Employment Law in Luxembourg - Your Guide on Labour Regulations
Employment Law in LuxembourgUpdated on Wednesday 22nd February 2023
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Employment in Luxembourg falls under the regulations of the Labor Code first enabled in 2006 which provides for both national and foreign citizens working in the Grand Duchy. However, it must be taken into accounts that nationals of certain countries are required to apply for an employment pass before starting to work in Luxembourg. Employment regulations are enforced by the Ministry of Labor and Employment.
Our law firm in Luxembourg can offer information on the Employment Law and the requirements for hiring foreign employees. Our employment lawyers in Luxembourg are at your service if you are an employer or worker and need assistance.
The main laws governing employment in Luxembourg
The most important law related to hiring employees in Luxembourg is the Labor Code, however, as an EU country, the Grand Duchy will also comply with the EU regulations imposed to all member states. Also, Luxembourg has signed various international agreements related to labor and resolution of employment disputes which must be considered by local companies hiring employees. It should also be noted that Luxembourg is part of the International Labor Organization.
With respect to the main institutions related to employment in Luxembourg, these are:
- the Ministry for Labor and Employment;
- the Inspectorate for Labor and Mines;
- the National Employment Agency;
- the National Employment Fund;
- the Conciliation Office.
The Conciliation Office is in charge of mediating disputes related to employment matters. The Luxembourg Employment Law is not the only act providing for the relations between companies and their workers.
Even though Luxembourg is one of the smallest countries in the world, visitors and expats continue to come here. Depending on your nationality and the purpose of your travel, you might need a visa to enter Luxembourg. For more details on immigration to Luxembourg, please contact our local law firm.
Labor contracts under the Luxembourg Employment Law
The Luxembourg Labor Law makes a clear distinction between employees who are categorized at it follows into regular workers and senior executives. However, the employment contract will have the same form for both types of employees. Labor contracts in Luxembourg are regarded as contracts through which an employee agrees to work under the authority of an employer. There are two types of work contracts in Luxembourg:
- fixed-term employment contracts;
- permanent employment agreements.
Fixed-term labor contracts cannot exceed 2 calendar years and can only be renewed twice.
Labor contracts in Luxembourg must contain the following elements:
- the name and address of both employee and employer;
- the effective date of employment;
- the location where the work will be carried;
- the services to be rendered;
- the remuneration for the services rendered;
- the working hours;
- information about the employee’s registration for social security purposes;
- the taxes to be withheld from the salary.
Our lawyers in Luxembourg can provide you with information about content of employment agreements.
Categories of workers according to the Luxembourg Employment Law
The Labour Code in Luxembourg provides for several types of employees based on their qualifications. These are:
- employees and self-employed persons;
- non-executive and executive workers;
- agency workers;
While self-employed persons are not supervised by a higher body, employees are subordinated to the company hiring them in exchange for a wage. In the case of executive and non-executive positions, there are also a few differences. For example, in the case of executives the responsibility is greater, which is why the remuneration is also higher. Non-executives enter the category of employees who contribute to the welfare of the business through their regular activities.
Companies in Luxembourg are also allowed to hire external workers who are persons hired by employment agencies supplying temporary labor force most of the times. Apprentices and trainees can also work in local companies, however, their rights and remuneration, as well as their responsibilities are limited.
Domestic businesses can also hire students who can work part-time with the intention of gaining experience.
All relations must be regulated through employment and/or apprenticeship contracts. In the case of external workers, their contract will be signed with the agency representing them.
The labour market here is quite complex, which is why if you need legal advice, you can discuss with our employment lawyers in Luxembourg.
Rights of employees in Luxembourg
No matter the type of contract concluded, all employees have certain rights attached to the obligation of fulfilling their service for the Luxembourg company employing them. The Employment Law in Luxembourg establishes a national minimum salary which depends on the qualifications of the workers. Also, workers are entitled to paid leave, sick leave and payment for the duration of the leave. The employee is also protected against dismissal for the duration of the sick leave. For employees working under extraordinary conditions, other rights may arise.
If you have any questions on the Luxembourg Labour Law, you can rely on our lawyers for assistance.
Hiring foreign employees in Luxembourg
Luxembourg is a small country in which often the local workforce cannot complete the needs of the local labor market. This is why many Luxembourg companies are required to hire foreign workers. It should be noted that employees coming from EU and EEA countries do not need a work permit, however all other third-country workers must obtain such visa before entering Luxembourg. Once arrived in the country, these will benefit from the same rights as local workers.
The rights and benefits obtained through continuous employment
The Luxembourg Labour Law provides for various additional rights and benefits for employees who have worked for a great number of years with the same employer. Among these, such workers are entitled to larger duration of the notice period when leaving the company, higher severance payment (where the labor contract stipulates such payments), more holiday leave days.
Being an employee comes with many benefits for Luxembourg citizens, but also for foreign ones who decide to relocate here for work reasons. You can rely on our law firm in Luxembourg for guidance in both immigration and employment matters.
Dismissal of employees in Luxembourg
In exchange for the wage and benefits workers are entitled to, their employers also have rights and one of them is related to the employees respecting their duties and complying with the regulations imposed at the workplace. Failing to do so can end up in termination of the labour agreement.
In case the dismissal is not immediate (which can only occur in serious misconduct or other aggravating circumstances), the employer is required to give a notice period to the worker. This period depends on the time of the employee in the company and is settled according to the following scheme:
- a 2 months’ notice in the case of employees with less than 5 years in the position they hold;
- a 4 months’ notice in the case of workers with 5 to 10 years of service;
- a 6 months’ notice for employees working for more than 10 years with the same company;
- the notice period can start on the 1st or 15th day of the month the letter announcing the dismissal.
Dismissed persons are also entitled to severance payments, as it follows:
- a 2 months’ severance pay for employees with contracts of 5 to 10 years;
- a 3 months’ severance pay for workers with contracts of 10 to 15 years;
- a 4 months’ severance pay for employees working with the same company 15 to 20 years;
- a 6 months’ pay for workers with 20 to 25 years seniority in the same company;
- a 9 months’ severance pay for those who have been with the same employer between 25 and 30 years;
- a 12 months’ severance pay for employees with 30 years seniority.
If you need support in termination of work contracts, our employment lawyers in Luxembourg can offer support in order to avoid any dispute.
All work relations are supervised by the Ministry of Labour and Employment.
Employment lawyers in Luxembourg
If you need support in any work-related matter, our Luxembourg lawyers are at your disposal with a wide range of services. From employment contract drafting to hiring foreign staff, you can rely on us for tailored advice not only when hiring, but also when dismissing employees. Apart from that, we can offer suitable assistance in cases of mergers and acquisitions where employees’ rights must be respected.
For full information about the Luxembourg Labor Law or hiring foreign employees, do not hesitate to contact our local law firm.