A new law of 7 August 2023 has implemented significant changes to both the Luxembourg labor code and the Luxembourg law of 29 August 2008 on the free movement of persons and immigration (which governs, regarding non-Luxemburgish nationals, entry and stay conditions on Luxembourg soil as well as the conditions of leaving the Luxembourg territory), the “Immigration Law”. These changes entered into force on 1^st September 2023 (the “Effective Date”) and are as follows.

• Changes to the provisions of the Luxembourg labor code specifically pertaining to the employment of illegally staying third-country nationals

Two important revisions have been introduced in an effort to dissuasion of the employment of illegally staying third-country nationals.

First, the administrative fine that Luxembourg employers would incur in such circumstances is raised to EUR 10,000 per concerned third-country national (article L. 572-4, §1). The fine amounted to EUR 2,500 before the Effective Date. In practice, such an administrative fine is decided by the ministry in charge of labor matters upon the decision of the president of the Inspection du travail et des mines (ITM), meaning that the latter must have been informed of the recriminated situation beforehand.

The fine is payable within 30 days to the Administration de l’enregistrement, des domaines et de la TVA.

The ITM has reinforced its workforce during the past years, paving the way to an increased number of fines for employers failing to follow applicable rules.

Second, the criminal sanctions in case of aggravated circumstance, i.e. (i) persistently repeated employment of illegally staying third-country nationals, or (ii) simultaneous employment of a significant number of illegally staying third-country nationals, or (iii) employment of illegally staying third-country nationals under abusive working conditions, or (iv) employing an illegally staying third-country national knowing that he is victim of human trafficking, or (v) knowing that the illegally staying third-country national is a minor, are increased with a criminal fine ceiling now amounting to EUR 125,000 (article L. 572-5). As a result, the maximum criminal sanctions for a concerned employer would be 1 year of prison and a EUR 125,000 criminal fine against a EUR 20,000 fine prior to the Effective Date.

To complete this prohibition scheme, a new chapter has been introduced into the Luxembourg labor code relating to the prohibition of the employment of third-country nationals who are not abiding by the Immigration Law (“en situation irrégulière”), with a view to encompass any situation where a third-country national specifically violates legal provisions of chapter 3 of the Immigration Law (i.e. is not in possession of a valid working permit where required) and aligns the prohibition between the two legal sources (Art.574-1 to 574-7).

To raise consciousness and responsibility amongst employers, the labor code also now expressly provides that employers shall keep in their files a copy of the work permit of any third-country nationals they are employing (to be produced in case of ITM’s control) (Art. L. 574-3).

• Changes introduced into the Luxembourg labor code relating to third-country nationals’ employment process

Market test

The principle that the so-called “market test”, a compulsory process to be followed in case of work vacancies on the Luxembourg territory, is now expressly stated in the labor code (article L. 622-4 of the Luxembourg labor code).

The information to be communicated to the Employment Development Agency (ADEM) regarding the envisaged employment of foreign workers has been slightly revised: the description of the profile shall now include the language skills and professional experience, to further assist ADEM in its scrutiny work, while it is not necessary anymore to mention the proposed salary package.

The time frame for the market test process has been completely revised to take into consideration the market conditions applicable at the relevant time. More specifically, the process will be speeded up where the job offered concerns a working area where a shortage of workers has been publicly acknowledged. In this respect, the government publishes every year a list of shortage occupations. The last one has been published in the Official gazette on 1^st September 2023 (Mémorial B, n°2983) and is available on the following link: Liste des métiers très en pénurie (public.lu). The concerned areas include credit analysis and banking risks, banking customer management, financial markets front office, roofing installation and restoration, building and restoring facades, management and engineering studies, research and industrial development, installation and maintenance of industrial and operating equipment, children education, psychology and legal professions.

Before the Effective Date, the market test was a uniform 3-step process irrespective of the working area concerned and took approximately 4 weeks: the employer declared a job vacancy to the ADEM, the ADEM had 3 weeks to propose a suitable candidate, in the absence of such a proposal the employer was delivered a certificate vetting his/her/its choice of candidate within 5 business days.

Now the process should be 4 times quicker in case of vacancy in a working area in need of workers, quicker where the ADEM has no suitable candidate to propose, and much longer in case the ADEM has found suitable candidates.

You may in this respect refer to the below timeline of the market test process involving the ADEM:

First scenario: The employer has published a job vacation falling into the scope of employment shortage areas 1-week procedure