HR Software for Luxembourg

Leave Policy

Maternity Leave

Employees are entitled to 20 weeks of paid leave, which is divided into two parts: before and after confinement. 8 weeks of maternity leave must be taken before the expected date of delivery.

The employee receives 100% of her highest salary in the last three months before the vacation and social security is responsible for this salary.

Paternity Leave

Employees are entitled to 10 days of paid paternity leave. The leave must be taken within 2 months of the birth. The employee receives 100% of his salary during this period. The first 2 days are paid by the employer, the remaining 8 days are covered by social insurance.

Parental Leave

Employees are entitled to one of two parental leave options after maternity and/or adoption leave has ended. Parental leave can last up to 6 months, depending on the number of hours specified in the parent’s employment contract and their employment status. Both parents can decide how to divide their free time. Both parents can take parental leave. Social Security calculates the employee’s remuneration based on the average salary of the last 12 months.

Sick Leave

Employees are entitled to an unlimited number of paid sick days. For the first 77 days, the employee receives 100% of his salary from the employer. If the 77th day falls on a day after the 1st of the month, March 18th, the employer is obliged to continue paying the employee’s wages for the remaining days of the month if the employee remains on sick leave. From the 1st day of the month following the 77th day of sick leave, sick leave is paid directly by social security at 100% of the employee’s regular salary up to the social minimum wage x 5.

Pay & Tax

Minimum Wage Requirements

The minimum wage can vary depending on the qualifications of the employee. For unskilled workers, the minimum wage is usually EUR 2,570.93 and for skilled workers it is EUR 3,085.12.

Individual Income Tax

Income tax in Luxembourg is complex. Individual income tax ranges from 8% to 42%. Personal income tax is calculated according to progressive rates, the employee’s marital status and the number of children.

Payroll Cost

Employer costs are generally estimated at 11.94% of the employee’s salary:

Public pension fund – 8%
Health and maternity insurance (Caisse de maladie soins) – 0.25%
Insurance against accidents at work – 0.75%
Public health insurance (Caisse de maladie soins) – 2.8%
Medical pre-employment examination and professional fitness support for employees – 0.14%
Telephone and internet flat rate – 15 EUR

Overtime Pay & Maximum Hours

Overtime pay is mandatory for all employees except senior managers. Overtime is paid at 140% of the regular hourly rate. Overtime can be compensated through compensatory time off (1 hour of overtime corresponds to 1 hour and 30 minutes of free time).
Employees receive compensation for additional hours:

Overtime type	Pay
Standard overtime	140% of the regular hourly rate
Working on public holidays	200% of the regular hourly rate
Working on Sundays	170% of the regular hourly rate
Working at night (from 10 PM to 6 AM)	115% of the regular hourly rate

Termination

Termination Requirements

Dismissals must take into account complex rules and the regulations of the country in which an employee is employed. Off-boarding is always carried out by the employer with the main participants. It may include ad hoc fees as well as required or recommended steps in certain termination cases.

In Luxembourg, employers cannot terminate at their own discretion and the termination must be for a valid reason.

Compliant terminations are:

Voluntary by the employee
By mutual agreement
Unilaterally by the employer due to:
1. Probation period
2. Objective reasons
3. Disciplinary dismissal
4. Performance due to unsuitability for the position
When the contract expires

Notice Period

The notice period is at least 30 days and increases depending on the duration of the employment relationship and the type of termination.

Notice period upon termination of the employment relationship by the employer:

60 days if the length of service is less than 5 years
120 days if you have been with the company for more than 5 years but less than 10 years
180 days if you have been with the company for more than 10 years

Notice period when the employee leaves:

30 days with less than 5 years of service
60 days if you have been with the company for more than 5 years but less than 10 years
90 days if you have been with the company for more than 10 years

Severance for Employees

In Luxembourg, all employees who are dismissed without reasonable notice or who have been with the company for more than 5 years are entitled to severance pay. The severance payment is 30 days’ salary per year of service up to 25 months’ salary.

From 5-10 years of service, 4 monthly salaries.
From 10 to 15 years of service, 2 months’ salary.
From 15-20 years of service: 3 monthly salaries.
From 20-25 years of service: 6 monthly salaries.
From 25-30 years of seniority, 9 monthly salaries.
From 30 years of service, 12 monthly salaries.

Statutory Time Off

Paid Time Off

Both full-time employees are entitled to 26 days of paid time off (PTO) per year. PTO is credited monthly at 2.17 days per month. Employees are entitled to annual leave after 3 continuous months of work. Part-time employees are entitled to a pro rata share of vacation days.

Public Holidays

Luxembourg celebrates 11 national holidays

National public holidays include:
New Year’s Day
Easter Monday
Labour Day
Europe Day
Ascension Day
Whit Monday
National Day
Assumption Day
All Saints’ Day
Christmas Day
2nd Day of Christmas

Onboarding

Due to the lengthy compliance steps, the start-up timeline can vary from 2 weeks to 1 month. The documents must be completed 1 day before the start date.

In Luxembourg, new hires must be registered with the national employment agency ADEM (Agence pour le développement de l’emploi). During the onboarding process, you will receive an additional form that you must fill out and which IceHrm will use to notify ADEM. Once ADEM has confirmed the registration, IceHrm can send the employment contract to your employee

Additional Info

Employment Contract Details

Contracts can be concluded in English. They must be in writing and signed by both parties.

A contract must contain:

Name
Start date
Length of the employment
Job description
Termination conditions
Monthly salary
Address of work
Working hours
Holidays
Bonuses
Benefits

Probation Period

The minimum probation period is 180 days. The maximum duration of the probationary period is 180 days for employees and 365 days for managers