Court of Appeal clarifies the grey zone and sets out employment relationship rules
In its ruling of April 3, 2025, the Luxembourg Court of Appeal examined a complex employment dispute. The key legal question was whether the employee was an employee under a contract of employment or a corporate officer acting without subordination—thus outside the scope of labor law.
The case originated when the employee, claiming to have been dismissed abusively on February 27, 2018, filed a claim before the Labour Tribunal of Diekirch, seeking a total of €78,976.63 for severance pay, unpaid leave, and bonuses. The Labour Court, in its judgment, ruled that it had jurisdiction, declared the claim partially founded, and ordered the company to pay over €59,000 in severance and unpaid leave, while dismissing claims for bonuses. The company appealed, primarily contesting the Labour Tribunal’s jurisdiction by denying the existence of an employment relationship.
The Court of Appeal focused on the legal criteria for recognizing an employment contract: the performance of work, remuneration, and—crucially—a relationship of subordination. The Court emphasized that a mere title of “employee” or the issuance of salary slips is insufficient; the existence of subordination must be factually demonstrated.
In this case, the Employee had no dated, written employment contract with the company from February 2017 onward. Evidence showed that he held mandates as managing director and company officer during the relevant period, including the role of delegated administrator. While the employee claimed to have performed technical tasks under managerial authority, the Court found that none of the emails, payroll documents, or witness statements sufficiently demonstrated subordination.
Notably, the Court underscored that being subject to board or shareholder decisions is inherent to corporate governance and does not imply subordination as defined in employment law. The alleged tasks described by the employee were either insufficiently detailed or aligned with his role as corporate officer, not as a subordinate employee.
As a result, the Court concluded that the employee failed to establish the existence of an employment relationship. It reversed the Labour Tribunal’s ruling on competence, thereby dismissing the claim due to lack of jurisdiction.
Linari law firm is of course available should you need any assistance regarding labour law or dispute resolution. Do not hesitate to contact us for more information on this matter and visit our website and social media.
