Some joint stock companies are required to have staff representatives on their board of directors or supervisory board.

Which companies must have staff representatives on their board of directors or supervisory board?

The following companies must provide for employee representation on their board of directors or supervisory board:

• companies established in Luxembourg in the form of a joint stock company and which habitually employed at least 1,000 employees over the last three years;
• companies established in Luxembourg in the form of a joint stock company that enjoy financial participation with the State of at least 25% or that have a concession from the State concerning their main activity. These companies are designated by Grand-Ducal decree. According to a Grand-Ducal decree dated 11 August 1974, these are CEGEDEL, LUXAIR, CLT and SES. This decree was supplemented in 2008 in order to add to this list the Luxembourg airport company LUX-AIRPORT.

What is the minimum number of members of the board of directors or supervisory board?

The directors or supervisory board members of the companies concerned must number at least nine in all.

How is employee representation ensured?

The law makes a distinction between a :

• joint stock company with at least 1,000 employees: one third of the directors or members of the supervisory board must represent the employees;
• joint stock company with state participation or concession: at least three directors or three of the members of the supervisory board must represent the company’s personnel. The board of directors or the supervisory board shall be composed of one director representing the personnel for every 100 employees, without the total number of directors or members of the supervisory board exceeding one third of the members of the board of directors or the supervisory board.

How are staff representatives on boards of directors or supervisory boards appointed?

The members of the board of directors or supervisory board representing the staff are appointed by the staff delegation from among the employees of the company. The election takes place by secret ballot in accordance with the rules of proportional representation.

An exception to the normal rules for appointing members of the administrative or supervisory board is provided for in the case of joint stock companies in the steel sector. Three of the members of the board of directors or supervisory board representing the staff are appointed not by the staff delegation but by the representative trade unions at national level.

This appointment shall be made after consultation with the signatory parties to the collective agreement applicable to the business. The members of the board of directors or supervisory board thus appointed need not necessarily be employees of the company.

Their allocation among the trade unions concerned shall be the subject of a prior agreement between those organizations, which shall be notified in writing to the chairman of the Board of Directors or Supervisory Board of the company concerned and to the director of the Inspectorate of Labour and Mines.

If no appointment is made within the set time limit, the members of the Board of Directors or Supervisory Board are appointed by the Minister of Labour from among the company’s staff.

When should staff representatives on Boards of Directors or Supervisory Boards be appointed?

The appointment shall be made no later than one month before the expiry of the term of office of the previous members of the Board of Directors or Supervisory Board.

What are the conditions for becoming a member of the Board of Directors or Supervisory Board representing employees?

Employees of the company who wish to stand for election must have had an employment contract for at least two years prior to their appointment as a member of the Board of Directors or Supervisory Board, and this contract must correspond to an actual job.

Note: Employees’ appointments as a member of the Board of Directors or Supervisory Board do not cause them to lose this contract.

What is the duration of their mandate?

The members of the Board of Directors or Supervisory Board representing the staff shall be appointed for a term of office equal to that of the other members of the Board of Directors or Supervisory Board. Their term of office shall be renewable.

According to the amended law dated 10 August 1915 on commercial companies, the maximum term of office for members of the Board of Directors or Supervisory Board is six years.

What are the grounds for terminating their mandate?

The term of office of members of the Board of Directors or Supervisory Board representing the staff shall end in the following cases:

• death of the member of the Board of Directors or Supervisory Board;
• voluntary relinquishment of mandate;
• termination of the employment relationship;
• revocation of the mandate by the staff delegation, the trade union organisation or by the Minister of Labour.

How is an outgoing member replaced?

When a member of the Board of Directors or Supervisory Board ceases to hold office for one of the reasons listed above, he shall be replaced:

• by the next candidate on the list in sequence, if the outgoing member has been designated by the staff delegation;
• by a candidate nominated by the most representative trade unions at national level or, failing that, by the Minister of Labour, if the outgoing member belongs to a company in the steel sector.

Note: In the event of a vacancy, the other members of the Board of Directors or the Supervisory Board are entitled to occupy the seat provisionally until the first meeting of the plenary assembly which leads to the final election.

What is their responsibility?

Members of the Board of Directors or the Supervisory Board representing the staff shall be liable for any misconduct in their management in accordance with the ordinary law governing the liability of members of the Board of Directors or the Supervisory Board.

The members of the Board of Directors or the Supervisory Board representing the staff shall be jointly and severally liable with the other members of the Board of Directors or the Supervisory Board in accordance with the provisions of article 59, second paragraph, of the amended law dated August 10, 1915 on commercial companies.

Can a member of the Board of Directors or the Supervisory Board representing the employees be dismissed?

No, the members of the Board of Directors or the Supervisory Board representing the staff cannot be dismissed during their term of office, unless authorised by the Labour Tribunal.

This also applies to:

• former members of the Board of Directors or the Supervisory Board representing the employees during the six months following the expiry of their mandate;
• candidates for membership of the Board of Directors or the Supervisory Board for a period of three months from the date of submission of their application.

Can a member of the Board of Directors or the Supervisory Board be dismissed for serious misconduct?

In the event of serious misconduct committed by a member of the Board of Directors or the Supervisory Board representing the staff in the exercise of his professional activities in the company, the rules are the same as those of the staff representatives, except for the retroactive right to unemployment from which the representative whose contract has been terminated by the court and who is ordered to reimburse the employer. (See explanation under “Special protection – Dismissal for serious misconduct“)

Are there any conflicts of interested associated with being a member of the Board of Directors or the Supervisory Board representing employees?

Yes, members of the Board of Directors or the Supervisory Board representing the employees cannot simultaneously be a member of the Board of Directors or the Supervisory Board of two or more companies which pursue activities of the same nature and purpose.

Similarly, they may not be employed by another company engaged in activities of the same nature as the one in which they are a member of the Board of Directors or the Supervisory Board.

In addition, a member of the Board of Directors or the Supervisory Board representing employees may not serve on more than two Boards of Directors or the Supervisory Boards.