Workplace Flexibility: Tomorrow’s Priority

More than ever, companies are seeking to introduce greater flexibility in terms of where and when employees work. Despite certain obstacles, particularly regarding taxation and social security, remote working is expected to remain widespread and become formally incorporated into employment contracts. However, it must be based on mutual agreement between the employer and the employee.

Although workplace flexibility is not a new concern, the nature of requests for greater flexibility has evolved. “A few years ago, the requests we received regarding flexible working hours came from employers. With productivity in mind, they sought to optimise working arrangements by introducing greater flexibility,” explains Marie Bena, Partner at Brucher Thieltgen & Partners. Some companies needed their employees to be physically present during particularly busy periods, while requiring less on-site presence at other times. To manage these fluctuations, they sought to implement work organisation plans.

Today, the demand for flexibility comes from different stakeholders and takes different forms. “It is now employees who are seeking greater flexibility, as they do not feel ready to return to the office full-time and wish to continue working remotely. Employers are therefore having to rethink their working models to retain existing talent and attract new employees.”

Legal Obstacles to Complete Remote Working Freedom

Against this background, the applicable legal framework, including the Agreement of 20 October 2020 on the legal framework for teleworking and CSSF Circular 21/769, as amended by CSSF Circular 22/804, which applies in particular to supervised entities, provides the basis for employers to implement remote working arrangements.

“One of Luxembourg’s distinctive characteristics is that approximately 200,000 cross-border workers commute to the country every day.” – Marie Bena

However, certain legal constraints limit the use of remote working. “Companies introducing remote working arrangements do so to promote employee well-being. One of Luxembourg’s distinctive characteristics is that approximately 200,000 cross-border workers commute to the country every day. Under normal circumstances, bilateral agreements with neighbouring countries restrict remote working for tax and social security reasons. Although these agreements are currently suspended, the standard regime is expected to apply again from 30 June.” German, Belgian and French cross-border employees would then be allowed to work remotely for 19, 34 and 29 days per year respectively, without any impact on their taxation. Beyond these thresholds, each day worked in the employee’s country of residence would be subject to taxation in that country. This situation would affect not only employees but also their employers, who would have to adapt their payroll management systems to account for days worked outside Luxembourg and, where applicable, remit the relevant taxes to foreign tax authorities. The issue of social security affiliation must also be considered, particularly the threshold of 25% of working time.

Recognising the importance of remote working for cross-border employees, the French National Assembly recently adopted a resolution aimed at encouraging discussions at the European level and reaching a comprehensive agreement. “These discussions are urgently needed, as it is clear that many companies intend to maintain remote working arrangements. Some have already implemented dedicated policies.” Following the expiry of the temporary agreements, remote working is therefore expected to remain subject to regulation. “Where remote working is authorised, it must also take place within reasonable geographical limits, most commonly at the employee’s home. Smart working, which involves working from anywhere at any time, may raise issues relating to working hours, security and data confidentiality and therefore falls outside the scope of these arrangements.”

The Keys to a Successful Transition: Establishing a Clear Framework

To redefine remote working and strike the right balance, companies will need to establish a clear framework for implementing sustainable workplace flexibility, based on transparent and mutually understood rules. “Under the 2020 Agreement, remote working must be based on mutual agreement between the employer and the employee and must specify the applicable arrangements, including the number of permitted remote working days, the hours during which employees must be reachable, compensation and other relevant conditions. Employers cannot therefore impose remote working, just as employees cannot claim an automatic right to work remotely, since no such right exists.” Remote working arrangements must therefore be formalised through an amendment to the employment contract, which should also specify the conditions governing the transition to remote working or the return to traditional working arrangements.

In Luxembourg, the law adopted by the Chamber of Deputies on Wednesday 16 March follows this approach. It requires companies employing more than 150 employees to consult their staff delegation before introducing a remote working policy and obtain its agreement.

Marie Bena, Partner : marie.bena@btplawyers.lu