EMCC European Monitoring Centre on Change

Luxembourg: Severance pay/redundancy compensation

Luxembourg
Phase: Management
Típus:
Severance pay/redundancy compensation
Utoljára módosítva: 10 December, 2021
Név:

Code du travail

Angol név:

Labour Code

Cikk

L.124-7

Leírás

A dismissed employee, except in the case of gross misconduct, is entitled to a severance allowance (Indemnité de départ) if they have at least five years of service within the organisation. Employees are entitled to:

Severance allowance and notice period according to length of service

Employee's length of service

Severance allowance

Notice

Less than 5 years

0

2 months

Between 5 and less than 10 years

1 month

4 months

Between 10 and less than 15 years

2 months

6 months

Between 15 and less than 20 years

3 months

6 months

Between 20 and less than 25 years

6 months

6 months

Between 25 and less than 30 years

9 months

6 months

30 years and more

12 months

6 months

The allowance is calculated on the basis of wages or salaries effectively paid to the employee for the previous 12 months which immediately preceded the notification of termination. The following items are included in the wages or salaries: financial allowances in the case of illness; standard allowances and supplements, etc. The following items are excluded from wages and salaries: overtime pay; bonuses; allowance for incidental expenses.

The employer must pay the severance allowance at the end of the notice period (whether the notice was worked out or not). The amount is not subject to income tax or social contributions.

Employers of fewer than 20 workers can opt for an extended period of notice in case of redundancy instead of severance allowance; applicable for employees dismissed for economic reasons with a seniority of more than five years.

Option without allowance (businesses with fewer than 20 employees)

Employee's length of service

Notice extended without allowance

Less than 5 years

0

Between 5 and less than 10 years

5 months

Between 10 and less than 15 years

8 months

Between 15 and less than 20 years

9 months

Between 20 and less than 25 years

12 months

Between 25 and less than 30 years

15 months

30 years and more

18 months

Hozzászólások

In the insurance banking sector, for example, according to the latest collective agreement of the banking sector 2021-2023, the severance pay is higher and is the following:

Monthly payments Years of service
1 monthly payments After 1 year
2 monthly payments After 8 years
3 monthly payments After 13 years
7 monthly payments After 18 years
11 monthly payments After 23 years
15 monthly payments After 28 years
18 monthly payments After 33 years

 

Cost covered by
  • Employer
Involved actors other than national government
National goverment only
Thresholds
No, applicable in all circumstances
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