In brief
On 4 March 2025, the Luxembourg parliament adopted draft bill No. 8225 ("Law"), transposing the employment law provisions of the Mobility Directive (Directive (EU) 2019/2121) into Luxembourg law. This legislation introduces new rules on employee information, consultation and participation in cross-border conversions, mergers and divisions.
These changes complement the law of 17 February 2025 (derived from Bill No. 8053), which primarily addressed the company law aspects of the Mobility Directive and strengthened employee information and consultation rights.
The Law was published on 28 March 2025 in the Luxembourg Official Journal and entered into force on 1 April 2025.
Companies planning cross-border restructurings within the European Economic Area (EEA) must comply with these new obligations, particularly regarding information and consultation deadlines as well as employee participation.
To understand the implications of these changes and how they may impact your organization, please get in touch with your usual Baker McKenzie contact.
Background
The Mobility Directive seeks to enhance corporate mobility within the European Union, ensuring that employees remain adequately informed and, as applicable, involved in decision-making processes during cross-border transactions.
Luxembourg transposed the Mobility Directive in two phases:
- The law of 17 February 2025 (Bill No. 8053) – This has been in effect since 2 March 2025, covering corporate law aspects and introducing enhanced employee consultation rights in cross-border operations. For more details, please refer to our InsightPlus alert dated 5 February 2025.
- The Law (Bill No. 8225) – This further adapts employee rights in cross-border mergers and introduces new rules for cross-border conversions and divisions in the Luxembourg Labor Code.
Key takeaways
Strengthened employee information and consultation rights
- For cross-border operations with restructuring plans published on or after 1 April 2025, management bodies of each of the merging companies or the company to be converted or divided shall formally notify shareholders, employee representatives — or employees in the absence of representation — and creditors that they may submit comments on the contemplated restructuring at least five working days before the shareholders’ meeting.
- Management bodies of each merging company or the company to be converted or divided must provide detailed explanatory reports for employees and shareholders.
- These reports were previously only required for shareholders (unless waived). Now, employee-specific reports are mandatory, except for companies with no employees other than those in management.
- These employee-specific reports must provide a detailed analysis of the implications of the cross-border operation for employment relationships, as well as, where applicable, any measures for safeguarding those relationships and any material changes to the applicable conditions of employment or to the location of the company’s places of business.
- Reports must be made available electronically to employee representatives or, if there are no employee representatives, to employees directly, at least six weeks before the shareholders’ meeting, alongside the draft terms of the operation.
- If employee representatives — or employees in the absence of representation — have submitted comments at least five working days before the shareholders’ meeting, such comments shall be considered by shareholders and attached to the shareholder's report although they are not binding nor have a suspensive effect on the operation.
- The existing employee information and consultation rules in cross-border mergers are now extended to cover cross-border conversions and divisions.
Enhanced employee participation rights
- Employee board-level participation rights were previously applicable only to cross-border mergers; they now extend to cross-border conversions and divisions.
- Companies undergoing a cross-border operation must protect existing employee representation rights where applicable.
- Employee participation is required if the average number of employees in the company in the past three years is 800.
- In a cross-border merger, if one of the merging companies is subject to an employee participation regime, the merged entity has two options:
- Apply standard participation rules directly.
- Negotiate a new participation framework with a special negotiating body.
- The outcome of employee participation negotiations for any company resulting from a cross-border operation must be communicated to employees within three working days.
- If negotiations fail, default catch-all provisions ensure that employee participation remains at the same level as before.
- Any company resulting from a cross-border operation must now safeguard employee participation rights for four years (previously three). This protection extends not only to subsequent national mergers but also to subsequent cross-border mergers, conversions and divisions.
Action required
Companies planning cross-border operations within the EEA should take proactive steps, including the following, to comply with the new requirements:
- Ensure that information and consultation processes are extended to also protect employee rights during cross-border divisions and conversions.
- Adapt the participation thresholds and safeguard periods to meet the new legal requirements.
Conclusion
With these legislative updates, Luxembourg law is now fully aligned with the Mobility Directive, providing greater protections for employees involved in cross-border restructurings. Companies should assess their obligations and ensure compliance to avoid legal risks and potential disputes.
