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Good to know
Luxembourg possesses one of the highest standards of living in the world. This, along with competitive salaries and benefits, attracts talent from various countries.
Currency
Euro (EUR)
Capital
Luxembourg City
Employee Costs
12.45%
Local Language
Luxembourgish, French, German
Employer Taxes
> 15%
Public Holidays
11 Days
Payroll Frequency
Monthly
Tax Year
1st Jan – 31st Dec
Are you ready to hire in Luxembourg?
Luxembourg is strategically located in the heart of Europe, providing easy access to major European markets like Germany, France, and Belgium. It’s an ideal location for businesses with international aspirations. The country also offers a business-friendly environment with favorable tax policies, a stable legal system, and government support for foreign investment.
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Minimum Wage
As of February 2023, the minimum wage in Luxembourg is EUR 2,387.40 gross per month for unskilled workers aged 18 and above. Meanwhile skilled workers aged 18 and above receive EUR 2,864.88 gross per month.
Working Hours
Standard Working Hours
The work week consists of 40 hours, spread across 5 workdays, each day lasting 8 hours. It is mandatory for employees to enjoy a weekly rest period of no less than 44 hours, with a daily rest period of at least 11 hours. Additionally, Sundays are generally observed as days of rest. The standard work week is Monday – Friday.
Overtime
Any hours worked beyond the standard weekly working hours are considered overtime and are governed by employment contracts or collective agreements.
In general, the maximum allowable overtime is capped at 2 hours per day and 8 hours per week. Overtime hours are compensated at a rate of 150% of the regular salary rate.
Furthermore, working on Sundays is generally prohibited, except under specific circumstances or for certain sectors, for which appropriate compensation is required to be provided.
Payroll
In Luxembourg, most companies follow a monthly payroll schedule, although some opt for weekly payments. Employees receive their wages for the work performed during the month or week on the final day of that respective period.
It is a tradition to provide a 13th salary to employees. This extra payment equals one month’s salary and is disbursed at the end of the year. Additionally, it is customary for employers to grant an extra half-month’s salary to their employees as well.
Leave
Paid time off
Employees have a minimum entitlement of 26 paid leave days per year. Depending on the terms negotiated in a collective bargaining agreement, an employee’s annual leave allocation might exceed this.
Sick Pay
Sick pay rules in Luxembourg generally require employees to have a waiting period before becoming eligible for sick pay. The duration and percentage of pay during sick leave can vary based on collective labour agreements or individual employment contracts.
Employees are required to promptly notify their employer of their illness and provide medical certificates as proof to qualify for sick pay. After the initial period of sick pay provided by the employer, additional benefits may be available from the National Health Fund, which is a social security system in Luxembourg.
Maternity Leave
Maternity leave lasts for 20 weeks and can commence up to 8 weeks before the anticipated due date. To qualify, the woman must have been covered by mandatory health insurance for a minimum of 6 months within the last 12 months prior to taking maternity leave.
Additionally, the woman is required to inform her employer at least 12 weeks before the expected due date. These benefits are provided by social insurance and must be equivalent to or higher than the minimum wage, with a maximum cap of 5 times the minimum wage.
Paternity Leave
Paternity leave in Luxembourg is outlined in the collective agreement or employment contract, allowing fathers up to 10 days of leave. This leave doesn’t necessarily have to be taken consecutively and can be taken within 2 months after the child’s birth.
Termination
Termination of Employment
The termination process differs depending on the existing employment agreement and collective agreement, considering the type of contract and the reason for termination. The amount of severance pay varies and is determined by the length of employment.
Notice Period
In Luxembourg, the mandatory notice period is determined by the length of employment. For less than 5 years of service with an employer, a notice period of 2 months is required. For service between 5-10 years, 4 months notice period is required. This extends to 6 months notice period if service in above 10 years.
Probation Period
The probation period in Luxembourg can vary depending on the employment contract and collective agreements. Typically, the probationary period can last up to 3 months.
Visa
Visa rules in Luxembourg depend on the nationality and purpose of the visit. Citizens of the European Union (EU), the European Economic Area (EEA), and Switzerland do not need a visa to enter Luxembourg. However, non-EU/EEA citizens may require a Schengen visa for short stays of up to 90 days for tourism, business, or family visits. For long-term stays, such as work or study, non-EU/EEA citizens need to apply for a national visa or a residence permit.
The specific requirements and procedures can vary based on individual circumstances, and it’s advisable to check with the Luxembourgish authorities or consulates for the latest and detailed information on visa rules and regulations.
VAT
The standard rate of VAT in Luxembourg is 16%.
