Time savings account (CET) in Luxembourg: accrual, use and liquidation

Axis 1 — General principles and establishment

An hours account, not a cash account

The CET is a reserve of entitlements to future paid absence. The employee accumulates hours or days converted into time, which can be drawn upon later in the form of leave or reduced working time. No cash is deposited in the account: everything is expressed in hours.

A necessarily collective arrangement

The CET cannot be created unilaterally by either the employer or the employee. Its establishment requires a collective framework: a collective bargaining agreement, an interprofessional agreement, or an agreement setting up the scheme as provided by law. In companies covered by such an agreement, the CET is introduced through negotiation between the employer and the staff delegation. Where the applicable regulations so require, approval by the Minister of Labour is necessary.

Individual eligibility conditions

Some CET schemes require a minimum length of service — frequently cited as two years — as a condition for opening an account. This requirement is not universal: it depends on the founding document of the CET in the company. The applicable agreement must always be checked before concluding whether or not an employee is eligible.

Axis 2 — Accrual

Credits to the CET are made on the employee's written request. The following are frequently provided accrual sources under Luxembourg CET schemes; the exact list depends on the founding document applicable in the company:

Overtime hours

Overtime hours may be credited to the CET at the same rate as that applied for their recovery in rest time (Art. L. 211-27). This is one of the most common accrual sources: rather than being recovered immediately or paid with a supplement, overtime hours are carried forward for later use.

Excess leave days

Leave days beyond the statutory minimum of 26 days may be credited. Subject to conditions, it is also possible to credit up to 5 days of paid leave not taken due to illness, maternity leave or parental leave.

Other eligible items

• Surplus balances at the end of a WOP reference period or under flexible hours
• Compensatory rest for Sunday work or public holidays falling on a Sunday

Axis 3 — Use and cap

Cap of 1,800 hours

The CET is capped at a maximum of 1,800 hours. Beyond this cap, no further hours may be credited: excess entitlements must be recovered or remunerated under the ordinary rules.

Withdrawal conditions

Accumulated hours are drawn upon at the employee's request. The employer may refuse where service requirements or the legitimate wishes of other employees so dictate — provided the refusal is justified and not arbitrary. Outside those cases, the employer's agreement is required, but any refusal is circumscribed.

Axis 4 — CET on contract termination or employer insolvency

Departure: accrued entitlements must be settled

When the employment contract ends — for whatever reason — accumulated hours not yet used are not forfeited. They must be compensated financially. For overtime hours not yet recovered, the employee is entitled to payment at the normal hourly rate plus a 40% supplement (Art. L. 211-27).

Employer insolvency: Employment Fund guarantee

In the event of the employer's bankruptcy or insolvency, claims arising from the liquidation of the CET benefit from a guarantee by the Employment Fund (Fonds pour l'emploi) (Art. L. 126-1). This guarantee is capped at an amount equal to twice the reference statutory minimum wage. It covers outstanding CET entitlements up to that ceiling.