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Luxembourg is among the most dynamic European economies, consistently ranking higher for territorial competitiveness, digitalization, and innovation. While the nation’s financial sector makes about one-fourth of its GDP, logistics and satellite tech are fast catching up.
Moreover, cross-border workers from Belgium, France, and Germany contribute to over half the nation’s workforce. However, to set up a business in Luxembourg, you must comply with local labor laws.
Several sources shape the legal framework for employment laws in Luxembourg, including international treaties, European Union directives and regulations, national laws and regulations, collective bargaining agreements, and individual contracts. It is equally important to understand the regulations around remote work.
Dive into this comprehensive guide on the employment laws in Luxembourg targeted toward employers looking to grow here.
Contractual Agreements
While the employment laws in Luxembourg recognize an oral contract, you may conclude a written contract outlining the nature and conditions of the employment relationship.
Employers must add the following information in all employment contracts:
- Name and address of both parties
- Date of entry into service
- Place of work
- The registered office of the business
- Nature of job
- Duration of employee’s daily and weekly work
- Working schedule
- Basic salary and the index in force
- Duration of paid annual leave
- Notice period
- Duration of trial period
And wherever applicable:
- Reference to collective agreements governing working conditions
- Additional or derogation clauses that may override the law that are favorable to the employee.
Apart from this, there are separate requirements for different types of employment contracts you must include with the above information.
Types of employment contracts in Luxembourg
Here are the types of employment contracts per the employment laws in Luxembourg.
You may engage with independent contractors, freelancers, or remote employees under any suitable contract employment law in Luxembourg.
Obligations and rights for both parties
- You must conclude an employment contract before or on the first day of employment.
- You must pay fair wages and overtime according to labor law regulations.
- You must implement company policies and regulations per the employment laws in Luxembourg.
- Since the General Data Protection Regulation (GDPR) is applicable in Luxembourg, you may sign separate Data Processing Agreements to minimize risks during employee management.
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Talk to an expertWorking Hours and Overtime
Luxembourg labor law regulates working hours and overtime compensation as follows:
Regular working hours
- The standard is eight hours per day and 40 hours per week.
- You may schedule working hours beyond the statutory limits but over a reference period of up to four months.
- You must also provide a rest period of 11 consecutive hours within 24 hours and 44 consecutive hours within seven days.
Overtime regulations and compensation
Minimum Wage and Compensation
You must ensure all employee salaries are above the social minimum wage prescribed under the employment laws in Luxembourg.
The minimum wage rate in 2024
Factors affecting wage determination
Learn more about remote employees and effective ways to pay them.
Employee Benefits and Social Security
Here are the following benefits your employee is entitled to as per the employment laws in Luxembourg:
Statutory benefits
- You must extend paid, sick, and maternity & paternity leave.
- You must withhold employee contributions towards social security coverage under the Joint Social Security Centre (CCSS). The fund may administer pay benefits during sickness, maternity, old age, disability, survival, unemployment, etc.
- You must register your employee for an occupational health service.
Additional perks and benefits
- Supplemental benefits for employees in Luxembourg include the 13th month pay, meal voucher, annual bonus, travel allowance, dental and vision insurance, and so on.
Social Security contributions and requirements
Vacations and Paid Time Off
The employment laws in Luxembourg prescribe the following paid and unpaid leave entitlements:
Annual leave entitlement
- Luxembourg labor law requires you to grant a minimum paid leave of 26 working days each year.
- An additional leave of up to six more days is mandatory for some categories of employees (like registered disabled).
- You may adjust the leave allowance of part-time workers based on their actual working hours.
Public holidays and special leaves
Termination and Severance
The employment laws in Luxembourg inform you about acceptable causes for employee termination, notice period, and severance pay in detail.
Ground for termination
Notice period and severance pay
Discrimination and Equal Opportunity
The Labor Code and Criminal Code prohibit direct and indirect discrimination. Employees can claim the labor court to enforce their rights. Therefore, you must stay compliant with the labor laws.
Prohibitions against workplace discrimination
- The employment laws in Luxembourg prohibit discrimination based on religion, conviction, belief, handicap, age, sex, sexual orientation, and ethnic origin.
- The labor laws of Luxembourg explicitly provide for non-discrimination between part-time and full-time employees.
Health and Safety Regulations
The labor laws in Luxembourg state the following health and safety obligations for employers:
- Protection of the employee
- Risk prevention, information, and training
- Appointing a designated employee in charge of health and safety issues
- Enrolling new employees under an occupational health insurance scheme
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Now, you can outsource administrative tasks of onboarding and managing employees to an Employer-of-Record solution like Skuad while complying with the employment laws in Luxembourg and focusing on your core expertise.
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FAQs
Q1. What are the employment rights in Luxembourg?
A1. In Luxembourg, you must guarantee employees' right to minimum wage and fair overtime pay. Working hours are capped, with a generous annual leave allowance. You may ensure transparency during terminations, including mandatory severance pay. Employees have the right to associate, work in a safe environment, and be free from discrimination.
Q2. How many hours can you work in Luxembourg?
A2. The standard working hours in Luxembourg cannot exceed eight hours a day and 40 hours per week. Even for overtime, the working hours cannot exceed 10 hours per day and 48 hours per week.
Q3. What is the contract law in Luxembourg?
A3. Luxembourg contract law borrows heavily from French laws and is based on the civil code. Specific to the case of employment, contract law in Luxembourg should be a written draft outlining the nature and conditions of work in detail.
Q4. What are the three ways a contract can be terminated in Luxembourg?
A4. An employment contract in Luxembourg is terminated with notice, without notice for cases of serious misconduct, or rapid termination during the probation period.
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