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Europe

Luxembourg

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Employer of Record (EOR) in Luxembourg

What you'll learn

  • Country Introduction
  • Tax Breakdown for Employers
  • Statutory Leave Laws
  • Minimum Wage and Working Hours
  • Termination Process
  • Additional Information
Luxembourg Introduction

Luxembourg is a small landlocked country in Europe, bordered by Belgium, Germany, and France — it has one of the highest GDPs per capita in the world. Luxembourg has a representative democracy headed by a constitutional monarch, which makes it the world's only remaining sovereign grand duchy. The city of Luxembourg was declared a UNESCO World Heritage Site because of its exceptional preservation of historic quarters.

Paid Leave and Statutory Leave

Parental Leave

Pregnant employees can receive 20 weeks of paid maternity leave beginning up to 8 weeks before the due date. This leave is paid for by social insurance at a maximum of 5x the minimum wage. Paternity leave is up to 10 days, and adoption leave can be taken as well.

Parents can also take Parental Leave once per child, before the child turns 6 years old. The length and pay of the leave depends on the number of hours a week the employee works.

Sick Leave

Employees can take sick leave for up to 26 weeks, paid at 100% of the salary by the employer for the first 77 days. After that, employees can draw benefits from social security.

Paid Leave

There are 11 public holidays, and employees are entitled to a minimum of 26 days of paid time off each year. Employees can also qualify for special leave for bereavement, marriage, and other reasons.

Wage Requirements and Working Hours

The minimum wage in Luxembourg depends on the role of the employee and ranges from EUR 2,313 to EUR 2,776. The standard workweek is 40 hours at 8 hours per day. Overtime work must be mutually agreed on between the employer and employee, and is paid at 150% of the regular salary. Overtime work must not exceed 2 hours per day and 8 hours per week.

Termination Process

Process

The process for termination will vary based on the employment contract and reason for termination.

For companies with 150+ employees need to conduct a hearing before an employee is dismissed. For companies with at least 15 employees, the employer has to notify the Economic committee of the termination.

Notice Period

In most cases, the amount of notice is dependent on how long the employee has worked at the company, and payment can be made in lieu of notice.

  • 0-5 years = 2 months of notice
  • 5-10 years = 4 months of notice
  • 10+ years = 6 months of notice

Severance Pay

In most cases, the amount of severance is dependent on how long the employee has worked at the company:

  • 0-5 years = no severance pay
  • 5-10 years = 4 months of severance pay
  • 10-15 years = 2 months of severance pay
  • 15-20 years = 3 months of severance pay
  • 20-25 years = 6 months of severance pay
  • 25-30 years = 9 months of severance pay
  • 30+ years = 12 months of severance pay

Additional Information

It’s customary to pay a 13th month salary in Luxembourg, equivalent to 1 month of salary paid at the end of the year.

OVERVIEW
Language(s):
Luxembourgish, German, French
Currency:
Euro (EUR)
Capital City:
Luxembourg City
Population:
648,000
Cost of Living Rank:
13th
VAT (Valued Added Tax):
17%
Employer TaxES
12.04%-14.99%
(estimated)

★  12.04%-14.99% - Social Security

Simplified Global HR and Payroll.
Let’s work on it together.

We've made the process really simple
with only 3 steps.

1

Remote candidate

You've sourced a full-time employee or contractor located in a country where your company is not incorporated.

2

Cost Calculation

Pass us the details of your candidate and we will let you know exactly what it costs to employ your candidate in that country.

3

Onboarding & Admin

Sit back and relax as we onboard your new team member and take care of all the local compliances and admin work.

Same-day onboarding
Best Pricing
Available in 150+ countries
How Remofirst employs in Luxembourg

It can be prohibitively expensive to establish an entity in every country you want to hire talent in, so Remofirst will hire and pay your employee on your behalf while you manage their daily duties. Remofirst will handle formal HR procedures and employment contracts that adhere to local laws, so that you can simply approve invoices via our platform. When you work with an Employer of Record (EOR) you can compliantly hire the best employees around the world.

How employees in Luxembourg get paid
Your employee's hours, time off, holidays, bonuses, and commissions are automatically calculated into payroll. Remofirst will invoice you in either US Dollars (USD), Euros (EUR), British Pounds (GBP), Canadian Dollars (CAD), or Singapore Dollars (SGD) around the 15th of each month to make sure your employees in Luxembourg are paid on time in Euro (EUR). To make it even easier, you can summarize your entire global team's salaries to aggregate them into one payment (instead of many individual payments).
Full-time Employees vs Global Contractors

Unlike full-time employees, contractors work on projects with multiple companies at a given time and are technically self-employed. Full-time employees are solely focused on their employer and usually receive benefits (such as health insurance, equity or stock options, and time off) as an additional form of compensation. While it can be cheaper to work with international contractors instead of paying benefits to a full-time employee, you run the risk of misclassification. It's recommended to work with an EOR for contractor onboarding and payments, so you can know that your international contractors are paid compliantly and on time.

Dependable support for employees
Whenever the employee or employer has a question about benefits, Visas, or anything else related to international employment in Luxembourg, they can use our platform's chat function to get answers from our team of experts. Every client of Remofirst also receives a dedicated account manager that will serve as a point of contact for global HR support.