Working life country profile for Luxembourg
This profile describes the key characteristics of working life in Luxembourg. It aims to provide the relevant background information on the structures, institutions, actors and relevant regulations regarding working life.
This includes indicators, data and regulatory systems on the following aspects: actors and institutions, collective and individual employment relations, health and well-being, pay, working time, skills and training, and equality and non-discrimination at work. The profiles are systematically updated every two years.
‘Individual employment relations’ refers to the relationship between the individual worker and their employer. This relationship is shaped by legal regulation and by the outcomes of social partner negotiations over terms and conditions. This section looks at the start and termination of the employment relationship and entitlements and obligations in Luxembourg.
Requirements regarding an employment contract
According to the Labour Code (Article L. 121-4), it is compulsory to conclude a contract in writing, detailing the nature and conditions of the work relationship, either before or on the first day of employment. The minimum working age is 16. Otherwise, there are restrictions on the employment of workers under the age of 18.
An employer recruiting a new employee in response to a lasting need for personnel to participate in the normal and permanent activity of the business generally must conclude a permanent employment contract (contrat à durée indéterminée, CDI ) with the employee. The employer can only use a fixed-term contract (contrat à durée déterminée, CDD) in exceptional cases (that is, in response to the specific needs of the business), according to the Labour Code (Article L. 122-1).
Dismissal and termination procedures
The Labour Code contains provisions regarding the termination of employment contracts and protection against dismissal. However, some collective agreements may provide greater protection against dismissal than that provided by law.
In addition to termination of the contract during the trial period (if stipulated in writing), there are four different types of termination of a permanent employment contract: dismissal with notice, dismissal without notice for gross misconduct, resignation and termination by mutual consent.
Any employer employing at least 15 people must notify the Economic Committee of any termination/redundancy taking place for reasons not linked to the employee’s aptitude or attitude. Such notification must be given at the latest when the employee is notified of the termination.
Any employer with 150 employees or more who contemplates dismissing any employee must, before making a decision, interview the employee concerned.
All categories of workers are protected against dismissal, in the sense that their employment relationships may only be terminated in accordance with the specific provisions of employment legislation. If the employer wants to dismiss an employee, a letter of notice of dismissal must be sent by registered mail.
Certain employees or categories of employees benefit from specific additional legal protection as employee representatives.
Parental, maternity and paternity leave
A parental leave reform was enacted in 2015 and came into force in 2016. The law of 3 November 2016 reforming the system of parental leave entered into force on 1 December 2016. Its aim was to improve work–life balance and encourage parents in general, and fathers in particular, to make greater use of parental leave. Because of this law, both parents are able to take parental leave until the child is 6 years old (instead of 5 years old under the previous system). Furthermore, on 1 January 2018, paternity leave was increased from 2 to 10 days, under legislation passed in December 2017. The law, aimed at improving work–life balance, also introduced more flexibility for parents to use leave to take care of a sick child, but reduced some permissible leave for personal reasons.
The law of 22 December 2023 abolishes the condition of affiliation to Luxembourg social security at the time of birth or reception of the child. Concretely, the amendment includes the children of the employee's spouse or partner born of a previous relationship, in line with the EU definition of ‘family members’.
Statutory leave arrangements
| Maternity leave | |
| Maximum duration | 8 weeks of prenatal leave and 8 weeks of postnatal leave (extended to 12 weeks if the employee is breastfeeding, or in the case of premature or multiple births). |
| Reimbursement | For a salaried worker, the highest salary received during the three months prior to maternity leave, and, where applicable, the average of complementary and other benefits received during the 12 months preceding the month prior to the start of maternity leave. Financial maternity benefits cannot be lower than the social minimum wage – with a gross amount of €2,387.40 per month as of 1 January 2023 – or higher than five times the social minimum wage – with a gross amount of €11,937 per month as of 1 January 2023. |
| Who pays? | National Health Fund (Caisse Nationale de Santé). |
| Legal basis | Labour Code, Articles L. 332-1 and L. 332-2, and Social Security Code, Article L. 25. |
| Parental leave | |
| Maximum duration | Those entitled to parental leave can now choose from several options, depending on the number of hours’ work provided for in their contract of employment. For a person employed full time (40 hours per week), there are 4 options: (1) full-time leave for 4 or 6 months; (2) part-time leave for 8 or 12 months; (3) fragmented leave amounting to 4 months taken over a maximum period of 20 months; and (4) fragmented leave in the form of a 20% reduction in the weekly hours worked (for example, 1 day per week) for a maximum of 20 months. |
| Reimbursement | Under the new system, the parental leave allowance, previously paid at a fixed rate of €1,778 per month, becomes a replacement income that is paid pro rata based on the income earned by the parent taking parental leave. The allowance cannot be less than the social minimum wage, which on 1 January 2024 was €2,570.93 for a full-time (40 hours) employment contract. The upper limit for the allowance is €4,284.88 (roughly 60% higher than the social minimum wage). |
| Who pays? | Caisse pour l’avenir des enfants (Zukunftskees). |
| Legal basis | Law of 3 November 2016 on the parental leave reform (Loi du 3 novembre 2016 portant réforme du congé parental) and Labour Code, Articles L. 234-43 to L. 234-56. |
| Paternity leave | |
| Maximum duration | 10 days (4 days for public servants). |
| Reimbursement | 100% of the employee’s salary. |
| Who pays? | The employer, but the government will reimburse the employer for the worker’s salary, starting on the third day of leave. |
| Legal basis | Law of 15 December 2017 amending the Labour Code and Labour Code, Article L. 233-16. |
| Special leave for family reasons | |
| Maximum duration |
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| Reimbursement | 100% of employee’s salary. |
| Who pays? | Employers’ Mutuality Scheme (Mutualité des employeurs) reimburses the employer/self-employed person for all salary costs (gross remuneration plus employer contributions) paid in the context of the leave. This is subject to the condition that the leave for family reasons has been declared by medical certificate by the employee to the competent fund and by the employer to the Joint Social Security Centre (Centre commun de la sécurité sociale, CCSS). |
| Legal basis | Labour Code, Article L. 234-50. |
Sick leave
The Labour Law specifies the obligations of the sick employee as well as his or her rights (Labour Code, Article L. 121-6). Social security legislation (Book I of the Social Security Code) regulates the sickness and maternity insurance schemes.
An employer must continue to pay their employee during sick leave due to illness or an occupational accident and must do so until the end of the month during which the 77th day of sick leave occurs, during a reference period of 12 successive months. This reflects the principle of the ‘continuation of pay’ (Lohnfortzahlung).
As of the month following the 77th day of sick leave, the National Health Fund takes over from the employer in paying sickness benefits to the employee on sick leave. From this point on, the employer no longer has to pay a salary to the employee while benefits from the fund are being paid.
Retirement age
Since the reforms introduced in 1996 and 1998 the public pension system has covered all individuals economically active in the public and private sectors. The pension scheme comprises disability, retirement and survivor pensions. As part of the reform of the single statute in 2008 (Loi du 13 mai 2008 portant introduction d’un statut unique), aiming to merge the statute of the worker with the statute of the employee, a single pension scheme was created for the whole private sector: the National Pension Insurance Fund (Caisse nationale d’assurance pension).
The retirement benefit has two components: a flat-rate amount dependent on years of coverage and an earnings-related amount. The pension system is financed through contributions shared equally between the employer, the employee and the state. The rate, half of which is payable by the employer and half by the employee, amounts to 16% of assessable income. The state contributes a further 8% of total assessable income (European Commission, 2007). The statutory retirement age is 65. An early retirement scheme becomes available after 40 years of contributions, which allows an individual to claim their pension from the age of 57. However, the law of 21 December 2012 on pension reform, which entered into force on 1 January 2013, introduced changes to ensure the sustainability of the public pension system, reducing the attractiveness of early retirement and changing how the pension is calculated.
Occupational system
Companies may offer their employees a pension, choosing between three types of plans: pension funds, group insurance or book reserve schemes. As reported by the OECD, ‘pension funds may be established as Sociétés d’épargne-pension à capital variable (SEPCAVs), Associations d’épargne-pension (ASSEPs) or other types of pension funds. The SEPCAV is similar to an investment trust, while the ASSEP is a new type of company inspired by mutual insurance associations and organised like a partnership’ (OECD, 2009).
Voluntary occupational pension plans can be defined benefit plans or defined contribution plans, or a hybrid of the two. According to the OECD (2009), in 2006, ‘approximately half of all privately managed pension funds financed defined benefit plans and the other half defined contribution schemes. However, defined benefit plans, which are typically linked to final salary earnings, covered approximately 87% of pension plan members.’
