Employment in Luxembourg is governed by the Labour Code (Code du travail) and, in many sectors, by collective agreements. Wages are indexed to inflation, and social security is collected by the CCSS. Here is what employers need to know about leave, pay, tax and ending employment.
The Labour Code sets generous minimum leave. Part-time employees receive annual leave pro rata, and collective agreements often add extra days.
Working days a year, regardless of age. Employees can take leave after 3 months’ uninterrupted service. Extra days apply for disabled employees.
8 weeks before the expected birth and 12 weeks after. Paid as a maternity allowance by the national health fund (CNS).
Working days for the second parent on the birth of a child. The employer pays the salary and is partly reimbursed by the state.
Per parent, full-time, or taken part-time or split into blocks. A parental leave allowance is paid by the family benefits fund.
Employees must tell the employer on the first day of absence and send a medical certificate by the third day. The employer continues to pay full salary until the end of the month in which the 77th day of incapacity falls (counted over a rolling 18 months). After that, the CNS pays sickness benefit directly.
Set up each Luxembourg leave type in IceHrm with its own accrual, carry forward and approval rules, including pro-rata entitlements for part-time staff. Employees see their live balance before they apply, and managers see who is away on a shared calendar. Leave management →
Luxembourg has a social minimum wage (salaire social minimum) that rises with qualifications. All wages, including the minimum wage, are automatically indexed by 2.5% whenever inflation triggers an index tranche.
Gross per month for workers aged 18 and over, from 1 June 2026 after indexation (EUR 16.02 per hour).
120% of the unskilled rate for qualified workers. Workers aged 15–18 receive 75–80% of the unskilled rate.
8 hours a day. Including overtime, work is limited to 10 hours a day and 48 hours a week.
Salaries are paid monthly, usually by bank transfer at the end of the month, with a payslip showing the calculation. There is no statutory 13th month salary, but many collective agreements and contracts provide one.
Capture attendance, overtime and Sunday work in IceHrm and feed the hours straight into payroll, so premiums and time off in lieu reflect what was actually worked. Time & attendance →
Income tax is progressive, from 0% to 42%, across many narrow brackets. The tax owed also depends on the employee’s tax class (1, 1a or 2), which reflects marital status and children. Employers withhold tax monthly using the employee’s electronic tax card.
| Annual taxable income | Marginal rate |
|---|---|
| Up to EUR 13,230 | 0% |
| EUR 13,230 – EUR 54,090 | 8% rising to 38% |
| EUR 54,090 – EUR 117,450 | 39% |
| EUR 117,450 – EUR 176,160 | 40% |
| EUR 176,160 – EUR 234,870 | 41% |
| Over EUR 234,870 | 42% |
A reform replacing the three tax classes with a single tax class and unified scale has been proposed for 1 January 2028. Until then, the class-based system above applies.
Employer and employee contributions are paid monthly to the CCSS. Pension and health contributions are charged on pay up to a ceiling of 5 times the social minimum wage (about EUR 13,857 a month from June 2026).
Paid by the employer, with another 8.5% withheld from the employee (both up from 8% in 2025).
Healthcare and cash sickness benefits, matched by the same rate from the employee.
Accident insurance (0.65% in 2026, adjusted by a bonus-malus factor) and the Mutualité des employeurs (0.23%–2.66%, by absenteeism class).
Employees also pay a 1.4% long-term care (dependency) contribution, with no ceiling, on pay above an allowance of a quarter of the minimum wage. Employers also pay a small occupational health contribution.
Build Luxembourg pay the way you already structure it, with your own salary components, deductions and formula columns, such as pension and health contribution columns. Want to know how well IceHrm handles payroll calculations for Luxembourg? Contact us or see Payroll →
A dismissal must be based on real and serious reasons, related to the employee’s conduct or capacity or to the needs of the business. Employees can ask for the reasons in writing, and employers with 150 or more employees must hold a preliminary meeting before dismissing.
| Length of service | Employer gives | Employee gives |
|---|---|---|
| Less than 5 years | 2 months | 1 month |
| 5 to less than 10 years | 4 months | 2 months |
| 10 years or more | 6 months | 3 months |
| Length of service | Severance |
|---|---|
| Less than 5 years | Nil |
| 5 years | 1 month’s salary |
| 10 years | 2 months’ salary |
| 15 years | 3 months’ salary |
| 20 years | 6 months’ salary |
| 25 years | 9 months’ salary |
| 30 years or more | 12 months’ salary |
Final pay includes compensation for any untaken annual leave.
Luxembourg has 11 statutory public holidays. When one falls on a Sunday, employees get a replacement day off within 3 months.
Leave groups give each office its own holiday calendar, so a Luxembourg team working alongside colleagues in France, Belgium or Germany gets the right days off automatically. Holiday calendars →
Contracts are open-ended by default. The employment contract must be in writing, with one copy for each party, and must set out the essential terms of employment.
A probation period must be agreed in writing and last between 2 weeks and 6 months. It is limited to 3 months for employees below a certain qualification level, and may be up to 12 months for employees earning above a salary threshold set by law. Fixed-term contracts may last no more than 24 months in total, including renewals, and may be renewed no more than twice.
Send contracts for e-signing, store them on the employee’s record, and track onboarding with task lists, from the CCSS declaration to the medical exam, so nothing is missed. Documents & e-signing →
This guide is general information to help you plan HR processes, not legal, tax or financial advice. Employment law and rates change regularly and awards, enterprise agreements and state rules may give employees more than the minimums shown here. Always confirm current requirements with the official sources or a qualified adviser.
Configure leave types, accrual rules and public holidays for Luxembourg, keep employee records and contracts in one place, and run payroll with your own salary components. Want to know how IceHrm handles payroll calculations for Luxembourg? Talk to us.
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