LINARI LAW

Luxembourg court of appeal: proven employee misconduct insufficient to justify dismissal with immediate effect

In a judgment delivered on 5 February 2026 (role : CAL-2023-01125) the Luxembourg Court of Appeal sitting in labour law confirmed a first-instance decision declaring an employee’s dismissal with immediate effect unfair and upheld the employer’s condemnation to pay notice compensation, severance pay and damages.

The dispute arose following the dismissal with immediate effect of a long-serving employee in December 2018. The employee challenged the dismissal before the labour court, which, in October 2023, held that the dismissal was abusive and awarded compensation exceeding 100.000 euros. Both parties subsequently appealed the judgment.

The employee, who held the position of department manager, was accused of repeatedly reducing the sale prices of certain products and subsequently purchasing those items herself at the discounted prices.

The employer alleged that these actions circumvented the internal procedures governing employee purchases and markdowns, thereby constituting an abuse of her managerial functions and a breach of the company’s internal rules.

While the Court acknowledged that the employee had committed certain procedural breaches in relation to a limited number of purchases, it reiterated that the mere existence of misconduct does not automatically justify a dismissal with immediate effect.

Taking into account (i) the nature of the proven breaches, (ii) the employee’s more than thirty years of service and (iii) the overall circumstances of the case, the Court concluded that the misconduct did not reach the level of seriousness required to make the continuation of the employment relationship impossible.

The dismissal was therefore held to be unfair.

The Court further upheld the compensation awarded by the labour court, including notice compensation, statutory severance pay and damages for both material and moral harm.

This decision serves as a reminder that, under Luxembourg employment law, even proven misconduct may not necessarily constitute a sufficiently serious breach to justify a dismissal with immediate effect.

Employers must therefore carefully assess not only whether misconduct occurred, but also whether its gravity is such as to render the continuation of the employment relationship immediately and definitively impossible.

Please visit our website if you require assistance in labour law.

 

Photo – Rosc Art
www.rosc-art.com

PREVIOUS NEXT

Related posts

Browse All

Right to disconnect: Key compliance considerations for employers in Luxembourg

The right to disconnect framework in Luxembourg becomes subject to administrative enforcement by the Labour Inspectorate (ITM) from 1 July 2026. Employers whose staff use digital tools for work must implement a documented framework protecting rest periods and work-life balance. The law allows flexibility, enabling organisations to adapt measures to…

ECB raises interest rates: implications for businesses and investors in Luxembourg

The European Central Bank has raised its key interest rates to 2.25% in response to renewed inflationary pressures across the euro area. The increase is expected to affect financing costs, investment strategies, asset valuations and transaction structures for Luxembourg businesses and investors. Companies should review financing arrangements, covenant compliance and…

Luxembourg Foreign Direct Investment : Key Developments and Practical Considerations for Investors in 2026

Luxembourg’s foreign direct investment screening regime has become increasingly operational and sophisticated since its entry into force in 2023. The framework requires certain non-EU and non-EEA investors to notify acquisitions involving sensitive sectors and strategic activities before completion. Recent practice shows a rise in precautionary filings due to broader interpretations…

Luxembourg launches new national AML/CFT information portal

Luxembourg authorities have launched a new national AML/CFT portal, amlcft.public.lu, to centralise anti-money laundering and counter-terrorist financing resources. The platform consolidates legal, regulatory and practical guidance issued by key Luxembourg authorities, including the Ministry of Justice, the CSSF, the CAA and the AED. The initiative aims to strengthen coordination, accessibility…

Luxembourg S.à r.l. Reform: Deferred Payment of Minimum Share Capital

Luxembourg is introducing a more flexible incorporation regime for S.à r.l. companies through Bill No. 8669. While the minimum share capital of EUR 12,000 remains unchanged, founders will be allowed to defer payment of cash contributions for up to 12 months after incorporation. The reform aims to accelerate company formations…
Browse All

A LEGACY OF LAW. A FUTURE OF INNOVATION.
25 years of legal excellence – the journey continues.

Contact Info

+352 27 11 60 10

UP