Hire in Luxembourg

EOR in Luxembourg

If a lack of speed or local expertise are among your top concerns when expanding to or employing workers in Luxembourg, an employer of record may be the best option for achieving your global growth objectives.

An employer of record, sometimes known as an international PEO, enables you to quickly hire and onboard workers in Luxembourg ―often in as little as two weeks―without having to take on the cost and risk of establishing a local entity.

Learn about the hiring, employment, payroll and benefits requirements for workers in Luxembourg and how our employer of record service, EOR, and local HR experts can help you manage your international employment needs.

Hiring in Luxembourg

The Luxembourg Constitution expressly grants citizens the right to work and join trade unions. Since September 2006, employment relationships have been governed by a consolidated Labor Code, which replaced various separate laws, rules, regulations, and ministerial orders.

Luxembourg employment law applies to all work performed in the country unless the parties have agreed to the application of the law of another country that is more favorable to the employee.

Employment contracts in Luxembourg

As you look to hire employees in Luxembourg, here are some standard regulations you’ll need to know to create a compliant contract, as well as how an employer of record and PEO can provide support for your unique HR needs.

Working hours

The normal workday in Luxembourg is eight hours, and the normal workweek is 40 hours. According to a work organization or flextime plan, however, employees may be scheduled to work up to 10 hours per day and 48 hours per week, if their average weekly hours during four months do not exceed 40. Employees cannot be required to work more than two hours of overtime per day.

The four-month reference period may be extended up to 12 months by a collective bargaining agreement or with the permission of the Ministry of Labor and Employment.

Employees who work more than six hours per day are entitled to one or more rest periods, whether paid or unpaid. A workday may include no more than one unpaid rest period. Employees are entitled to at least 11 consecutive hours of rest every 24 hours and to at least 44 hours of consecutive rest every seven days.

Special overtime rules apply to the banking, transport, and hotel industries.

Compensation

As you consider the appropriate salary to offer new employees, keep in mind:

• There are several levels of minimum wage in Luxembourg:
• Effective January 1, 2023, the minimum wage was 2,864.88 euros per month for skilled workers over 18 years of age and 2,387.40 euros per month for unskilled workers over 18.
• Employees who work on Sunday are entitled to a compensatory day off plus 70% of their normal hourly rate or can be paid 170% of their normal hourly rate. Overtime pay is added to this if applicable.
• Employees who work four hours or less are entitled to half a day off; employees who work more than four hours are entitled to a full day off.
• Employees under 18 who work Sundays are entitled to twice their normal hourly rate.
• Employees who work on a holiday are entitled to double pay.
• For work performed between 10 p.m. and 6 a.m., employees are entitled to a 25% premium above their normal pay.

As your employer of record in Luxembourg, we can provide you with resources and insights about employee compensation, so you are better equipped to make a competitive employment offer.

Bonuses

There is no statutory requirement that an employer pay its employees bonuses.

Probationary period

An employment contract may provide for a probationary period of at least two weeks, the maximum length depending on the qualifications and salary of the employee.

For employees whose professional qualifications are less than required for a technical and professional proficiency certificate (CATP), the maximum probationary period is three months. For employees with at least a CATP or its equivalent, the maximum probationary period is six or 12 months, depending on the salary.

If the probationary period is shorter than one month, the employment contract must define it as whole weeks. If the probationary period is longer than one month, the employment contract must set forth the probationary period in whole months.

A probationary period may not be renewed.

Termination and severance

During the first two weeks of the probationary period, the employment contract may not be terminated except for gross misconduct. After this, the employment contract may be terminated by either party upon notice to the other:

• If the probationary period is expressed in weeks, at least one day’s notice of termination must be given for each week of the probationary period.
• If the probationary period is expressed in months, at least four days’ notice of termination must be given for each month of the probationary period subject to a minimum notice period of 15 days and a maximum of one month.

After completion of the probationary period, the amount of notice of termination required depends on the reason for termination, the size of the employer, and the employee’s years of service. In all cases, an employer must notify the employee of termination in writing, either by registered letter or by obtaining the employee’s signature on the termination letter.

An employee must submit notice either by registered letter or by obtaining the employer’s signature on the letter of resignation. Unless the employer agrees to a different period, an employee must provide:

• Less than five years of service - at least one month’s notice
• Five to 10 years of service - two months notice
• 10 or more years of service - three months' notice

Notice is effective on either the first or the 15th of the month.

An employee with at least five years of service who is terminated for any reason other than gross misconduct is entitled to severance pay (also known as a departure allowance). The amount of severance pay depends on the number of years of service and ranges from:

• One month’s pay for employees with five to 10 years of service
• A year’s pay for employees with 30 years or more of service.

Severance pay is exempt from tax provided it does not exceed 12 times the monthly minimum wage for unqualified workers.

Any employee who leaves employment is entitled to pay for annual leave earned but not yet taken during that calendar year. Employees are considered to have earned one-twelfth of annual leave for every month worked. Employees who worked more than 15 calendar days in a given month are considered to have worked the entire month for purposes of calculating unused annual leave.

Employee benefits and paid leave in Luxembourg

When negotiating terms of an employment contract with a candidate in Luxembourg, here are some of the statutory benefits and paid leave requirements to keep in mind, as well as how an employer of record can support your company’s benefits strategy.

Maternity leave

To receive maternity leave benefits, the female employee must be a resident of Luxembourg and generally must have worked six months before the pregnancy. Pregnant employees are entitled to eight weeks of maternity leave before the delivery and 12 weeks after delivery. The maternity allowance is paid by the National Healthcare Fund.

The employee must submit a medical certificate of pregnancy to the employer and social security authorities no later than 10 weeks before the expected due date.

The employee continues to accrue annual leave while on maternity leave. In addition, each parent is entitled to up to six months of parental leave.

Vacation

Employees who have completed at least three months of uninterrupted service with their employer are entitled to a minimum of 26 days of annual leave with pay. Workers with disabilities, mine workers, and workers whose schedules do not allow them to receive at least 44 hours of continuous rest per week are entitled to additional leave.

Annual leave generally must be taken during the calendar year in which it is earned. If the business needs of the employer have precluded an employee from taking leave during the calendar year, however, the deadline to take annual leave may be extended to March 31 of the following year.

Employees need not take the entire 26 days in one increment but must take at least 12 consecutive working days off at some point during the year.

Holidays

Employees are entitled to the following paid national holidays:

• New Year’s Day
• Easter Monday
• Labor Day
• Europe Day
• Ascension
• Whit Monday
• National Day
• Assumption
• All Saints’ Day
• Christmas Day
• Boxing Day

With permission from an employer, salaried workers are permitted to celebrate a local or business holiday instead of an official public holiday. Public holidays that fall on a Sunday are usually observed on the following Monday.

If a holiday falls on a Sunday or other day off, workers get an additional day off they can use any time within three months.

Sick leave

Employees are entitled to paid sick leave from the first day of illness or injury up to a maximum of 78 weeks in 104 weeks. Employers must continue paying employees on sick leave for up to 77 days over 18 months. After this period, the employee receives a sickness allowance from the Health Insurance Fund.

The employment contract must be automatically terminated after 78 weeks of paid sick leave over 104 weeks. Employees must notify the employer on the first day of absence from work due to illness or injury. No later than the third day, the employee must submit a medical certificate confirming the inability to work and stating the expected duration of the absence.

Health coverage

Social security benefits, funded by contributions from the employer, employee, and/or the government, include old-age benefits, disability benefits, survivor’s benefits, health insurance, workers’ compensation, unemployment insurance, and family allowance benefits.

Retired employees are entitled to receive an old-age pension at 65 years if they have at least 10 years of paid or credited contributions. Employees may retire with an early pension at 60 or 57 if they have contributed for at least 40 years. Retirees receive a flat monthly payment based on their years of coverage under the social security system plus a yearly supplement equal to 1.85% of adjusted lifetime earnings.

Additional benefits

In addition to healthcare benefits, employees in Luxembourg are entitled to pension, which is funded by government tax revenues, as well as workers compensation, which is covered through mandated employer insurance.

Employer social costs will cover a large portion of employee benefits in Luxembourg, but we can consult with you about supplemental coverage options, such as additional pension contributions or life insurance if needed.

Updated: June 19, 2024

Employee onboarding with an employer of record in Luxembourg

We write and validate all local employment contracts, streamlining the onboarding process for you and your Luxembourgish employees—all you have to do is provide relevant information and review and approve the employment agreement. As your employer of record in Luxembourg, we will:

• Schedule a welcome call to discuss HR and employment information for Luxembourg, as well as answer any questions
• Prepare a customized employment contract in English or other local language
• Share the employment contract and benefits information with the new employee for signature and review
• Gather tax and banking information from the employee to set up payroll
• Provide a local point of contact to the employee to answer any questions regarding their employment, local HR or payroll

The entire onboarding process for the employee is often completed in as little as two weeks.

Partner with Safeguard Global as your Luxembourg employer of record and PEO

With over a decade of service, we are the longest-serving employer of record and PEO provider in the international market. Organizations around the world rely on EOR, our employer of record solution, to expand and hire in 170+ countries around the world, quickly and compliantly.

We’ve seen just about every global employment circumstance imaginable—and with our extensive knowledge of local law and culture, we know what it takes to get employment right in Luxembourg. We provide written contracts in the local language, salaries in the local currency and HR support in your employees’ time zone.

Additionally, as a global payroll provider we support payroll administration—including payments, filings and other calculations— all around the world and can accommodate the payroll outsourcing needs of any size organization.

Whether you’re looking to hire as part of a strategic expansion or to meet specific talent needs, our global solutions advisors can walk you through your international hiring options so you can make the right choice for your organization. Contact us today.

Disclaimer

The information provided on or through this website is for informational purposes only and does not constitute legal advice. Safeguard Global expressly disclaims any liability with respect to warranty or representation concerning the information contained herein, including the lost essence, interpretation, accuracy and/or completeness of the information in transit and language translation.