- Overview: Luxembourg
- Global HR Compliance
- Global PEO and payroll
- Work permit for hiring expats via PEO
- Expand without a company set up
- Contractor vs. employee: which is better?
Global HR Compliance in Luxembourg
If you hire an international workforce, or plan to hire employees, then Hiring and Firing Workforce in Luxembourg Guide below will help you understand the nuances of labor legislation in the country.
When the company is planning to enter a new foreign market of Luxembourg and has a need to employ a local national there, the first question to answer is how it is going to make local hires.
We have designed a Global Employer of Record service to help you outsource global employment of your foreign workforce to companies like ours.
This solution helps you employ your global sales force in Luxembourg as well as in other 180+ countries of the world, and provide pay and benefits to your employees, as well as administer any business expenses with our help.
Our solution is different from other hiring modes in that it helps you engage your foreign workforce in full compliance with the local labor legislation. This means you are protected from any non-compliance and employee misclassification risks while we bear all employment risks, not you.
So, it looks very much like hiring your in-house sales force in your home country. However, you focus on only on your global business development while we admin your global HR. In addition, you don’t need to open your own entities in the foreign countries and can leverage our infrastructure in Luxembourg instead. With our service, you can become a global company with reduced costs and minimized time and effort on your end.
Your employed foreign sales force will devote 100% of their time to your company product and may stay with you longer than foreign independent sales reps.
Global Employer of Record solution is 100% compliant solution that guarantees you and your employees fully compliance with local legislation in Luxembourg .
We are experts in global workforce employment in Luxembourg, and our goal is to become your single provider. Instead of working with numerous local staffing agencies and legal advisors, Acumen International can solve your global business challenges and save you time, costs, and resources.
Our team of English-speaking professionals frees you from working through language nuances. Acumen International works 24/7 and can assist you whenever you need, regardless of time zones. Our goal is to create tailored labor solutions for you that are managed legally and in full compliance with the local employment laws.
With our knowledge and deep understanding of local nuances, you easily satisfy your need for skilled professionals in your global industry. With our qualified local partners, you can trust that your global workforce satisfies all local tax, social security, and immigration requirements in Luxembourg.
Hiring and Firing Workforce in Luxembourg Guide
# Employment Contracts
Even though an oral contract is not prohibited, it is always in the parties’ best interest to draw up a written contract. Contracts of employment must be concluded no later than the first day of employment. Contracts of employment may be executed for a permanent or a fixed period of time.
Temporary job contracts may only be renewed twice, and may not exceed 24 months (including the renewal periods). A clause must be added to the contract specifying the renewal terms. A fixed-term contract becomes a permanent employment contract if the employee continues to work following expiry of the contract, without any objections from the employer in writing. A temporary contract cannot be terminated before the end date except in the event of gross misconduct.
# Minimum statutory employment rights
# Hours of work
The normal working hours in Luxembourg is limited to 8 hours per day and 40 hours per week. Employees who are covered by a flextime scheme may work up to 10 hours a day and 48 hours a week provided that the average work time per week over a reference period of 4 weeks (or up to 12 months in case of collective agreement or approval from the Ministry of Labor and Employment) does not exceed 40 hours.
# Probation period
Permanent and fixed-term contract usually commence with a period of probation, which may last from two weeks to twelve months (depending on the profession). During this time the work contract can be terminated by either party without cause. Notification must be delivered by registered letter. A trial period may not be renewed.
# Annual leave
Employees who have worked for their employers for a continuous period of 3 months are eligible for an annual paid leave. Eligible employers must be granted at least 25 working days of paid annual leave or more if required by the applicable collective agreement. Generally, annual leave should be given and used up during a calendar year. Employees may be allowed to carry forward an annual leave, which must be taken no later than the 31th March of the following year, if the reason for not taken the leave is due to their company’s requirements.
# Parental leave
Pregnant employees must be granted 16 weeks of paid maternity leave and an extended 4 weeks in case of premature birth, multiple births or for breastfeeding.
If the woman has been registered with the sickness and maternity insurance for at least six months during the 12 months prior to her maternity leave, financial maternity benefit is paid by the social security system at the same rate as the employee’s normal salary (limited to five times the minimum social wage).
Both the mother and father are entitled to 6 months of full-time parental leave or 12 months of part-time parental leave till their child is 5 years old. Male employees shall be granted 2 days of paid leave for the birth of a child.
# Sick leave
To be entitled to receive paid time off and to be protected against dismissal, the employee must inform his employer on the first day of absence about his sickness, and submit a medical certificate at the latest on the third day. After the expiration of a 26-week period, the employer will have the right to dismiss the employee for real and serious reasons.
An employment agreement will automatically end after a sick leave of 52 weeks over a period of 104 weeks.
The employer will pay the full salary (all benefits included) to his employee from the date on which he is informed about the sickness until the end of the month during which the 77th day of sickness leave occurs (whether consecutive or not), over a reference period of 12 consecutive months. 80% of the overall remuneration paid by the employer during the sickness period will be reimbursed by the employers’ mutual scheme insurance.
Overtime, when required, must be done with the assent of the Ministry of Labor and Employment, except in the event of an emergency or accident. Employees are entitled to 140 percent pay or one and a half hours’ compensatory time off for each hour of overtime they work.
When special company conditions mean that work must be performed on a day that is a legal public holiday, the employee working on that day is entitled to a 100 percent supplement for each hour worked. If the legal public holiday falls on a Sunday, the employee will receive a further 70 percent supplement. This also applies to overtime, following the principle of accumulated supplement.
# State minimum salary
Effective 2017, the state minimum wage is 1998.59 EUR per month.
# Employment termination
Before termination, employees must be given a written notice period as follows, subject to the number of years of employment:
- No notice – in the case of gross misconduct
- 2 weeks’ notice – during the probation period
- 2 months’ notice – for less than five years of employment
- 4 months’ notice – for between 5 and 10 years of employment
- 6 months’ notice – for 10 years of employment or more
Employees (save for those who are been terminated for gross misconduct) are entitled to a severance pay that ranges between one-month pay and year pay, subject to the number of years of service.
Severance pay will be paid at the end of the notice period and will be exempt from income tax and social contributions. Severance pay will be calculated on remuneration paid to the employee during the 12 months preceding the notification of the termination.
In addition to these legal requirements, the payment of higher amounts can be set out in the employment agreement or in a collective bargaining agreement.
Acumen International can help you fast-track your possibilities of entering and expanding your business in Luxembourg by providing you with our Employer of Record solutions that allows you to jumpstart your global operations almost immediately, cost-effectively and compliantly.