If you’re working in Luxembourg, here’s a comprehensive guide to employment contracts and remuneration in Luxembourg.
The Labour Code, which came into effect in September 2006, unified all Luxembourg’s previous employment legislation. You can therefore expect similar employment contracts and wage regulations when working in any part of Luxembourg.
Employment contracts are generally for an indefinite period, known as CDI (contrat à durée indéterminée), and must be finalised in writing (in duplicate) at the latest on the first day of employment. If there is no written contract, the employee may prove the existence and performance of a working contract in any way, which would generally classify it as an indefinite period contract.
An employment contract must include:
- the identities of the parties involved;
- the date on which work is to begin;
- the workplace;
- the nature of the post and, where applicable, a description of the duties involved;
- normal working hours;
- basic remuneration and any supplements (agreed bonuses or profit-sharing);
- the length of the probationary period, if applicable;
- the duration of paid leave and notice periods to be observed;
- any other additional clause (e.g., collective agreements).
In certain cases, a precise term of work may be set and a fixed-term contract known as a CDD (contrat à durée déterminée) would be awarded. Fixed-term contracts are for specific, short-term jobs, e.g. for seasonal work or to replace an absent employee; restrictions are in place so that they cannot be used to cover work related to the normal activity of a company for a lasting period. A CDD may not be terminated prior to its completion date, except in cases of serious misconduct.
A CDD should include the following additional information:
- the date on which the contract ends or the minimum length of time for which it will run;
- the name of the employee who has been replaced, where applicable;
- the length of the probationary period, if any;
- the renewal clause, where applicable.
Wages in Luxembourg
There is a guaranteed minimum wage (Salaire Social minimum, SSM) for all workers hired by an employer under a work contract. The SSM rate is based on the employee’s classification and age.
Unskilled workers over 18 years old receive 100% of the SSM. Fifteen- and 16-year-olds receive 75%, and 17 year-olds 80%. Skilled workers over 18 are covered at a rate of 120%. Since 1 March 2009, the SSM has stood at €1,682.79 a month for an unqualified worker over 18 years old and €2,019.33 for skilled workers.
The guaranteed minimum wage for skilled workers is available to employees performing an occupation based on a vocational qualification acquired through education or a training course recognized by an official certificate (at least a Certificate of Technical and Professional Aptitude, or CATP). Any employee that cannot produce such a certificate must be able to prove a minimum of 10 years’ professional experience.
Gross and net pay
Gross pay includes basic pay and any benefits and additional earnings such as overtime, bonuses, profit-sharing, and earnings in kind. Net pay is the amount actually received by a worker after deduction of social security contributions and Luxembourgish income tax, withheld at source.
Social security contributions and tax
These are calculated on the basis of a tax file sent to the employer in advance, and are relatively low. The maximum amount to be paid in social security contributions in Luxembourg is five times the minimum wage. Personal income tax in Luxembourg is at one of the lowest rates in Europe. The rate of income tax is set on a sliding scale of 17 progressive steps, with a maximum marginal rate of 38%.
Family allowance contributions
Family allowance contributions (1.7%) are paid by the state. The employer must send the employee a detailed statement at the end of each month showing how the wage or salary has been calculated. This statement should mention the time period concerned, the number of working hours being paid in total, the rate of pay for the hours worked, and any other payment in cash or kind.
Working time in Luxembourg
The law provides for a working time of 40 hours per week and eight hours per day. Time spent traveling to or from work is not included. The working day may not exceed 10 hours. In certain exceptional cases (serious accident or unexpected arrival of urgent work) working hours can be open-ended, or limited to a continuous shift of 12 hours. An employee can work up to 48 hours per week.
In cases in which the legal daily working hours are exceeded, the weekly average of 40 hours may not be exceeded over a consecutive four-week period. This is especially the case if the collective agreement envisages a longer reference period. Collective agreements can stipulate shorter working days than those that are laid down by law.
Workers should enjoy a rest period of at least 11 consecutive hours in each 24-hour period. All workers should, in the course of a week, have a minimum rest period of 44 consecutive hours. If they do not, then they must be granted an extra six days of supplementary leave a year under certain conditions.
Sunday work is forbidden apart from in certain sectors of activity or when authorised by the Inspection du Travail et des Mines (Labour and Mines Inspectorate), e.g., managerial jobs, trading in tourist regions, urgent work etc. Working on a Sunday entitles the employee to a pay increase of 70%. Employees may be compensated for each hour worked on a Sunday with additional free time in lieu of the wage supplement.
Night work means work performed between 22.00 and 06.00. If there is no legal rate, supplements for night work must be set by collective agreement. This supplement must be at least 15%. Young workers and pregnant women may not work nights. For other categories of employees, such work is regulated but not forbidden in principle.
Work on public holidays in Luxembourg
When special company conditions mean that work must be performed on a day that is a legal public holiday, the employee working on that day is entitled to a 100% supplement for each hour worked. If the legal public holiday falls on a Sunday, the employee will receive a further 70% supplement. This also applies to overtime, following the principle of accumulated supplement.
Overtime in Luxembourg
Hours worked beyond the legal working time (eight hours per day and 40 hours per week) when specifically requested by the employer, or when the employer is informed of these, are considered as overtime. Use of overtime working requires prior notification or authorization from the Ministre du Travail (Labour Ministry).
Since 1 January 2009, the supplement for each additional hour worked is 40 percent for all employees (except for upper management), but the principle of one and a half hours’ compensatory rest per hour of overtime worked will continue under the law governing the payment of supplements. This additional hour is exempt from tax and social contributions.
Waivers to the regulations on working hours are provided for certain sectors of activity, such as home help, agriculture, hotels and catering, healthcare and goods transport. Furthermore, the working hours regulations do not apply to river transport firms, fairground establishments or family-run enterprises.
Leave in Luxembourg
At least 25 working days’ paid leave must be given per year. A longer period may be laid down in the applicable collective agreement. Workers must work for an unbroken period of three months for the same employer before they are entitled to take a period of leave. Leave must be granted and taken during the calendar year. In principle, the employee decides when to take the leave. The employer must therefore give reasons if leave is refused.
If the employee has not been able to take all the leave to that (s)he is entitled by the end of the calendar year due to the needs of the company or leave being taken by other employees, outstanding leave may in this instance be carried over and taken by the following 31 March.
War invalids, victims of accidents at work and disabled workers are granted an additional six days’ leave. Miners, and manual workers and technical engineers in the mining industry are given an additional three days leave.
Legal public holidays
There are 10 public holidays laid down in law: New Year’s Day, Easter Monday, 1 May, Ascension, Whit Monday, 23 June (a public holiday to celebrate the Grand Duke’s birthday), Assumption, All Saints Day and 25 and 26 December.
If a public holiday falls on a day when the employee would not have worked (e.g., a Sunday), beneficiaries are entitled to take a day’s leave in lieu of this day within the next three months.
Leave for personal reasons
There are certain circumstances that entitle employees to leave for personal reasons on a particular date. These include marriage (six days), death of a spouse, a blood relative or relative by marriage of the first-degree (three days), moving house (two days), birth of a child (two days for the father), marriage of a child (two days for each parent).
Leave for family reasons
This is limited to two days per year per child under 15. It is granted in cases of illness, accident or other imperative health reasons requiring the presence of one of the parents. Such leave may be split over separate occasions.
Any person employed in the Grand Duchy for at least one year without a break by the same employer and who wishes to care for their child under the age of five years at home is entitled to parental leave. This leave lasts six months per child when the parent stops work, and twelve months when the parent wishes to work part-time (for which the employer’s agreement is required).
The allowance comes to EUR 1 778.31 net for full-time leave and EUR 889.15 for part-time leave. Both parents are entitled to take parental leave; however the first period of parental leave must start immediately when maternity leave ends.
It is now possible to take three months unpaid parental leave for a child under the age of five years should parental leave not have been taken after maternity leave or the period of leave allowed on first adopting a child.
There are a great many types of special leave: for sport, education and cultural activities, for fire brigade, rescue and lifesaving volunteer activities, for development cooperation, adoption, individual training (80 days out of the entire professional career), language training leave to learn the Luxembourgish language.
Palliative care leave
A draft law envisages the introduction of special leave to provide palliative care to a terminally ill family member.
Dismissal in Luxembourg
The employer may end the employment contract for a genuine and serious reason linked to the worker’s aptitude or behavior or due to the operational needs of the company, establishment, or department.
If the company has more than 150 employees, the employer must call the employee in for a discussion first. The company must then send written notice of dismissal by registered post. Finally, it must give the reasons for dismissal if the employee requests. Employers must send it by registered letter no later than one month after being given notice.
After giving notice, the working relationship ceases at the end of the notice period of between two and six months; this depends on the employee’s length of service. For five years or less: two months’ notice; five to 10 years: four months’ notice; 10 years or more: six months’ notice.
Employers may also end a contract immediately in the event of serious misconduct. In such cases, the notice of dismissal or redundancy must clearly state the event in question.
Resignation in Luxembourg
Under a permanent employment contract, the employee is free to end the working relationship. To do so, s/he should send a letter terminating the contract by registered post. The employer’s signature on the copy of the letter of resignation will also act as an acknowledgement of receipt of the notice of resignation.
Once the notice of resignation has been given, the working relationship will cease at the end of the notice period of between one and three months, depending on the employee’s length of service (half of this period for dismissal).
An employee may, like the employer, withdraw from the employment contract without giving notice should there be serious grounds for doing so. This includes non-payment of wages, for example.
Withdrawal during the trial period
A trial period of between two weeks and six months can be in the employment contract. During this period, each of the parties (employer/employee) may withdraw from the contract, without providing just cause beyond the minimum trial period of two weeks (for which there must be serious grounds), notifying the other party by registered post.
The amount of notice that must be given is one day per week of the trial period when the latter is described in weeks, and four days per month when it is described in months. The notice period is between 15 and 24 days.
End of a fixed-term contract
The working relationship ends automatically at the end of a fixed-term contract. A fixed-term contract (CDD) may only end before its expiry on serious grounds.
The employee’s work contract expires on the date that they can no longer claim a sickness benefit; that’s after 52 weeks’ incapacity for work paid by the Caisse Nationale de Santé (National Sickness Insurance Fund), during a reference period of 104 weeks.
Protection against dismissal
The Labor Code provides protection against dismissal of sick employees who fulfill their obligations of informing their employer during a consecutive period of 26 weeks. Beyond that period of protection, the employer may dismiss the employee for genuine, real, and serious reasons.