Luxembourg Supreme Court clarifies end date of redeployment compensation rights
In a significant judgment dated 5 February 2026 (No. 41/2026), the Luxembourg Supreme Court set aside a decision of the Higher Social Security Court concerning the duration of compensatory indemnities (indemnités pécuniaires de reclassement) payable in the context of internal professional redeployment.
The case concerned an employee in the banking sector who, at the time of her dismissal, was subject to an internal redeployment measure. Upon termination, she benefited from an extended four-year notice period, resulting from the combined application of the sectoral collective bargaining agreement applicable to the banking sector and a company-level agreement. As she remained under internal redeployment during that period, she continued to receive financial redeployment compensation throughout the full duration of the notice period.
ADEM, the national employment agency, considered that the employee remained entitled to compensatory redeployment indemnities only until the expiry of the statutory notice period on 31 May 2020. It therefore discontinued payment as from that date and sought reimbursement of the amounts paid for the period thereafter. While the “Commission spéciale de réexamen” and subsequently the Social Security Arbitration Tribunal upheld the continuation of payments beyond the statutory notice period, the Higher Social Security Court later reversed those decisions and ordered repayment.
The key legal issue arose under Article L.551-2(6) of the Labour Code, which provides that payment of the compensatory indemnity ends upon, inter alia, termination of the employment contract. The Supreme Court held that the appellate judges could not lawfully stop the indemnity at the end of the statutory notice period without first determining the actual date of termination of the employment contract.
By focusing exclusively on the alleged non opposability of the company agreement and settlement towards the State, the Higher Social Security Court failed to address the legally decisive question: did the employment contract continue until the end of the extended notice period? Because that factual and legal determination was missing, the Supreme Court set aside the ruling.
This decision is important beyond redeployment matters. It reaffirms a broader principle of Luxembourg employment law: where statutory rights are tied to the existence of the employment contract, courts must assess the effective contractual end date, even where extensions result from settlements, company agreements or collectively negotiated arrangements.
For employees subject to internal redeployment, the decision confirms that the relevant trigger for the end of compensatory indemnities is the actual termination date of the employment contract, which must be assessed in light of any validly agreed extension of the notice period.
The Supreme Court further declared the appellate decision null and void and remitted the case to the Higher Social Security Court, sitting in a different composition, for reconsideration of the contractual end-date issue.
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Photo – A. Sánchez
