If you lose your job and find a new one that is less well paid, you may be eligible for temporary re-employment support, subject to certain conditions. This guarantees you 90% of your previous salary during the first four years of employment. Here’s everything you need to know.
47-year-old Thibault has been unemployed for three months and has just found a job with a Luxembourg company. This new job is a perfect match for his expectations as regards the type of position, working hours and company location. There’s just one issue – the salary is much lower than in his old job! His potential employer has indicated there will be real opportunities to gradually increase his salary. However, the starting level is a such a crucial issue for Thibault that he had thought about turning down the offer until he heard that he could apply for temporary re-employment support to top up his income. What does this mean? Is Thibault eligible and on what conditions? He needs precise answers before taking a decision.
What is temporary re-employment support?
This is a salary top-up provided by the Agence pour le développement de l’emploi (ADEM). It aims to encourage anyone who is unemployed to accept a job that is less well paid than their previous position, by guaranteeing 90% of their previous salary for four years.
Who is eligible?
The scheme was reformed in 2018 and is now subject to stricter conditions than in the past. Thibault must check whether his situation corresponds to the criteria set by ADEM.
Firstly, the new employment contract must be with a company located in Luxembourg. It must be a permanent contract (“CDI”) or a fixed-term contract (“CDD”) for at least 18 months or as replacement cover for parental leave. So far so good, Thibault has been offered a CDI!
Next, this support may be granted to employees on condition that:
- they voluntarily left a company facing economic difficulties (structural or cyclical);
- they were laid off (or threatened with layoff) on economic grounds;
- they lost their job as part of reorganisation or restructuring of the company following bankruptcy or a court-ordered liquidation, or due to their employer’s death or physical inability to continue business operations;
- they were transferred as part of a temporary redistribution of workers to another company that is not a member of the same group under a job protection plan approved by the Minister responsible for employment issues.
NB: the previous position must have been in Luxembourg for at least 24 months prior to leaving, and the original company must have been declared eligible for re-employment support by the Minister responsible for employment issues.
Temporary re-employment support may also be granted to anyone previously receiving unemployment benefits on condition that:
- they are at least 45 years old;
- they were registered with ADEM and in receipt of unemployment benefits for at least one month without interruption;
- they worked in Luxembourg for a consecutive period of 24 months prior to registering with ADEM;
- their new position was registered in advance with ADEM as a vacant position.
Lastly, an employee applying for re-employment support when starting a new job must be registered as an employee with the social security bodies and have been approved by the occupational health organisation as fit for the position.
Good news! As someone in his forties who previously claimed unemployment benefits, Thibault meets the conditions and therefore has a good chance of being eligible for re-employment support.
|When is re-employment support not granted?
According to ADEM, even if the conditions are met, temporary re-employment support is not granted if:
Useful info: a cross-border worker registered with the social security system in Luxembourg who loses and then finds a new job in the Grand Duchy of Luxembourg is also eligible for re-employment support.
Re-employment support aims to guarantee that an employee who has found a new job will receive remuneration equivalent to 90% of their previous salary.
How high is re-employment support?
Re-employment support aims to guarantee that an employee who has found a new job will receive remuneration equivalent to 90% of their previous salary. In concrete terms, ADEM tops up the monthly salary paid by the new employer to 90% of the previous annual salary (one twelfth of any bonuses and the 13th month are included each month).
In Thibault’s case (former recipient of unemployment benefits), his previous remuneration is determined on the basis of the gross salary used to calculate his full unemployment benefits.
Example: Before losing his job, Thibault earned EUR 3,700 per month gross salary. His new employer is offering him a gross salary of EUR 3,000 per month. With re-employment support, he may receive EUR 3,330 gross, i.e. EUR 3,000 from his new employer and EUR 330 re-employment support paid by ADEM.
For other employees (laid off due to economic reasons, bankruptcy of the company, etc.), the calculation is based on the gross monthly salary received during the 12 months preceding the end of the employment contract.
Useful info: if the working hours of the new job are lower than in the old job, the support is reduced in proportion to the working hours. In addition, any other earnings (salaried or non-salaried) are deducted from the support.
NB: gross salary for the purposes of calculating the support is capped at 3.5x the minimum wage for unqualified workers, and the amount of support may not exceed 50% of the gross salary paid by the new employer.
Re-employment support is granted for a maximum of 48 months after starting the new job.
For how long is the support granted?
Thibault is eligible for re-employment support for a maximum of 48 months after starting his new job. This period will give his new boss time to gradually raise his salary to reach a level that better meets his skills. However, re-employment support may not be granted for longer than the period spent at the previous employer.
Support is granted for a continuous period. However, payment can be interrupted if Thibault reaches more than 90% of his previous salary, takes full-time parental leave or unpaid leave, or loses his job. If payment ceases, any unpaid monthly amounts are lost.
Useful info: if Thibault changes employer, he can continue to receive re-employment support if his new salary is less than 90% of his previous salary.
Re-employment support can be granted for an additional 48-month period, subject to certain conditions, but only if the request is made for a new company and the employee was made redundant on economic grounds.
How to apply for re-employment support
Thibault believes that he meets the conditions for temporary re-employment support and has accepted the new job. He has three months from hiring to apply for the support; an application is not possible after this deadline.
As Thibault was in receipt of unemployment benefits, he must apply to ADEM by filling in the “Re-employment support application form” and attaching all the requested supporting documents.
If he had been eligible for a different reason (e.g. an employee laid off for economic reasons, corporate bankruptcy, etc.), prior to submitting his request, he would also have to establish the eligibility of his previous employer by sending a registered letter accompanied by the reasons for layoff to the Ministry of Labour, Employment and the Social and Solidarity Economy in Luxembourg.
Whilst he is waiting for ADEM’s response, Thibault can prepare for his arrival at his new company to give himself the best possible chance of swift integration. We wish him the best of luck!