A country with a booming economy, Luxembourg, in 2023, was ranked second on the list of countries with the highest GDP per capita at USD 131,580 and also boasts of the highest minimum wage in Europe at €3.085,11 per month. To make things even brighter, Luxembourg has some of the lowest unemployment rates in Europe. With such an economy, Luxembourg only encourages its workforce to enhance their skills and dedication.
Permanent employees are defined as persons employed on a contract for an indefinite duration for the regular and permanent activity of the business. Employment agreements must be made in writing.
Permanent employment contracts can include a trial period upon entry into work, which may not be shorter than 2 weeks or exceed 6 months.
All employment contracts, whether for an indefinite or fixed term, must be concluded in writing. Written labor agreements must include such information as the nature of work, salary and benefits, duration of the paid leave, working time, and length of the notice period, etc.
Employers in Luxembourg can hire temporary employees only through temporary work agencies. A temporary employee is an employee who engages under an assignment contract with an employer to carry out specific and temporary jobs. This contract is made in writing and sent to the employee within no later than 2 working days.
The temporary work contractor is solely responsible for the temporary worker's salary, social charges, and related taxes. The pay of a temporary employee cannot be less than that of a permanent employee with equal qualifications. Temporary employees have the same access to collective facilities, such as catering and transport, as permanent employees.
In Luxembourg, employers can include a probationary period in employment contracts, but this must be clearly documented in writing before the employee starts. Without a written agreement specifying the trial period, the probationary clause is null and void, and the employment relationship continues without a probationary period. Probationary periods generally last between 2 weeks and 6 months, though specific rules apply based on the employee's qualifications or salary. For employees with lower qualifications, the probationary period is limited to 3 months, while those earning a high salary may have a probationary period of up to 12 months.
For contracts without a fixed term, the probationary period is determined based on the contract's minimum duration. The probation period also counts toward the maximum allowable duration for a fixed-term contract. During probation, either party can terminate the contract under specific rules. If not terminated by the end of the probationary period, the contract automatically becomes permanent. Temporary employment contracts also allow probationary periods, which are limited to 3 days for contracts of 1 month or less, 5 days for contracts over 1 month, and 8 days for contracts exceeding 2 months.
The Labor Code of Luxembourg dictates that working hours cannot exceed 8 hours per day and 40 hours per week. In exceptional cases, working hours may be extended to up to 12 hours, compensated with an extra holiday, so that the average weekly working hours do not exceed 40 hours over four weeks. The standard working time of night workers may not exceed eight hours, on average per 24-hour period calculated over 7 days.
Effective June 23, 2026, employees will be entitled to a right to disconnect after working hours. It applies to all employees using digital tools for professional purposes, without distinction of role or seniority. Employers are required to implement a specific framework—through collective agreements or company-level policies—defining how this right is ensured in practice. This framework must include practical, technical, and organizational measures such as limiting after-hours communication and raising awareness. In case of non-compliance by the employer, they can be liable to an administrative fine of EUR 251 to 25,000, imposed by the Director of the Labour and Mines Inspectorate, depending on the circumstances and the seriousness of the breach.
All employees are entitled to a paid recreational leave of 26 days per year, regardless of their age. Sundays and statutory holidays are not included in annual leave. If, during the annual leave, the employee falls sick, the days of sickness recognized as such by the medical certificate are not considered a part of paid annual vacation.
The right to annual leave is acquired after 3 months of work with the same employer.
The leave can be taken all at once or split on request of the employee, in which case one of its parts must be at least 2 weeks long. The leave must be taken within the calendar year or postponed until March 31 of the next year.
Employees are entitled to paid sick leave for illnesses, with the condition that they submit a medical certificate after the third day of incapacity. In the event of urgent hospitalization, the employee has 8 days from the date of the hospital admission to send a medical certificate to the employer. The employer pays 100% of the employee's salary for up to 77 days within 18 months. If the sick leave exceeds this period, the employee may be eligible for different compensation. After this, the National Health Fund starts the payment of sickness benefits. During this period, the employer can file for reimbursement from the government, which compensates up to 50% of the costs after the first 3 days of illness.
Additionally, employees are entitled to 1 day per year for urgent personal matters and 5 days to provide personal care or personal assistance to a family member or to a person who lives in the same household as the employee and who requires considerable assistance for a serious medical reason.
The Labor Code of Luxembourg grants a total of 20 weeks of paid maternity leave to pregnant employees: 8 weeks before and 12 weeks after childbirth.
It is prohibited to employ a pregnant woman in night work. Pregnant employees and nursing mothers cannot be required to work overtime.
During the employee's absence due to maternity leave, the employer is required to hold the job for the employee, or, if it is not possible, a similar job corresponding to her qualifications and with at least an equivalent salary. An employee cannot be dismissed during her maternity leave.
According to Luxembourg's labor law, employees receive 10 days of paid paternity leave in case of the birth of a child or adoption of a child under the age of 16 years. This leave may be divided in agreement with the employer and must be used immediately after the child’s birth. The employee must notify the employer at least 2 months before the expected date of birth or adoption.
The state covers the costs for paternity leave from the 17th hour of leave on specific request from the employer to the Ministry of Labour, Employment, and the Social and Solidarity Economy.
In Luxembourg, the required notice period for termination of an employment contract depends on the duration of the employee's service and is as follows:
Under 5 years of service – 2 months' notice period
Between 5 and 10 years of service – 4 months' notice period
More than 10 years of service – 6 months' notice period
The notice period can be waived if the responsible party pays compensation in lieu of notice to the other party.
The employer can dismiss the employee without notice in cases of gross misconduct.
Luxembourg's Labor Code states that employees who are dismissed for a reason other than serious misconduct must be given notice of dismissal. If they have worked in the business for 5 or more years, they are also entitled to severance pay. Severance pay amount is based on an employee's length of service as follows:
5 to 10 years of service – 1 month's salary
Ten to 15 years of service – 2 months' salary
15 to 20 years of service – 3 months' salary
20 to 25 years of service – 6 months' salary
25 to 30 years of service – 9 months' salary
More than 30 years of service – 12 months' salary
The employer and the dismissed employee may also agree on a voluntary severance package.
In addition, businesses with fewer than 20 employees may:
Disburse the severance pay, or
Extend the dismissed employee's notice period
The employer must specify the option they have chosen in the letter of dismissal.
