General Overview

Luxembourg, a small but prosperous country in Western Europe, has a highly developed economy focused on finance, technology, and industry. As an EU member, it offers a robust labor framework that ensures employee rights, competitive salaries, and strong social security protections.

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Employment Contracts

Fixed-term contracts can last up to 18 months and may be extended up to 3 times, provided the total duration does not exceed 18 months. Otherwise, the contract is considered permanent.

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Probation Period

The standard probation period is 3 months.

14 days' notice is required for termination during probation.

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Working Hours

Standard work hours: 8 hours per day, 40 hours per week.

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Overtime is capped at 2 extra hours per day and 8 extra hours per week, with a maximum of 10 hours daily and 48 hours weekly.

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Mandatory rest periods:

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• 11 hours of uninterrupted rest per 24-hour period.
• 44 consecutive hours per week.

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Vacation Days

Employees are entitled to 26 days of annual leave. A maximum of 5 unused days can be carried over to the next year but must be used by March 31. Unused leave can be paid out if the employee leaves the company.

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Sick Leave

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• Sick leave is compensated at 100% from the first day.
• A doctor’s certificate is required from day 3, unless otherwise agreed.
• 80% of sick pay is reimbursed by social security, while 20% is covered by the employer.

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Wages and Salary Payment

Minimum wage for 2024: €3,130 per month. Salaries are paid at the end of the month.

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Public Holidays

Luxembourg observes 11 national public holidays, including:

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• New Year’s Day (January 1)
• May 1 & 9 (Labour Day & Europe Day)
• National Day (June 23)
• Christmas & Boxing Day (December 25 & 26)

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If a public holiday falls on a Sunday, it can be taken within the next 3 months.

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Employer Taxes

Employers contribute approximately 12.31% of wages to social security, which covers:

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• Pension (8%)
• Health insurance (3.05%)
• Accident insurance (0.70%)
• Mutuality & occupational health insurance (0.42% + 0.14%)

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Employee Taxes

Employees contribute 12.45% of their salary to social security, including:

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• Pension (8%)
• Health insurance (3.05%)
• Dependency insurance (1.40%)

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‍Income tax rates range from 0% to 42%, depending on salary level.

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Notice Period

During probation: 30 days for both employer and employee.

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After probation:

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• Employee: 30 days’ notice.
• Employer: 60 days’ notice.

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Notice periods increase after 5 years of service.

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Termination and Severance Pay

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• Severance pay is based on the notice period.
• For fixed-term contracts, severance is limited to 1 month’s salary.
• Employees retain salary and benefits during the notice period.