EurWORK European Observatory of Working Life

Luxembourg: Self-employed workers

About

Country: 
Luxembourg
Author: 
Wlodarski
Institution: 
Prevent

Disclaimer: This information is made available as a service to the public but has not been edited or approved by the European Foundation for the Improvement of Living and Working Conditions. The content is the responsibility of the authors.

The organisations that represent self-employed workers make no distinction between self-employed workers who are employers and those who are not. The principle of freedom of commerce and the clear distinction between the status of self-employed worker and employee predominate. They also have no special rights as far as working conditions are concerned. The social protection system covers the following risks: sickness and maternity, disability, death, old age, work accidents and occupational diseases. Those covered by the system also receive other benefits: family allowances and unemployment benefit under very restricted conditions. Overall, the number of self-employed workers has remained stable, and only the category of self-employed intellectual workers is growing. The issue of intermediate status between that of self-employed worker and that of employee is not very clearly defined in Luxembourg, even if the phenomenon exists.

1. Legal provisions and social security

Please provide the definition of self-employed workers which is applicable in your country.

There is a definition for social security purposes. The social insurance code stipulates in Article 1, Paragraph 1, Point 4 (of the law of 25 July 2005 amending the social insurance code) the requirement to be registered at the community social security centre. This applies to:

‘anyone practising in the Grand Duchy of Luxembourg on their own behalf a professional activity that falls within the scope of the Chamber of Trades, Chamber of Commerce or Chamber of Agriculture or a professional activity of a predominantly intellectual and non-commercial nature.’

Under this law, the following are therefore treated as self-employed:

partners in a partnership (société en nom collectif), ordinary limited partnership (société en commandite simple) or private company with limited liability (société à responsabilité limitée) whose object is an activity of this nature, where such partners hold more than 25% of the shares

and

- the directors, ordinary partners or representatives of limited companies (sociétés anonymes), partnerships limited by shares (sociétés en commandite par actions) or cooperative companies (sociétés coopératives) whose object is an activity of this nature, where such persons are entrusted with its day-to-day management, provided that their licence to trade, issued under the amended law of 28 December 1988 on access to craft, retail and industrial professions and to certain liberal professions, relates to these people, and that, accordingly, they sit on the board of directors. It should be noted that banks and other professionals working in the financial sector are excluded, as their licence to trade is issued by the Ministry of Finance under the amended law of 5 April 1993 on the financial sector.

However, self-employed businesses practised as a main or subsidiary activity are exempt from social insurance if the professional income of the self-employed worker or person of comparable status does not exceed one-third of the minimum annual social wage.

Briefly indicate the main differences, if any, in the social security regime of self-employed workers with no employees compared with: a) employees; b) self-employed with employees.

For the purposes of social security, self-employed workers fall into three sub-groups:

self-employed businesspeople (i.e. craft workers, salespersons and industrial workers who require a licence to trade in order to carry on their business);self-employed intellectual workers (i.e. liberal professionals, artists, consultants, etc.);self-employed persons in the agricultural sector in the broad sense (i.e. crop growers, horticulturists, market-gardeners, foresters and wine growers).

Self-employed intellectual workers are divided into liberal professions which require a licence to trade under the amended law of 28 December 1988 (engineers, architects, accountants, etc.), liberal profession which are subject to other laws (doctors, auditors etc.) and other professions which have no requirement to hold a licence to trade.

Please indicate the existence of any particular legal forms of employment which cover contractual relationships which are commonly regarded to be mid-way between dependent employment and self-employment (if necessary, see for a longer discussion of the concept the EIRO comparative study ‘Economically dependent workers', employment law and industrial relations’).

This type of contractual relationship is not formally defined either in legal doctrine or in legislation. It falls exclusively within the scope of the treatment under civil law of contract formation, under which a contract is an agreement in which one or more people give an undertaking to one or more other people, to give, to do, or to not do something (Article 1101 of the Civil Code). This type of agreement is distinguished from the employment contract within the meaning of the law of 24 May 1989 on employment contracts by the absence (in principle) of the relationship of legal subordination which is an essential characteristic of an employment contract. The relationship of legal subordination is defined in case law as the employer’s right to give orders concerning the carrying out of the work, and to oversee its performance and result.

whether they are commonly considered as economically dependent employment;

The concept of ‘economic dependence’ is very little used in jurisprudence in cases where a request is made for a business contract to be reclassified as an employment contract. For example, the requirement to work certain hours or in a specific place, or to produce a report on one’s activity if the board of directors requests it [C.S.J 25/03/2004 roll no. 8212] does not constitute (in recent case law) sufficient grounds for concluding that a subordinate relationship exists.

specify the main features of such forms of employment and whether they enjoy specific social security regime and, if relevant, the basic features of such special regime (please refer this illustration to the answer given to question 1.2 above).

Not applicable

indicate any rules which generally apply to this kind of employment as for: a) working time and vacation; b) maternity and parental leave; c) sick pay and leave for sickness

Not applicable

2. Recent trends in self-employment with no employees

Please provide data on recent trends in self-employment (since 2000):

Table 1. Recent trends in self-employment (2000-2007)*
  2000 2003 2006 2007
Total Total Total Total
Self-employed (no.) 15,949 15,800 15,788 Not available
Self-employed with no employees (no.) No specification in available data

* Number of people insured with the Health Insurance Fund for Independent Professions (figures from the General Inspectorate of Social Security)

Please report, according to available research and studies,

the distribution of self-employment without employees across sectors and occupations;

Self-employed intellectual workers by profession

  2000 2003 2006
Total 4,404 5,851 6,650
Lawyers 704 859 1,091
Notaries 19 17 17
Judicial officers 16 15 16
Registered attorneys 2 2 1
Doctors 806 860 896
Dentists 240 265 287
Pharmacists 84 84 80
Veterinarians 73 79 83
Medical assistants 244 288 289
Architects 323 340 353
Consultant engineers 96 103 93
Quantity surveyors 3 2 1
Inspectors 1 1 1
Technicians 11 8 5
Assessors 16 15 17
Chartered accountants 176 153 157
General insurance representatives 8 8 7
General insurance agents 176 153 135
Dance teachers, physical training instructors, etc 35 27 21
Literary workers 14 13 11
Musicians 12 15 11
Artists 97 100 88
Miscellaneous 1,268 2,444 2,992

Source : STATEC

whether self-employment without employees has either increased or decreased significantly in recent years (since 2000) in specific:

Sectors and activities.

Between 1981 and 2001 (the latest census), the number of self-employed people in Luxembourg increased by 21.8%. However, this increase was exclusively due to growth in the number of "self-employed intellectual workers (TIIs)" (doctors, architects, lawyers etc.) which more than doubled in twenty years. The "other self-employed workers" (craft workers and salespersons) remained more or less the same in number. Taking into account the fact that the total population in employment grew by 23% between 1981 and 2001, it can be concluded that the relative proportion of these "other self-employed workers" has fallen.

The number of Luxembourger "other self-employed workers" decreased (by 21% from 1981 to 2001) while that of Luxembourger TIIs doubled. The number of foreign workers increased in both categories. In total, foreigners account for more than 35% of self-employed workers.

While the changes in professional status seem to be for reasons that are mainly structural or sociological, the change in the number of licences to trade granted mainly reflects the state of the economy.

Source: http://www.gouvernement.lu/salle_presse/communiques/2004/02/13economie/index.html

The incidence of the working poor is especially high amongst blue-collar workers, 22% of whom fall into this category, as opposed to 3% of private-sector white-collar employees, 12% of self-employed workers, and less than 1% of national and international state employees.

Source: Work alone is not enough to prevent poverty, Frédéric Berger, in: Vivre au Luxembourg N°33/ April 2007, CEPS

The self-employed workforce has risen by 21.8% since 1981 and today amounts to more than 13,200 people. This statistical category includes two distinct social groups. It is made up of ‘self-employed intellectual workers’ (TIIs) (doctors, architects, lawyers, etc) and ‘other self-employed workers’ (craft workers and salespeople). The former group, often referred to as the new middle class, is growing rapidly: TIIs have more than doubled in 20 years. The second group, the “old middle class”, has retained virtually the same in terms of numbers.

The number of Luxembourger ‘other self-employed workers’ has decreased (by 21% between 1981 and 2001) while that of Luxembourger TIIs has doubled. The number of foreign workers has increased in both categories: TIIs increased by a factor of 8, and ‘other self-employed workers’ increased by 78% (while the proportion of foreigners in the total working population increased by 65%). In total, foreigners account for 35.2% of self-employed workers, showing that craftwork and sales work are important avenues of social advancement for immigrants.

66.8% of TIIs are men. However, the number of women has grown by nearly 17% in 20 years. The proportion of female ‘other self-employed workers’, however, has not changed and remains around 34%. 79.7% of TIIs have a higher education qualification, representing more than four years of study. 20.9% of ‘other self-employed workers’ have a masters degree, and 21% have a professional teaching diploma. TIIs are mainly to be found in or near the capital, while the ‘other self-employed workers’ are found in the North-West, in the vicinity of Echternach and Remich.

Source: http://www.statistiques.public.lu/fr/publications/thematiques/PopulationEmploi/Societes_lux_recensement_2001/PDF_Chapitre_3.pdf

Occupations (International Standard Classification of Occupations – ISCO 88, at one digit).

  Helpers Farmers Self-employed intellectual workers Other self-employed workers
All sections 3,164 2,743 3,841 9,419
Agriculture, hunting and forestry 522 1,738 10 127
Fishing and aquaculture - - - 4
Mining industries - - - 2
Manufacturing industries 127 13 41 482
Production and distribution of electricity, gas and water - 1 1 5
Construction 179 13 63 936
Sale and repair of automobiles and domestic applicances 408 44 196 2,443
Hotels and restaurants 310 14 67 1,738
Transport and communications 41 12 24 307
Financial intermediation 51 3 107 401
Property sales and leasing and business services 114 7 1,093 713
Public administration 41 9 73 24
Education 17 3 60 79
Health and social work 235 6 1,160 145
Community, social and personal services 68 6 142 671
Domestic services 113 3 2 18
Extra-territorial activities 25 15 55 60
Not specified 913 856 747 1,264

Source : Statec, 2001 Population census

and in specific groups of workers defined by:

Gender (men/women).

Total population in employment by professional status according to nationality and sex

Status Total population Luxembourg population Foreign population
  Total Men Women Total Men Women Total Men Women
Domestic helper 3,164 653 2,511 2,186 463 1,723 978 190 788
Farmer 2,743 1,984 759 2,629 1,906 723 114 78 36
Self-employed intellectual worker 3,841 2,564 1,277 2,585 1,823 762 1,256 741 515
Other self-employed worker 9,419 6,192 3,227 6,007 3,901 2,106 3,412 2,291 1,121

Source: Statec, 2001 Population census

Age groups (younger/older; 14-24, 25-54, 55-64; 65 and over).

Total unwaged population, Luxembourger and foreign, by age and according to sex

  Total unwaged population Male unwaged population Female unwaged population Luxemboug unwaged population Male Luxembourg unwaged population Female Luxembourg unwaged population
All ages 19,167 11,393 7,774 13,407 8,093 5,314
15-19 83 45 38 46 30 16
20-24 421 244 177 251 178 73
25-29 1,191 658 533 687 412 275
30-34 2,145 1,192 953 1,289 757 532
35-39 2,927 1,862 1,165 1,890 1,155 735
40-44 3,060 1,799 1,261 2,138 1,254 884
45-49 3,068 1,829 1,261 2,138 1,254 871
50-54 2,488 1,492 996 1,829 1,078 751
55-59 1,549 957 592 1,187 717 470
60-64 988 609 379 787 474 313
65-69 550 372 178 478 321 157
70-74 431 289 142 383 256 127
75 and over 266 145 121 236 126 110

Source : STATEC, 2001 Population census

Nationality (nationals/foreign nationals).

See above

Other relevant dimensions to be specified.

Based on existing research and studies, please provide any available data on the diffusion and recent trends of:

All legal forms of employment indicated in section 1.3 above (contractual relationships mid-way between dependent employment and self-employment and economically dependent employment), specifying whether they concentrate in any sectors and/or occupations.

No data

‘Bogus self-employment’, i.e. formal self-employment which is fraudulently used to disguise contractual relationships which should be properly registered as dependent employment, in order to avoid the protections and costs (both wage and social contributions) connected with the latter, specifying whether it concentrates in any sectors and/or occupations.

No data

3. Collective representation and collective bargaining

NCs are requested to indicate the main collective representation organisations of employed workers with no employees or of the workers with the special contractual relationships illustrated above in section 1.3. In particular, they should provide information on:

The type of associations (trade associations or trade unions).

Self-employed workers are represented by professional associations. Most of these belong to the Federation of Craft Workers (Fédération des Artisans). The Chamber of Trades (Chambre des Métiers) is a public body set up by the amended law of 4 April 1924 on the creation of elected professional chambers and currently regulated by the provisions of the Grand-Ducal decree of 8 October 1945. Its main role is to safeguard and defend the interests of craft businesses.

These associations make no distinction between self-employed workers who employ personnel and those who work alone. A large number of professional associations belong to the Federation of Craft Workers:

Federation of Luxembourg CarpentersFederation of Food WorkersLuxembourg Association of Professional AbattoirsFederation of Bakers and Cake MakersFederation of Cake-Makers, Confectioners and Ice-Cream MakersFederation of ButchersFederation of Master CaterersFederation of Qualified BeauticiansFederation of Dry Cleaners and Laundry OwnersAssociation of Master FurriersFederation of Master Watchmakers and JewellersFederation of Barbers and HairdressersConfederation of Fashion WorkersAssociation of Master Orthopaedists and Truss-Makers Federation of Dental LaboratoriesFederation of Opticians and OptometristsPedicurists SectionGrouping of Importers and Repairers of Construction Business EquipmentFederation of Lift-MakersFederation of Mechanics for Bicycles, Motorbikes, etc.Federation of Service Station Operators

The associational domains of each of such associations: territorial, sectoral, occupational, professional, etc.

The associations defend the interests of the trades and are national in nature.

Membership and membership rates.

For the Chamber of Trades, which covers the craft trades, the enrolment rate is 100%, since enrolment is compulsory in order to be legally entitled to carry out the work. For the Federation of Craft Workers, which includes various professional associations, the organisation estimates that the rate is between 80% and 85%.

Any forms of social dialogue or collective bargaining these associations engage in, specifying:

The levels at which such activities take place (national, sectoral, territorial, company).

There is no collective bargaining in the usual sense. The employers’ organisations which represent self-employed workers who are not employers have no special demands to make on behalf of this particular group. They play a role in relaying information to and from the various decision-making and supervisory bodies such as the economics committee of which the Federation of Craft Workers is a member.

The actors they engage in these activities with (public authorities, employers associations, single employers).

These organisations most frequently engage in dialogue with the public authorities. They issue opinions on measures that are being contemplated by the public authorities where the general interests of entrepreneurs are involved.

The topics typically covered by these activities.

The organisations concerned have no special demands to make on behalf of self-employed workers who are not employers. They mainly defend the rules regarding the right to trade, and administrative simplification, and fight against the phenomenon of unfair competition (also see point 5).

The typical outcomes of such activities (joint documents and declarations, guidelines, agreements, etc.)

When asked by the public authorities, they issue opinions on bills and more generally on draft regulations.

A brief description of the content of some (two or three) of the main and most recent of such documents.

The Federation of Craft Workers and the Chamber of Trades have not issued any specific documents recently relating to the group targeted by the study. See also the answers above.

4. Employment and working conditions

Wage levels, of self-employed workers without employees compared with the national average.

No data

The incidence of low-paid jobs (that is, according to the OECD definition, jobs which pay less than two-third of the median wage) among self-employed workers without employees compared with the national average.

The incidence of the working poor is especially high for blue-collar workers, 22% of whom fall into this category, as opposed to 3% of private-sector white-collar employees, 12% of self-employed workers (estimated figure) and less than 1% of national and international state employees.

Source: Work alone is not enough to prevent poverty, Frédéric Berger, in: Vivre au Luxembourg N°33/ April 2007, CEPS

Working hours, of self-employed workers without employees compared with the national average:

Average hours actually worked per week.

  Self-employed (all sectors) Employment Employees
Total 44.9 37.3 36.9
Full-time 49.7 40.4 40.0
Part-time 23.1 u 22.2 22.2
Males
Total 47 40.1 39.7
Full-time 49 40.5 40.1
Part-time No data 24.5 24.7
Females
Total 41.5 33.6 33.3
Full-time 51.2 u 40.1 39.8
Part-time 22.9 u 22.0 22.0

Source : Eurostat, LFS 2006

u : unreliable data

Diffusion of long working hours (more than 10 hours a day).

No data

Diffusion of work at unsocial hours (night, weekend).

Population in employment working on Saturday, Sunday and at night as a percentage of the total employment for a given sex and professional status

  Saturdays     Sundays     Night    
  Usually Sometimes Never Usually Sometimes Never Usually Sometimes Never
Employment 20.5 8 71.5 12.8 6.7 80.5 6.2 3 90.8
Employees 17.4 7.2 75.4 10.9 5.7 83.3 6.4 2.4 91.1
Self-employed 53.6 18.1 28.3 38.8 15.6 45.7 _ 11.7 84.2
Males
Employment 21.1 9.5 69.4 14.2 8.0 77.8 8 4.1 87.9
Employees 17.3 8.6 74.1 12.0 7.0 81.0 8.3 3.3 88.4
Self-employment 58.0 19.3 u 22.7 u 42.9 15.4 u 41.7 _ 15.3 u 79.7
Females
Employment 19.8 6.0 72.4 11.0 4.8 84.1 3.9 1.5 u 94.6
Employees 17.6 5.3 77.1 9.6 4.1 86.3 4.0 1.2 u 94.7
Self-employment 46.9 16.3 u 36.8 u 32.6 u 15.7 51.7 _ _ 91.0

Source : Eurostat, LFS, 2006

u: unreliable data

Place of work of self-employed workers without employees compared with the national average:

Home/office distribution.

No data

Exposure to risks and accidents at work of self-employed workers without employees compared with the national average:

Work accident rates.

The accident statistics only make a distinction for self-employed intellectual workers. In 2006, 73 accidents were declared for the 6,333 self-employed workers insured. The other categories of self-employed workers are covered under the risk class retail, food and other unclassified activities, but no distinction is made between employed and self-employed workers.

Source : Association d’assurance contre les accidents

Health outcomes, work-related health problems and occupational illnesses of self-employed workers without employees compared with national average:

Occupational illness rates.

The Accident Insurance Association holds data on this subject which it does not wish to supply for practical reasons. However, it has indicated that the incidence of recognised occupational diseases is very low. For all types of workers combined, the figure is just seven to eight cases per year.

Work intensity and stress at work

No data

Lifelong learning of self-employed workers without employees compared with the national average:

Participation rates in continuous education and training.

No data available. According to the Institute for Continuing Professional Training, the participation rate is extremely low.

This situation could change over the coming years due to the implementation of a new law from 1 January 2008 on training leave, which also benefits people who practise self-employed or liberal professional activities. These people now benefit from compensatory payments made directly by the state. They are determined on the basis of the income used for the last contribution period as the contribution basis for pension insurance. This payment is made on submission of a reimbursement declaration the model for which has been laid down by the Ministry of National Education and Professional Training.

Work-life balance of self-employed workers without employees compared with the national average:

Presence and take up rates of maternity/parental leave (according to the applicable social security regime).

The social security regime for self-employed workers includes the granting of family benefits such as maternity and parental leave. The only available statistics give the total amount of payments made.

Presence and take up rates of long-term leave (according to the applicable social security regime). If possible, please indicate the reasons for long-term leave.

Not covered by the social security regime

Degree of control of personal working time.

No data available

Degree of consistency of personal working time with family and social commitments.

No data available

Job satisfaction of self-employed workers without employees compared with the national average:

Degree of satisfaction with employment conditions.

No data available

Degree of satisfaction with working conditions.

No data available

5. The social partners’ positions

In its contribution to the European Commission’s Green Paper on economically dependent work, the Luxembourg government has said, regarding the introduction of the concept of "economically dependent work", proposed by the European Commission, that it is strictly opposed to such a "grey area". In this context, the status of "bogus self-employed person" – people working under self-employed status but treated as employees, though without the same protection as employees – must, according to the Minister for Labour, be reclassified as that of an employee.

Source: www.gouvernement.lu/

Both the Chamber of Trades and the Federation of Craft Workers primarily defend the principle of free trade, and reject the idea of creating an intermediate zone between the status of employee and self-employed person. More generally, the organisations which represent self-employed workers do not make a distinction between self-employed workers who do not have employees, and those that are employers. There is a strong consensus regarding the principle on which the status of self-employed worker is based, namely that a person who has chosen to be self-employed has accepted and taken on the risks connected with his or her work, including those relating to working conditions. Hence the organisations that represent self-employed people do not advocate the extension of access to solidarity mechanisms which would inevitably make them subject to conditions which would affect the spirit of enterprise and lead to ambiguities and possible abuses of the system. The distinction between the two statuses must be clear, since it is the result of free choice. Thus in a general sense, these organisations place more emphasis on defending self-employed people indirectly by protecting them against unfair competition, by administrative simplification, or by protecting access to certain professions. The Chamber of Trades believes that a self-employed person must have the capacity necessary to assume this status. The position of the organisations that represent self-employed people can be illustrated by their rejection of automatic access to unemployment benefit for self-employed people who have ceased trading – a subject which had been debated at the isolated request of a few self-employed people. Those representing self-employed people believe that such a measure would be unfavourable to the general economic context, since it would attract people who lack the capacity to be self-employed to start working in this way and would increase the number of bankruptcies.

6. NC Commentary

The working conditions of self-employed workers raise few questions in Luxembourg. The legal and economic contexts maintain a clear distinction between the statute of waged employees and the statute of self-employed workers. The will to maintain clear lines of demarcation between labour law and other forms of contract was reaffirmed by the government and social partners during the debates on the European Commission’s Green Paper. Consequently, the working conditions of self-employed workers do not appear on the agenda of the social dialogue.

Odette wlodarski, Prevent