Labor Law in Luxembourg

Labor Law in Luxembourg

Updated on Thursday 14th April 2016

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The labor law in Luxembourg is included in the main legislative document on this matter, the Labor Code (Code du Travail). The Ministry of Labor, Employment and the Social and Solidarity Economy is the governmental agency entrusted with the enforcement of the labor law and the supervision of any professional and employment relations. 
The Luxembourg market is characterized by its openness and multiculturalism and there are many frontier workers from neighboring countries. The Duchy observes of all international treaties for labor laws, European law and EU directives. The labor law applies on all employment relationships developed on the territory of the Grand Duchy, unless the parties agree in the employment contract to pursue other laws and regulations. 
The employees are considered all the individuals which are enrolled in a company and have signed an employment contract. The individuals engaged in coaching or sporting performance with a contract registered at an approved federation or an affiliated club, are not considered employees if the activity is not carried on as principal or regular.
The Grand Duchy has three official languages: Luxembourgish, French and German and the law does not impose the use of one of them in employment contracts. 
Any employment or labor litigations are brought in front of the Labor Court of first instance, by the Court of Appeal in second instance cases and, in necessary, to the Luxembourg Supreme Court.

The employment contract in Luxembourg

The employment contract in Luxembourg can be individual or collective. The collective labor agreement applies for a company or a group of companies and it is concluded between the representatives of the employer and the employees. There are two types of individual employment contracts recognized by law, but in practice most of them are concluded for an indefinite period of time. The employment contract with indefinite or fixed term must be in writing with each employee individually and must be signed before starting the activity. A contract for an indefinite period may include a clause regarding a trial period. The trial period must be recorded in writing and cannot be less than two weeks nor more than six months. 
The content of the employment contract can differ according to the company/individuals who conclude it. The contents also depend on the type of contract and its duration. The information typically included in any employment contract is: the identity of the parties, the date of commencement of the contract work, the workplace, the nature of the job, regular schedule of work, the base salary and, if applicable, wage supplements, bonuses, the amount of paid leave to which the employee is entitled to, the duration of periods of notice, the length of the trial period and others. 
The employment contract can be terminated if there are real and serious reasons to do so. Severance payments are to be awarded to dismissed employees who have completed at least five years of service n that line of work. There is no applicable severance payment in case of resignation. The applicable notice period can vary and are expressed in the agreement. 

Working conditions and benefits for employees in Luxembourg

The labor law also regulates the minimum working conditions employers must provide as well as the minimum remuneration and benefits their employees are entitled to. According to law, the general maximum working time is 40 hours per week or eight hours per day but exceptions can be made in certain branches. Employees can work overtime but only if this is previously approved for that company and it must be remunerated or compensated for with free time. In general, individuals in senior management positions are not usually required to perform overtime hours. 
There are 10 annual public holidays in Luxembourg and employees working full-time are entitled to 25 business days of holiday each year. Certain categories of employees or those working in certain conditions might be entitled to additional free days. The employer must also pay attention to the sick leave the employees are entitled to. If an individual informs the employee in writing of an accident or sickness and he/she sends a medical proof of the incapacity to work, then the employer cannot dismiss the employee for a period of 26 days following the illness or accident. 
Our law firm in Luxembourg can help you if you want to hire personnel for your company. We can also help you hire foreign employees and obtain the additional documents required for them. Non-Luxembourg nationals who want to stay in the country for more than three months and work here need to apply for a residence permit (EEA nationals) or foreign identity card (all other citizens). They must also obtain a work permit before commencing any remunerated activity in Luxembourg. This is usually done by the employer after the recruitment process. Applications for work permits are accepted or rejected according to certain criteria and, in general, priority is given to Luxembourg nationals and EU nationals.
Contact our lawyers for more information about taxation in Luxembourg, including mandatory social security contributions and the personal tax rates.