Employer of Record Luxembourg

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Employing in Luxembourg

Luxembourg has one of the most stable and lucrative economies in the whole of Europe, thanks to relaxed business. Banking, finance, and knowledge services are its primary economic sectors. Youth in Luxembourg are well-educated and well-equipped to find work. This makes it a lucrative place to establish an office or take advantage of these business incentives. However, setting up international payroll in Luxembourg can be complex, so engaging an Employer of Record provider is a sensible option.

An overview of employing in Luxembourg


Euro – €

Salary pay date

Employees in Luxembourg are usually paid on a monthly basis, with all TopSource Worldwide employees paid on the final day of the month.

Salary increases

Increases in salary are usually attached to performance or inflation, and are not mandated by law. Usually, the employee can expect an annual review to determine or negotiate any increase in salary.


Everyone in Luxembourg has access to free, universal health care. There are a number of insurance funds in Luxembourg, each classified according to the occupation of its members and each with a different level of contribution.

Many people also purchase private insurance plans to cover the features that the government’s national healthcare system does not cover. These are often included in employment contracts as an added benefit to the employee.

Social security

Luxembourg’s social security system is among the best in the world. Social assistance is a right that each and every citizen has access to. All residents of Luxembourg are obligated to participate in the country’s social safety net.

Social security payments are used to fund public healthcare, unemployment benefits and support, and the public pension system. They vary depending on the person’s income and both employee and employers contribute to the system.


An employer must inform an employee in writing of the reasons for the termination of their employment. The reasons given can include poor performance, incompatibility, business needs or poor conduct. The employee must be given notice of dismissal.

Resignation by the employee

Employees must give written notice if they wish to leave their employer and serve the adequate notice outlined in their employment contract. Employers and employees can agree to reduce the notice period, and the employee may be asked to help hire a replacement in the final weeks of their notice period.

Indirect termination

Employees who are dismissed for reasons unrelated to their personal performance must be given written notice and a notice period in line with their employment contract. Employers with more than 150 employees must hold a per-dismissal interview with the employee before dismissing them.

Termination by mutual consent

Employers and employees must agree in writing any immediate mutual termination, otherwise the notice period outlined in the employment contract must be observed by both parties.

An overview of statutory benefits on the Luxembourg


Luxembourg’s pension system is built on a number of pillars. The public tier state pension, as well as occupational and personal pensions, are included in the system. These funds are under the management of the Caisse Nationale d’Assurance Pension (CNAP).

Luxembourg’s state pension (Pension de Vieillesse / Altersrente) can be claimed by workers in full or in part. The amount they receive is determined by the number of years they have paid into social security by the time they turn 65. This is the age at which people in Luxembourg can begin receiving their state pensions.

Sickness pay

Employees in Luxembourg can self-certify illness for two days, but must then seek a medical note for illnesses that last more than three days. For long term sickness, the employer is responsible for the first 77 days, then the social security system covers sick pay.

Maternity / Paternity

Working mothers in Luxembourg are entitled to 20 days of paid maternity leave, and employers may offer to increase the amount of leave available either at full or reduced pay. Fathers are entitled to 10 days of full pay before they return to work, but agreements are often made from organisation to organisation.


Parents have an entitlement of a total of six months to care for children under five years old.

Contractual provisions in Luxembourg

Employment contracts

Employment contracts in Luxembourg can be short-term or long-term, permanent or temporary. Every contract must be in writing, and each party must receive a copy of the agreement.

It is not possible to extend a fixed-term contract beyond two years or to renew it more than twice. Employees must be offered a permanent position or dismissed after this period.

Probationary period

The usual probationary period in Luxembourg is between two and six months. In most cases, it is included in the contract of employment and the employee must have the same contract as their peers after passing probation. However, it can only be extended for a maximum of three additional months, which must be agreed to by both employees and employers.

Working hours

The maximum number of hours that can be worked in a day is eight, making the normal working week 40 hours.

If necessary, this can be increased to 10 hours a day and 48 hours a week, as long as this is agreed .

The workday can go up to 12 hours a day in specific industries. It would then be limited to a weekly work week of 60 hours.

Rest breaks

During a work week, employees are entitled to a minimum of 44 hours of uninterrupted rest time off, usually over the weekend. An additional one day of leave is granted to employees who have worked overtime of more than eight hours in a working week.


Employees can only be asked to work overtime in special circumstances, such as if revenue will be lost or there is no one else available to do the work. The employee can still decline overtime if they wish.

An employee is only allowed to work an additional two hours per day and a maximum of ten hours per week. If an employee works more than the required number of hours per week, they are entitled to a 40% uplift to their hourly wage.

Vacation allowance

Workers in Luxembourg are entitled to 25 days of annual leave (exclusing bank holidays). Employees with a registered disability are offered an additional six days of annual leave on top of this allowance.

Luxembourg public holidays

2021 2022
New Year’s Day Friday 1 January Saturday 1 January
Easter Monday Monday 18 April Monday 18 April
Labor Day Saturday 1 May Sunday 1 May
Europe Day Sunday 9 May Monday 9 May
Ascension Day Thursday 26 May Thursday 26 May
Monday of Pentecost / Whit Monday Monday 6 June Monday 6 June
Birthday of the Grand Duke Wednesday 23 June Thursday 23 June
Assumption Day Sunday 15 August Monday 15 August
All Saints’ Day Monday 1 November Tuesday 1 November
First Day of Christmas Saturday 25 December Sunday 25 December
Second Day of Christmas Sunday 26 December Monday 26 December

Keen to engage a EOR in Luxembourg? At TopSource Worldwide, we work with local experts to help you navigate the various admin and cost obstacles you may come across along your expansion journey

Get in touch today to see how we can help your business with our employment solutions.

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Published date: 3rd Aug 2021
Review date: 3rd Aug 2022