Financial compensation for redeployment: historic victory for ALEBA at the Court of Cassation

ALEBA is delighted to announce a significant victory before the Court of Cassation of the Grand Duchy of Luxembourg. In a judgment handed down on 5 March 2026, the Court of Cassation upheld the appeal lodged by ALEBA on behalf of one of its members, setting aside the decision of the Higher Social Security Council dated 31 March 2025.

It should be noted that successful appeals to the Court of Cassation are extremely rare. By upholding the grounds of appeal based on a breach of the law, the High Court ruled in favour of ALEBA on the merits of the case, thereby establishing a legal position of considerable significance for all employees undergoing redeployment in Luxembourg.

The facts: a case full of twists and turns spanning five years

The case pitted one of ALEBA’s members, an employee of a local bank, against the Employment Development Agency (ADEM). Upon her dismissal, the employee had been given four years’ notice, extended under the collective agreement applicable to the banking sector, as well as a company-level agreement concluded in good faith within her organisation. As she was undergoing internal redeployment at the time of her dismissal, she had continued to receive financial redeployment allowances throughout the notice period.

However, having noted that the statutory notice period had been extended by agreement, the ADEM decided to cease payment of the allowances beyond the statutory notice period and to claim reimbursement of the sums paid. The ADEM argued that the artificial continuation of the employment contract beyond the statutory notice period would unduly allow the employee to receive allowances at the State’s expense.

A long legal battle fought with determination

ALEBA successfully challenged ADEM’s reasoning before the Special Review Commission set up within ADEM, and subsequently before the Social Security Arbitration Board, to which ADEM referred the case following this initial victory. ADEM then lodged an appeal with the Higher Social Security Council, which, in a ruling dated 31 March 2025, ruled against our member.

Determined to defend its member’s rights to the very end, ALEBA then lodged an appeal to the Court of Cassation. The Court of Cassation finally ruled in her favour, quashing the ruling of the Higher Social Security Council. This outcome, achieved after five years of proceedings and numerous hearings, represents an exceptional achievement of which ALEBA is proud.

The implications of this victory

This ruling by the Court of Cassation is of paramount importance in several respects:

• For employees undergoing redeployment: the decision confirms that employees entitled to an extended notice period under a collective agreement or company-level agreement are entitled to continue receiving their redeployment allowances for the entire duration of that notice period.
• For employers: companies that enter into agreements in favour of their employees, in accordance with collective agreements, cannot be suspected of seeking to defraud the State. Good faith in collective bargaining is thus recognised and protected.
• For legal certainty: by ruling on the breach of the law, the Court of Cassation provides welcome clarification on the relationship between collective labour law and the statutory regime governing redeployment allowances.

“This victory in the Court of Cassation is the result of five years of hard work, carried out behind the scenes, on behalf of a member who placed her trust in us. It is a victory for her, for all employees undergoing redeployment, and for social dialogue in Luxembourg,” said Roberto Mendolia, President of ALEBA.