Mobility Directive implemented in Luxembourg: impacts on employment law
Directive (EU) 2019/2121 amending Directive (EU) 2017/1132 as regards cross-border conversions, mergers and divisions (the “Mobility Directive”) was adopted on 27 November 2019 and was supposed to be transposed into national laws by Member States by 31 January 2023.
Luxembourg introduced two draft laws to transpose the Mobility Directive, covering both corporate (draft bill 8053) and employment law (draft bill 8225) facets.
The corporate law aspects were first to be implemented into national law with the law of 17 February 2025, which particularly amends the law of 10 August 1915 on commercial companies, as amended. The employment law aspects were subsequently transposed with the law of 25 March 2025.
This law, which came into force on 1 April 20251, together with the above-mentioned corporate law, introduce numerous changes in the context of cross-border conversions, mergers, and divisions, including the following:
Clear and open employee communication
A report must be provided within a certain timeframe to employees which should detail the implications of the transaction on employment relationships, any requisite measures to preserve these relationships, significant changes to employment conditions or company locations, and how these factors impact the company's subsidiaries.
Employee participation
- The right to employee participation has been extended to include cross-border conversions and divisions, with the threshold reduced to 800 employees, compared to the previous threshold of 1,000 employees under earlier rules.
- The draft terms of the transaction shall include information on the procedures for determining terms related to employee involvement in establishing their participation rights.
- Companies involved in cross-border mergers, divisions, or conversions must now protect employees' participation rights for 4 years after the transaction, an increase from the previous 3-year period.
- At least, one of the companies engaged in a cross-border merger, operates under an employee participation regime, shall enable the competent bodies of such companies to opt for an employee participation regime without any prior negotiation.
- Any company engaged in a cross-border merger is required to inform its employees or their representatives regarding the decision to either apply the employee participation provisions or initiate negotiations within a special negotiation group (groupe spécial de négociation). In such instances, companies participating in cross-border mergers are now required to promptly communicate the results of negotiations to their employees or representatives, ensuring this is done within a specific time frame.
Information/consultation
This obligation, which was previously explicitly stipulated only for cross-border merger operations, has now also been extended to conversion and division operations.
With numerous cross-border transactions occurring annually in Luxembourg, these provisions aimed at bolstering employee rights during such operations are set to transform future transactions. It is crucial to incorporate these developments into your upcoming projects.
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