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Hiring Employees in Luxembourg

Hiring Employees in Luxembourg

Updated on Thursday 14th April 2016

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The employment law in Luxembourg is based both on the EU regulations and on the domestic Labor Code (`Code du Travail`). The Labor Ministry supervises the implementation of the labor law.
 
An employment contract concluded in Luxembourg is defined as an agreement between two parties where one of them agrees to perform a specific task, as per the instructions of the employer, in exchange for monetary remuneration.
 
Types of employment contracts in Luxembourg
 
Company owners in Luxembourg who want to hire employees may choose between two types of employment contracts:
 
- part-time employment contracts (concluded for less than 40 hours a week);
- indefinite employment contracts (concluded for an indefinite period of time).
 
Part-time employment contracts are usually an exception. They are used for temporary tasks, such as:
 
- temporarily replacing an employee;
- seasonal work or a specific and temporary task.
 
Part-time employment contract may not exceed 24 months and cannot be renewed more than once. The most common type of employment contract in Luxembourg is the one concluded for an indefinite period of time. These contracts can be terminated as per the wish of one or both parties or by the effect of the law. 
 
Both types of employment contracts may be preceded by a trial period. However, the trial period may not be less than two weeks and may not exceed six months.
 
Employment contracts may be concluded in one of the three official languages in the Grand Dutch of Luxembourg: Luxembourgish (the national language), French or German. Both parties should understand the chosen language.
 
Termination
 
Employers may terminate employment contracts concluded for an indefinite period of time provided that the termination is based on serious reasons. The notice period varies according to the duration of the employment:
 
- 2 months for less than 5 years;
- 4 months for a period between 5 and 10 years;
- 6 months for more than 10 years.
 
Both parties may terminate the contract without notice in case of gross misconduct. Discrimination based on religion, belief, disability, age, sexual orientation, ethnic affiliation, race or ethnic origin is prohibited. 
 
Other employment provisions in Luxembourg
 
The employment income is subject to progressive tax rates that vary between 0% and 39%. All employees must be registered with the Social Security Services. Both the employer and the employee have to pay certain contributions like the health insurance and pension insurance. Employees have the right to specific benefits, among which: sickness and maternity benefits, occupational illness insurance, accident insurance and retirement benefits. 
 
If you want to open a business in Luxembourg and need more information about specific legal matters, our law firm in Luxembourg can offer you more personalized information. 
 
 
 

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