupational redeployment imposed on employers (see point 2 above), it is clear that the legislator intended to make the applicability of this obligation depend, in particular, on the size of the employer’s undertaking to which the employee is assigned.
From that perspective, the legislator obviously considered the characteristics of employers operating undertakings with multiple establishments, by expressly providing that[15]:
“For undertakings with multiple establishments, this redeployment obligation applies to each establishment taken in isolation.”
However, the legislator did not define the concept of “multiple establishments”, thereby leaving room for interpretation.
In the judgment delivered on 21 March 2024 by the Higher Council of Social Security, the Joint Commission considered that the concept of “multiple establishments” required that the establishments constitute economic units distinct from one another.
Accordingly, where the various establishments concerned have the same social security registration number, are represented by the same legal representative, carry out the same activity and/or operate under an identical or similar trade name, the Joint Commission held that the number of employees employed by the employer must be determined by taking account of all employees employed at the level of the employer’s undertaking, including all establishments.
The Joint Commission also took into account the characteristics of the employment relationship between the employer and the employee concerned, analysing (i) whether the employment contract contained a mobility clause allowing the employee to be assigned to another establishment of the employer at its discretion, (ii) whether the employee’s length of service was determined at the level of the employer itself, and (iii) the fact that the employee’s employment contract was concluded with the employer and not with the establishment itself.
In practice, under such an interpretation, the statutory threshold of at least twenty-five (25) employees employed by the employer (the first condition governing the application of the statutory obligation of internal occupational redeployment, see point 2 above) was quickly reached, or exceeded, thereby obliging employers to proceed with internal occupational redeployment of the employee as soon as they did not employ the statutorily required number of employees redeployed / benefiting from the statutory status of disabled employee (the second condition governing the application of the statutory obligation of internal occupational redeployment, see point 2 above).
Yet, in practice, there are many cases in which the establishments of the undertaking operated by the employer do not constitute distinct economic units from one another, while the employer generally carries out the same activity, under the same trade name, through different establishments located in the Grand Duchy of Luxembourg.
This is the case, for example, of an employer operating a retail business running several shops, or a temporary employment business operating several agencies across the Grand Duchy of Luxembourg.
In its judgment of 21 March 2024, the Higher Council of Social Security refuted the above interpretation adopted by the Joint Commission of the concept of “multiple establishments”, holding that:
“Contrary to what is put forward by the respondent party, Article L. 551-2 (1), last sentence, of the Labour Code does not provide that the multiple establishments referred to should be distinct units, and imposing such a condition would add to the law.”
It follows that the above statutory threshold of at least twenty-five (25) employees employed by the employer must be determined at the level of the specific establishment where the employee carried out their most recent job role for which they were declared medically unfit or unable to work, regardless of whether that establishment is distinct from the other establishment(s) of the undertaking operated by the employer.
The Higher Council of Social Security also emphasised that the interpretation of a provision relating to the redeployment of an employee subject to social security law cannot be influenced by “specific arrangements which fall under employment law”, so that the characteristics of the employment relationship between the employer and the employee must not be taken into account.
The Higher Council of Social Security therefore concluded that the statutory threshold of at least twenty-five (25) employees employed by the employer had to be determined at the level of the establishment, taken in isolation, where the employee held their most recent job role for which they had been declared medically unfit or unable to work.
In so far as the employer had proved that the establishment concerned employed fewer than 25 employees on the date on which the Joint Commission was seized, the Higher Council of Social Security held that the employer was not subject to the statutory obligation to carry out internal redeployment of the employee.
Finally, it should be noted that in this case law, the establishment concerned was a branch duly registered with the Luxembourg Trade and Companies Register: confirming earlier case law[16], the Higher Council of Social Security held that a branch constituted an establishment within the meaning of Article L. 551-2 (1) of the Labour Code, even though it did not have separate legal personality.
This case law provides an essential clarification for employers with several establishments (in particular employers active in the retail sector operating a chain of shops, fashion or food distribution brands, or service undertakings with several regional agencies, such as banks, temporary employment companies or insurance companies), and should lead them to reflect on the structuring of their activities, in particular in light of the repercussions this may have on their obligations towards their employees regarding, in particular, internal occupational redeployment decided by the Joint Commission.
These employers are now reassured that the threshold of 25 employees, governing the applicability of the statutory obligation of occupational redeployment, must be determined per establishment separately, and not at the level of the undertaking as a whole, including the various establishments.
Such reflection is all the more essential in view of the extremely limited possibility for employers, including employers with multiple establishments, to escape this statutory obligation where the statutory conditions are met.
[2] National authority, established under the Minister responsible for Labour and Employment, sitting within the Employment Development Agency (ADEM) and having exclusive jurisdiction in matters of occupational redeployment (Articles L. 552-1 et seq. of the Labour Code and Grand-Ducal Regulation of 14 October 2002 concerning the method of appointment and remuneration of members, the operating rules and procedural deadlines of the Joint Commission for the redeployment of workers unable to perform their most recent job role)
[3] Article 187 of the Social Security Code: “An insured person is considered to be invalid where, as a result of prolonged illness, infirmity or wear and tear, they have suffered a loss of their capacity to work such that they are prevented from exercising the profession they last carried out or another occupation corresponding to their strength and aptitudes.”
[4] Law of 25 July 2002 on incapacity for work and occupational reintegration, which entered into force on 3 August 2002
[12] Mandatory employment rate for disabled employees: between 25 and 49 employees: 1 person / ≥50 employees: 2% of the workforce / ≥300 employees: 4% of the workforce
[13] Higher Council of Social Security, 02/04/2020, case No. 2020/0104
[14] Higher Council of Social Insurance, 28/04/2004, case No. 2004/0074
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