Global HR Compliance in Luxembourg
Expanding your business to Luxembourg? Understanding the nuances of local labour legislation is crucial for successfully hiring and managing employees. This guide provides essential information to help you navigate the complexities of global HR compliance in Luxembourg.
Challenges of International Hiring
Entering a new market like Luxembourg presents unique challenges for businesses. Establishing a compliant local presence and understanding local employment laws can be complex and time-consuming. One of the first questions to address is how to hire local talent efficiently and compliantly.
The Global Employer of Record Solution in Luxembourg
Our Global Employer of Record (EOR) service offers a streamlined solution for international hiring. By partnering with us, you can outsource the complexities of global employment, allowing you to focus on your core business objectives.
Here’s how our EOR service can benefit your business:
- Effortless International Hiring: Employ your global sales force in Luxembourg and over 180 other countries easily.
- Comprehensive HR Management: We handle payroll, benefits administration, and business expenses on your behalf.
- Guaranteed Compliance: Our solution ensures full compliance with Luxembourg labour laws, protecting you from non-compliance and misclassification risks.
- Reduced Risk: We assume all employment liabilities, giving you peace of mind.
- Simplified Operations: Focus on global business development while we manage your global HR needs.
- Cost and Time Savings: Eliminate the need to establish your entities in foreign countries and leverage our existing infrastructure in Luxembourg.
Benefits of Global Employment Services Beyond Compliance
Our Global Employment solution offers more than just compliance. By leveraging our expertise, you can:
- Build a Dedicated Team: Employ a local workforce dedicated to your company’s success.
- Improve Retention: Experience higher retention rates than working with independent sales representatives.
- Access Local Expertise: Benefit from our in-depth knowledge of Luxembourg’s labour laws and cultural nuances.
- Gain a Competitive Edge: Expand your global reach with reduced costs and minimized time and effort.
Acumen International: Your Global Employer of Record Partner in Luxembourg
Acumen International is your trusted partner for global workforce employment in Luxembourg. We offer:
- Expertise: Extensive knowledge of Luxembourg labour laws and HR practices.
- Compliance: 100% compliant solutions to protect your business.
- Efficiency: Streamlined processes to save you time and resources.
- Support: A dedicated team of English-speaking professionals available 24/7.
- Tailored Solutions: Customized labour solutions to meet your specific needs.
Partner confidently with Acumen International and navigate the complexities of global HR compliance in Luxembourg.
Employment Contracts in Luxembourg
Even though an oral contract is not prohibited, it is always in the parties’ best interest to draw up a written agreement. Employment contracts must be concluded no later than the first day of employment and may be executed for a permanent or a fixed period. Temporary job contracts may only be renewed twice and may not exceed 24 months (including the renewal periods). A clause must be added to the contract specifying the renewal terms. A fixed-term contract becomes a permanent employment contract if the employee continues to work following expiry of the contract, without any objections from the employer in writing. A temporary contract cannot be terminated before the end date except in the event of gross misconduct.Employment Law in Luxembourg
Working Hours
Luxembourg’s normal working hours are 8 hours per day and 40 hours per week. Employees covered by a flextime scheme may work up to 10 hours a day and 48 hours a week provided that the average work time per week over a reference period of 4 weeks (or up to 12 months in case of collective agreement or approval from the Ministry of Labor and Employment) does not exceed 40 hours.Probation period
Permanent and fixed-term contracts usually commence with a period of probation, which may last from two weeks to twelve months (depending on the profession). During this time, either party can terminate the work contract without cause. Notification must be delivered by registered letter. A trial period may not be renewed.Annual leave
Employees who have worked for their employers for a continuous period of 3 months are eligible for an annual paid leave. Eligible employers must be granted at least 25 working days of paid annual leave or more if required by the applicable collective agreement. Generally, annual leave should be given and used up during a calendar year. Employees may be allowed to carry forward an annual leave, which must be taken no later than the 31th March of the following year, if the reason for not taken the leave is due to their company’s requirements.Parental leave
Pregnant employees must be granted 16 weeks of paid maternity leave and an extended 4 weeks in case of premature birth, multiple births or for breastfeeding. If the woman has been registered with sickness and maternity insurance for at least six months during the 12 months before her maternity leave, the Social Security system pays a financial maternity benefit at the same rate as the employee’s average salary (limited to five times the minimum social wage). The mother and father are entitled to 6 months of full-time parental leave or 12 months of part-time parental leave until their child is 5 years old. Male employees shall be granted 2 days of paid leave for the birth of a child.Sick leave
To be entitled to paid time off and to be protected against dismissal, the employee must inform his employer about his sickness on the first day of absence and submit a medical certificate by the third day at the latest. After the expiration of a 26-week period, the employer has the right to dismiss the employee for real and serious reasons. An employment agreement will automatically end after a sick leave of 52 weeks over 104 weeks. The employer will pay the full salary (all benefits included) to his employee from the date on which he is informed about the sickness until the end of the month during which the 77th day of sickness leave occurs (whether consecutive or not), over a reference period of 12 consecutive months. The employers’ mutual scheme insurance will reimburse 80% of the overall remuneration paid by the employer during the sickness period.Overtime
Overtime, when required, must be done with the permission of the Ministry of Labor and Employment, except in the event of an emergency or accident. Employees are entitled to 140 per cent pay or one and a half hours’ compensatory time off for each overtime hour. When special company conditions mean that work must be performed on a legal public holiday, the employee working on that day is entitled to a 100 percent supplement for each hour worked. If the legal public holiday falls on a Sunday, the employee will receive a further 70 per cent supplement. This also applies to overtime, following the principle of accumulated supplement.Minimum Wage in Luxembourg
The minimum wage in Luxembourg is much higher now and depends on age and skill level. As of September 1, 2023: Unskilled workers (18+): €2,570.94 per month Skilled workers (18+): €3,085.11 per month 17-18 years old: €2,056.74 per month 15-17 years old: €1,928.19 per month Luxembourg has one of the highest minimum wages in Europe, and it is regularly adjusted based on the cost of living.Employment Termination in Luxembourg
It’s important to distinguish between notice periods for employers and employees.
Notice periods for employers terminating an employee:
- No notice: In the case of gross misconduct (with valid reasons)
- 2 months’ notice: For less than 5 years of employment
- 4 months’ notice: For between 5 and 10 years of employment
- 6 months’ notice: For 10 years of employment or more
Notice periods for employees resigning:
- 2 weeks’ notice: During the probationary period (this can vary, so check your contract)
- 1 month’s notice: For less than 5 years of employment
- 2 months’ notice: For between 5 and 10 years of employment
- 3 months’ notice: For 10 years of employment or more
Important notes on notice periods
- These are legal minimums. Collective agreements or individual contracts may specify more extended periods.
- The notice period starts on the 15th of the month if the termination letter is sent before the 15th or on the 1st of the following month if sent on or after the 15th.
Severance Pay in Luxembourg
- Eligibility: Employees who have been employed for at least 5 years and are dismissed with notice (except in cases of gross misconduct) are entitled to severance pay.
- Amount: Severance pay is calculated based on the employee’s length of service:
- 5 to under 10 years: 1 month’s salary
- 10 to under 15 years: 2 months’ salary
- 15 to under 20 years: 3 months’ salary
- 20 to under 25 years: 6 months’ salary
- 25 to under 30 years: 9 months’ salary
- 30 years or more: 12 months’ salary
- Calculation: Severance pay is based on the average monthly salary over the 12 months preceding the termination notice.
- Tax exemption: Severance pay is exempt from income tax and social security contributions.
- Payment: Severance pay is due at the end of the notice period.
- Collective agreements: Collective agreements or individual contracts may provide for higher severance pay amounts.