Guide to employment, payroll and benefits in

Luxembourg

Rivermate offers complete payroll, benefits and compliance services for

Luxembourg

01. Overview

Last updated: 

August 19, 2021

Currency
Euro
Capital
Luxembourg
Ease of doing business
69.6
Language
French
Population
625978
GDP growth
2.30%

02. Grow your team in

Luxembourg

with Rivermate

Payroll, benefits, taxes, and compliance can be difficult to manage in

Luxembourg

, particularly if you don't have established local relationships. You can hire employees in

Luxembourg

effectively, conveniently, and in full compliance with all relevant labor laws using Rivermate's global employment solution. We handle the responsibilities and legal risks associated with foreign employment so you can concentrate on growing your company.

03. Summary

Luxembourg is a landlocked country in Western Europe, officially known as the Grand Duchy of Luxembourg. It is bordered on the west and north by Belgium, on the east by Germany, and on the south by France. Luxembourg City, the country's capital, is one of the EU's four official capitals and the home of the Court of Justice of the European Union, the EU's highest judicial authority. Its culture, inhabitants, and languages are all heavily influenced by its neighbors, resulting in a blend of French and German cultures. It has three official languages: French, German, and Luxembourgish, which is the national language. With a land area of 2,586 square kilometers, it is one of Europe's smallest sovereign nations. Luxembourg had a population of 626,108 people in 2019, making it one of Europe's least populated countries yet with the fastest population growth rate. Luxembourg is home to almost half of the world's population. It is the world's only remaining sovereign grand duchy and is led by Grand Duke Henri as a representative democracy with a constitutional monarch. Luxembourg is a developing nation with a sophisticated economy and one of the highest per capita GDPs in the world. The City of Luxembourg, with its old quarters and fortifications, was designated as a UNESCO World Heritage Site in 1994 due to the outstanding preservation of the extensive fortifications and the old city. The history of Luxembourg is thought to begin in 963, when count Siegfried acquired a rocky promontory and its Roman-era fortifications known as Lucilinburhuc, "little castle," and the surrounding area. Through marriage, battle, and vassalage, Siegfried's descendants expanded their territory. The counts of Luxembourg ruled over a large area at the end of the 13th century. Henry VII, Count of Luxembourg, was crowned King of the Germans in 1308, and later Holy Roman Emperor. During the High Middle Ages, the House of Luxembourg created four emperors. The county was elevated to the Duchy of Luxembourg by Charles IV in 1354. The duchy later became a member of the Burgundian Circle and then one of the Habsburg Netherlands' Seventeen Provinces. The City and Fortress of Luxembourg, strategically located between the Kingdom of France and the Habsburg territories, was steadily built up over the centuries to become one of Europe's most renowned fortifications. After being a part of both Louis XIV's France and Maria Theresa's Austria, Luxembourg became a part of Napoleon's First French Republic and Empire. The modern-day state of Luxembourg was founded at the Congress of Vienna in 1815. The Grand Duchy, with its strong fortress, became an independent state under William I of the Netherlands' personal possession, with a Prussian garrison to guard the city against another French invasion.

04. Public holidays

05. Types of leave

Paid time off

Employees are entitled to 26 days of paid vacation each year. In addition, those workers are entitled to extra time off:Persons who are disabled who have been injured at work are entitled to an additional six days of leave.Employees in the mining industry are entitled to an additional three days of vacation.An employee or apprentice who has not had a consistent rest time of 44 hours per week, plus one extra day for every 8 weeks the employee has not had continuous rest.

Public holidays

Luxembour recognizes eleven public holidays.

Sick days

The maximum amount of accrued vacation time is 26 weeks. There is no requirement to have a medical certificate if an employee is hospitalized for one or two days. A credential is issued if an employee is absent for more than three days.

Maternity leave

Maternity leave in Luxembourg is 20 weeks long and will start as early as eight weeks before the due date. To be considered, the woman must have had mandatory health care for at least 6 months in the 12 months prior to maternity leave. Furthermore, the woman must inform her boss at least 12 weeks prior to the scheduled due date.Maternity leave is covered by social security, which cannot be less than the minimum wage and is set at 5 times the minimum wage.

Paternity leave

Paternity leave lasts for ten days. If the father fails to contact their boss at least two months in advance of the planned leave, the leave will be limited to two days. Furthermore, this leave does not have to be taken in a specific order and can be taken within two months of the child's birth.

Parental leave

There are two kinds of parental leave, each of which can be used only once per child:Following maternity or adoption leave – this leave must be taken as soon as possible after an infant is born or adopted; otherwise, it will be forfeited.Before the infant hits the age of six or twelve whether he or she is adopted.All leaves are dependent on the number of hours of the employee's contract and can be taken in full, partly, or shared with the other parent:40 hours a week - 4–6 months of full-time leave; 8–12 months of part-time leave (50 percent of daily working hours); 4 cycles of one month leave in a 20–month span; 1-2 half days of leave per week in a 20–month period4-6 months of full-time leave; 8-12 months of part-time leave; at least 20 hours a week (50 percent of regular working hours)4-6 months of full-time leave for at least 10 hours a weekThe boss has the authority to grant split or partial leave.To be eligible:At the time of the child's birth or adoption, the parent may have been enrolled with social security for at least 12 months.Employees on a salary would have served a minimum of 10 hours per week.Get a job lined up when you're on vacation.The Children's Future Fund provides an income in lieu of wages.

Other leave

06. Employment termination

Termination process

Termination must be in writing in Luxembourg, however neither party is compelled to give a reason unless the cause is instant dismissal. This information, however, must be disclosed upon request.


Employers with more than 150 employees are required to have a hearing before dismissing an employee. Employers must notify the Economic Committee of the discharge of employees with at least 15 employees.

Notice period

The notice period is determined by the duration of the employment. There will be a two-month notice period for employees with less than five years of service. There will be a four-month notice period for employees who have worked for the company for five to ten years. There will be a six-month notice period for employees with more than ten years of service. If the dismissal letter is provided prior to the 15th of the month, the notice period begins on that date. If, on the other hand, the dismissal letter was delivered between the 15th and the last day of the month, the notice period begins on the first day of the following month. Additionally, payment in lieu of notice is an option.

Severance pay

Severance pay is calculated based on the duration of employment. Severance pay will not be provided if the employee has worked for the company for less than five years. Severance pay equals four months' salary for five to ten years of employment, or the notice period can be extended by five months for employers with fewer than twenty employees. Severance pay equals two months' salary for ten to fifteen years of employment, or the notice period can be extended by eight months for employers with fewer than twenty employees. Severance pay is equivalent to three months' salary for employees who have worked for an employer for fifteen to twenty years, and the notice period can be extended by nine months for employers with fewer than twenty employees. Severance pay equals six months' salary for a tenure of twenty to twenty-five years, or the notice period can be extended by twelve months for employers with fewer than twenty employees. Severance pay equals nine months' salary for a tenure of twenty-five to thirty years, or the notice period can be extended by fifteen months for employers with fewer than twenty employees. Severance pay is equivalent to twelve months' salary for employees who have worked for an employer for more than thirty years, and the notice period can be extended by eighteen months for employers with fewer than twenty employees.

Probation period

Probation periods are generally two weeks in length and are determined by the employee's salary and qualifications. If an employee earns at least 4,474.31 EUR per month, the maximum probation period is 12 months. The maximum probation period is six months if the employee holds a vocational skills certificate or an equivalent. If the employee lacks a vocational skills certificate or an equivalent, the probation period is limited to three months.

07. Working hours

General

The standard workweek consists of eight hours per day, five days a week. The workweek is limited to 48 hours, and employees are not permitted to work more than 10 hours in a single day. Sunday is a prohibited day of work, with the exception of certain jobs and tasks that cannot be performed at other times.


These restrictions do not apply to certain categories of employees, most notably executives and senior management personnel who play a critical role in ensuring the business's proper operation.


Night shift employees (10 p.m. to 6 a.m.) are entitled to a premium.

Overtime

For each hour worked beyond 40 hours per week, employees must be compensated at a rate of at least 140 percent of the standard rate.

Employees who work on Sundays must either be paid at 170 percent of their standard rate or receive compensatory time off (half a day off if the employee worked up to four hours on Sunday, a full day off if the employee worked more than four hours) and be paid 70 percent of their standard rate for the Sunday hours in addition to the compensatory time off.


Employees who work on federal holidays are entitled to pay (sometimes with a premium) and compensatory time off based on one of several formulas.


Overtime or Sunday pay is tax-exempt and does not require social security contributions.

08. Minimum wage

General

The minimum wage is 2,201.93 EUR per month. The minimum wage for a skilled worker has been increased by 20%, bringing it to 2,642.32 EUR.

09. Employee benefits

General

Luxembourg has one of the finest healthcare systems in Europe. The nation offers a high level of state-funded healthcare, and the healthcare system provides all people with basic medical coverage. Furthermore, all citizens have the freedom to choose their own doctor, specialist, and hospital. Luxembourg's Union of Sickness Funds is in charge of the country's health-care system.

Everyone working in Luxembourg must be a member of one of many insurance funds, depending on their profession. The majority of Luxembourgers get private supplementary insurance to cover expenses not covered by the public healthcare system.

Through healthcare taxes, all employed citizens and workers pay to this system. The maximum amount is 6,625 EUR. Employees and employers each pay half.

Many Luxembourgers get supplemental insurance via one of the Ministry of Social Security's non-profit health insurance organizations or mutual societies (mutuelles). Many companies provide supplemental insurance as a perk of the job. A mutuelle covers the part of your medical expenses not covered by national health insurance and may provide expanded coverage for hospitalization, eye care, dental treatment, and medical services outside of Luxembourg.

10. Why Rivermate as your Employer of Record / PEO?

Establishing an entity in

Luxembourg

to hire a team takes time, money, and effort. The labor law in

Luxembourg

has strong worker employment protection, requiring great attention to details and a thorough awareness of local best practices. Rivermate makes expanding into

Luxembourg

simple and effortless. We can assist you with hiring your preferred talent, managing HR and payroll, and ensuring compliance with local legislation without the hassle of establishing a foreign branch office or subsidiary. Our PEO and Global Employer of Record solutions in

Luxembourg

give you peace of mind so you can focus on running your business.

Please contact us if you'd like to learn more about how Rivermate can help you hire employees in

Luxembourg

via our Employer of Record / PEO solution.

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