Luxembourg Labour Code - Employment lawyers in Luxembourg
Employment lawyers in LuxembourgUpdated on Monday 10th January 2022
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The Labor Law in Luxembourg is included in the main legislative document on this matter, the Labor Code (Code du Travail). The Ministry of Labor, Employment and the Social and Solidarity Economy is the governmental agency entrusted with the enforcement of the labor law and the supervision of any professional and employment relations.
The Luxembourg market is characterized by its openness and multiculturalism and there are many frontier workers from neighboring countries. The Duchy observes of all international treaties for labor laws, European law and EU directives. The labor law applies on all employment relationships developed on the territory of the Grand Duchy, unless the parties agree in the employment contract to pursue other laws and regulations.
The employees are considered all the individuals which are enrolled in a company and have signed an employment contract. The individuals engaged in coaching or sporting performance with a contract registered at an approved federation or an affiliated club, are not considered employees if the activity is not carried on as principal or regular.
The Grand Duchy has three official languages: Luxembourgish, French and German and the law does not impose the use of one of them in employment contracts.
Any employment or labor litigations are brought in front of the Labor Court of first instance, by the Court of Appeal in second instance cases and, in necessary, to the Luxembourg Supreme Court. Below, our employment lawyers in Luxembourg explain the main rights and obligations of employers and workers in the Grand Duchy.
Provisions of the Luxembourg Labour Code
The Labour Law in Luxembourg is made of 6 chapters regulating the relations between local companies and their employees. These refer to:
- individual and collecting employment contracts;
- rules and working conditions applied by employers;
- protection of employees at the workplace and the safety and health measures to be taken by employers;
- staff representation through unions and other forms of organization;
- terms of unemployment and dismissal;
- authorities regulating labour relations.
The Luxembourg Employment Law is quite comprehensive and if you need guidance on how to conclude a labour contract, our local lawyers are at your service.
It should also be noted that Luxembourg also respects EU regulations when it comes to work relations and conditions.
Types of work contracts in Luxembourg
The Luxembourg Labour Code provides for various types of contracts, however, not all of them are employed. The most common ones are:
- the undetermined labour contract which is signed for an indefinite period;
- the fixed-term employment contract which is signed for a definite period;
- collective labour agreements which apply in certain sectors.
The main difference between fixed and permanent work agreements is that the former must contain provisions about the reasons for the determined period of time of the contract, the duration of the agreement and the renewal clauses, if any.
Employment contracts are usually issued in writing, even if oral contracts can also be made, however, these must also be recorded just like written ones.
Our employment lawyers in Luxembourg can review work-related documents and guide employers and employees on their rights and obligations.
The employment contract in Luxembourg
The employment contract in Luxembourg can be individual or collective. The collective labor agreement applies for a company or a group of companies and it is concluded between the representatives of the employer and the employees. There are two types of individual employment contracts recognized by law, but in practice most of them are concluded for an indefinite period of time. The employment contract with indefinite or fixed term must be in writing with each employee individually and must be signed before starting the activity. A contract for an indefinite period may include a clause regarding a trial period. The trial period must be recorded in writing and cannot be less than two weeks nor more than six months.
The content of the employment contract can differ according to the company/individuals who conclude it. The contents also depend on the type of contract and its duration. The information typically included in any employment contract is: the identity of the parties, the date of commencement of the contract work, the workplace, the nature of the job, regular schedule of work, the base salary and, if applicable, wage supplements, bonuses, the amount of paid leave to which the employee is entitled to, the duration of periods of notice, the length of the trial period and others.
The employment contract can be terminated if there are real and serious reasons to do so. Severance payments are to be awarded to dismissed employees who have completed at least five years of service n that line of work. There is no applicable severance payment in case of resignation. The applicable notice period can vary and are expressed in the agreement.
Working conditions and benefits for employees in Luxembourg
The labor law also regulates the minimum working conditions employers must provide as well as the minimum remuneration and benefits their employees are entitled to. According to law, the general maximum working time is 40 hours per week or eight hours per day but exceptions can be made in certain branches. Employees can work overtime but only if this is previously approved for that company and it must be remunerated or compensated for with free time. In general, individuals in senior management positions are not usually required to perform overtime hours.
There are 10 annual public holidays in Luxembourg and employees working full-time are entitled to 25 business days of holiday each year. Certain categories of employees or those working in certain conditions might be entitled to additional free days. The employer must also pay attention to the sick leave the employees are entitled to. If an individual informs the employee in writing of an accident or sickness and he/she sends a medical proof of the incapacity to work, then the employer cannot dismiss the employee for a period of 26 days following the illness or accident.
Our law firm in Luxembourg can help you if you want to hire personnel for your company. We can also help you hire foreign employees and obtain the additional documents required for them. Non-Luxembourg nationals who want to stay in the country for more than three months and work here need to apply for a residence permit (EEA nationals) or foreign identity card (all other citizens). They must also obtain a work permit before commencing any remunerated activity in Luxembourg. This is usually done by the employer after the recruitment process. Applications for work permits are accepted or rejected according to certain criteria and, in general, priority is given to Luxembourg nationals and EU nationals.
Rules to be respected by employers in Luxembourg
Starting a business in Luxembourg is usually followed by hiring employees in accordance with the conditions of the Labour Law. However, employers can also create internal code of conducts that must be respected by the workers.
When it comes to the rules Luxembourg employers must abide by, one of the most important refers to securing a minimum wage for each employee. It is worth noting that in 2021, the minimum wage was increased by 2.8%.
Then, employers must also ensure workers have all the equipment they need to complete their jobs and that their health is protected from any hazards.
An important aspect to take into account is that the working week is of 40 hours divided into 8 hours per day, according to the law. However, there are also exceptions to this rule, such as is the case of senior executive positions for which different rules may apply. In the case of overtime, the workday cannot exceed 10 hours.
If you need guidance in drafting work contracts, our law firm in Luxembourg can help you.
Workers’ obligations in accordance with the Luxembourg Employment Law
Once entered a work agreement, employees will have to respect the terms and conditions of employment, as well as the rules imposed by the employer.
One of the most important aspects to consider is that the Labour Law in Luxembourg is among the first to regulate the use of online tools at the workplace (email, social media platforms, etc.).
If you need more information on your rights and obligations as an employee, our employment lawyers in Luxembourg can offer it.
Termination of employment
There are three ways on ending work relations in Luxembourg:
- by mutual agreement;
- by resignation of the employee;
- by dismissal.
These are also included in the grounds for termination, however, according to the Luxembourg Labour Code there are also other reasons that can lead to the end of work relations. Among these, redundancy, company closure, incapacity and retirement are also reasons.
Unless the situation allows it, termination is associated with a notice, as it follows:
- if the employee has been working with the company for less than 5 years, the notice period is 2 months;
- in the case of workers in service for 5 to 10 years, the notice period is 4 months;
- in the case employees who have been in the company for more than 10 years, the notice period is established at 6 months.
The notice periods start on the 1st or 15th day after the notification was made. Employers must also pay severance to workers who have been working for at least 5 years with the same company. The amount paid as severance is established based on the work period and does not exceed 18 months of pay.
Collective dismissals must be completed by following other rules imposed by the Labour Code in Luxembourg.
Contact our lawyers for more information about taxation in Luxembourg, including mandatory social security contributions and the personal tax rates.