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Which issues would you most highlight to someone new to your country?
Some particularities of Luxembourg’s employment law include:
- the indexation of all wages (including higher salaries) each time the index (based on the average consumer price) is increased;
- the date of effect of notice periods upon termination, which can be set only for the first or 15th of the month; and
- employee, manager and director misclassification.
What do you consider unique to those doing business in your country?
Luxembourg is one of the few countries in which prolonged negotiations and dialogues with trade unions have led to social peace and respect between employers, employee representatives and employees.
Is there any general advice you would give in the employment area?
Luxembourg employment law provides extensive protection to employees. All provisions will be interpreted in the employee’s favour.
Emerging issues/hot topics/proposals for reform
Are there any noteworthy proposals for reform in your jurisdiction?
The legislature is considering proposals to amend the provisions relating to the classification of employees which have been declared inapt in order to:
- provide legislation in connection with whistleblowing;
- broaden the social dialogue; and
- enhance employees’ work-life balance.
What are the emerging trends in employment law in your jurisdiction?
Work-life balance is a concept which is becoming increasingly recognised and implemented in Luxembourg – in particular, it has been supported by a recent proposal to reform parental leave.
Recent studies show an increase in teleworking in Luxembourg, although teleworking is still offered by a limited number of employers.
The employment relationship
Country specific laws
What laws and regulations govern the employment relationship?
Most employment-related provisions are found in the Labour Code. Other laws and regulations governing the employment relationship include:
- Grand Ducal regulations implementing provisions of special laws;
- collective bargaining agreements and agreements resulting from multi-industrial social dialogues;
- case law; and
- customs and practices which may be relied on in specific cases.
Who do these cover, including categories of worker?
They generally cover all employees, including senior executives. Further, they include employees hired permanently, for a fixed term and on a part-time basis.
Are there specific rules regarding employee/contractor classification?
Employment relationships are essentially characterised through a legal link of subordination between the employer and employee. The employee must perform his or her duties under the authority and instruction of his or her employer. The employment relationship relies on:
- the provision and performance of effective work or services;
- compensation granted for the performance of work;
- the subordination of the employee to the employer; and
- the employer’s powers of direction and control over the employee.
Luxembourg courts follow a specific test for independent contractor and employee classification, which focuses on whether there is a link of subordination and the degree of control exercised by the employer over the employee.
Must an employment contract be in writing?
Employment contracts must be executed in writing and signed no later than the date on which work commences.
Are any terms implied into employment contracts?
Employment contracts must contain the following minimum requirements:
- the names of the parties;
- the employee’s start date;
- the place of performance of work;
- the employee’s function;
- the employee’s daily or weekly standard hours;
- the employee’s working schedule;
- the employee’s remuneration, including any benefits;
- paid holidays;
- the length of the employee’s notice period upon termination;
- the length of the employee’s probationary period, if any;
- any supplementary provisions;
- reference to the collective agreement, if any; and
- reference to the pension scheme, if any.
Additional implied terms should be inserted in employment contracts for part-time and fixed-term employment.
Are mandatory arbitration/dispute resolution agreements enforceable?
Yes – subject to general principles required for arbitration and dispute resolution, and any exceptions and exclusions thereto.
How can employers make changes to existing employment agreements?
Any substantial amendment to an employment contract which is detrimental to the employee will be deemed as a substantial modification to the terms and conditions of employment. Under Luxembourg law, employers may impose essential modifications to the detriment of an employee due to real and serious reasons. The procedure to be followed is similar to that relating to dismissals (eg, in terms of notification, notice periods, requests for grounds and the obligation to communicate the reasons for the substantial amendment).
Non-substantial amendments to an employment contract can be implemented through a written amendment to the existing employment contract and must be signed by both parties.
Is a distinction drawn between local and foreign workers?
No distinction is made between local and foreign workers, as long as the foreign worker is authorised to work within Luxembourg. Pursuant to new immigration legislation, work permits and residence permits have been merged; hence, foreign workers need obtain only one document.
What are the requirements relating to advertising positions?
All employers (whether local employers or foreign employers willing to hire in Luxembourg) must declare all vacancies to the Unemployment Administration. If a job offer is announced through other means of publication or communication, it must be declared to the Unemployment Administration at least three working days before publication or communication.
Infringement of these provisions may result in fines of between €251 and €2,500.
What can employers do with regard to background checks and inquiries in relation to the following:
(a) Criminal records?
The Law of March 29 2013 authorises all employers (irrespective of their sector of activity) to ask candidates and existing employees to provide copies of their criminal records. The criminal record excerpt (original/photocopy) must not be kept for more than 24 months from the date on which it is provided.
(b) Medical history?
Medical examinations can be performed by an occupational physician before the start of employment or within two months of the start of employment. Medical examinations will be performed if the employee’s duties are dangerous or must be performed at night.
The detailed results of medical examinations cannot be communicated to the employer. Instead, the employer will be provided only with the decision on whether the employee is fit to work.
(c) Drug screening?
Luxembourg law does not impose specific restrictions on drug or alcohol testing. However, this information is considered to be protected by privacy; thus, employers cannot require testing.
(d) Credit checks?
Credit checks are covered by personal and private data provisions and thus cannot be the subject of employer inquiries. However, depending on the applicant’s position and the nature of his or her activities, an employer may request him or her to provide such information.
(e) Immigration status?
Employers may ask whether a job applicant has authorisation to work in Luxembourg and request evidence thereof.
(f) Social media?
Luxembourg law has no specific provisions which address the appropriate use of social media during the hiring process.
During the hiring process, employers are prohibited from making inquiries based on sexual orientation, religion, convictions, disability or ethnic origin.
Wages and working time
Is there a national minimum wage and, if so, what is it?
The applicable minimum wage is €2,307.56 (Index 775.17) for skilled workers and €1,922.96 (Index 775.17) for unskilled workers.
Are there restrictions on working hours?
The normal working time is eight hours per day and 40 hours per week.
The normal duration of work may be extended to a maximum of 10 hours per day and 48 hours per week, including overtime.
Hours and overtime
What are the requirements for meal and rest breaks?
Employees should be provided with a reasonable period for meals. Duty-free meal periods need not be paid. Employees must take a 30-minute break after every six working hours.
Further, employees must rest for at least 11 consecutive hours over each 24-hour period.
How should overtime be calculated?
Generally, overtime must be paid for hours worked in excess of 40 hours per working week. Since the introduction of new provisions in the Labour Code, overtime is limited to specific circumstances. Overtime will either be compensated with time off or be recorded in a savings account provided for by a collective agreement or an arrangement between social partners. If time off cannot be granted, overtime pay will be calculated at a rate of 140% of the employee’s regular rate of pay.
What exemptions are there from overtime?
Exemptions to the regulations on working hours are provided for certain sectors (eg, home carers, agriculture, hotels and catering, healthcare and goods transport). Further, the regulations on working hours do not apply to:
- river transport firms;
- fairground establishments;
- family-run enterprises;
- salespersons performing their activity outside the employer’s premises; and
- senior executives.
Is there a minimum paid holiday entitlement?
At least 25 working days of paid leave per year must be provided to all full-time employees. Employees must work for an unbroken three-month period for the same employer before they are entitled to take leave.
What are the rules applicable to final pay and deductions from wages?
Employers cannot make deductions from employees’ wages, unless these are made in accordance with applicable laws or regulations – for example:
- social security contributions;
- personal income tax;
- deductions made in conjunction with an employer-sponsored pension scheme;
- fines incurred by the employee;
- repairs for damage caused by the employee;
- damage to or loss of tools or other working materials;
- advance payments made by the employer; or
- attachment of earnings.
What payroll and payment records must be maintained?
All employers must keep a record of the following employee information:
- employment contracts evidencing each employee’s occupation, salary and other benefits;
- pay slips evidencing the amount paid each pay period to each employee;
- a special register of normal working hours, overtime, Sunday hours, public holidays and night hours, and the corresponding amounts paid to each employee in this respect;
- social security numbers;
- medical certificates/documents evidencing sick leave, maternity leave, parental leave and any other paid leave;
- a register of paid holidays, including the exact number of days taken and those left over for each year;
- documents in connection with any assignments abroad;
- documents and payments made in connection with the pension scheme;
- total additions to or deductions from wages paid each pay period;
- payments made on termination of the employment relationship; and
- certificates of release of payment issued on termination of the employment relationship.
Discrimination, harassment & family leave
What is the position in relation to:
Article L. 251-1(1) of the Labour Code prohibits any direct or indirect discrimination based on age.
Article L 251-1(1) of the Labour Code prohibits any direct or indirect discrimination based on actual or supposed membership or non-membership in an ethnic or racial group.
Article L 251-1(1) of the Labour Code prohibits any direct or indirect discrimination based on disability.
Discrimination based on gender is prohibited by the provisions in the Labour Code on equal treatment of men and women.
(e) Sexual orientation?
Article L 251-1(1) of the Labour Code prohibits any direct or indirect discrimination based on sexual orientation.
Article L 251-1(1) of the Labour Code prohibits any direct or indirect discrimination based on religion or belief.
Discrimination based on incapacity or disability is prohibited.
Article L 251-1(4) of the Labour Code defines the act of encouraging someone to discriminate against another individual on the grounds mentioned in Article L 251-1(1) as discrimination.
Family and medical leave
What is the position in relation to family and medical leave?
An employee can take family leave if a child (under 15 years old) is sick. The annual duration of this leave cannot exceed two days per child.
At the latest, employees must inform their employer of any family or medical leave on the first day of the leave. Family leave is treated the same as a period of sick leave due to illness or injury. Employers must continue to pay employees during family or medical leave.
What is the position in relation to harassment?
The Labour Code has no express provision on moral harassment. However, an agreement has been reached with social partners and is generally binding. Acts will qualify as ‘bullying’ only if they occur repeatedly.
Sexual harassment is prohibited.
What is the position in relation to whistleblowing?
Whistleblowing protection was formally enacted by the Law of February 13 2011, which strengthened the means by which corruption can be fought and amended the Labour Code by inserting, among other things, specific provisions to protect whistleblowers.
The whistleblowing protection legislation is not dedicated solely to whistleblowing protection and includes provisions on the fight against corruption, amending corruption offences and criminal procedural rules.
The National Commission for Data Protection recommended that:
- whistleblowing be restricted to the accounting sector, banking industry and the fight against corruption;
- anonymous denunciations be discouraged and, insofar as possible, the identity of whistleblowers be discovered;
- specific organisations to collect and deal with complaints be established, allowing competent persons to process complaints; and
- any information against an individual be provided as soon as possible in order to provide him or her with the necessary time to exert his or her rights of opposition, access and correction.
Privacy in the workplace
Privacy and monitoring
What are employees’ rights with regard to privacy and monitoring?
Protection of privacy is guaranteed under Luxembourg law by:
- the amended Law of August 2 2002 on the Protection of Persons with regard to the Processing of Personal Data; and
- the Law of May 30 2005 on the Protection of Persons with regard to the Processing of Personal Data in Electronic Communications.
Employee monitoring by technical means is strictly regulated by law and requires the National Commission for Data Protection’s authorisation. Further, employers can process employees’ personal data in order to monitor them only if necessary for:
- the security and health of employees;
- the protection of the company’s property, materials and tools;
- the control of the production process; and
- the temporary control of production or services made by employees who are subject to specific remuneration with base calculations and within the framework of work organisation (eg, flexitime schemes).
To what extent can employers regulate off-duty conduct?
Employees’ off-duty conduct is generally off limits to employers. Exceptions do exist if there is a relationship between the off-duty conduct and the employer’s business and if misconduct outside the workplace poses a risk to the employer’s business.
Are there rules protecting social media passwords in the employment context and/or on employer monitoring of employee social media accounts?
Trade secrets and restrictive covenants
Who owns IP rights created by employees during the course of their employment?
Inventions belong to the employer where they are created by an employee while performing his or her duties, including an inventive task that corresponds to the employee’s effective position, studies or research explicitly entrusted to him or her.
Inventions also belong to the employer where an employee creates them:
- during the performance of his or her functions;
- in the company’s area of activities; or
- using knowledge, techniques or means specific to the company, or data provided by the company.
In all other cases, inventions belong to employees.
As a rule, employers are entitled to exercise all IP rights unless the employer and employee have agreed otherwise. Under certain circumstances, the employee may own certain IP rights, in which case he or she will be entitled to compensation.
What types of restrictive covenants are recognised and enforceable?
A balance must generally be struck between the freedom of occupation – which is a fundamental constitutional right – and the legitimate interest of employers to protect their business.
Luxembourg courts recognise non-solicitation and non-compete covenants, provided that they comply with applicable law and are reasonable in time, scope and geographic coverage.
Are there any special rules on non-competes for particular classes of employee?
In accordance with Article L 125-8 of the Labour Code, in order to be valid, a non-compete clause must fulfil the following conditions:
- The non-compete clause must be in writing.
- The non-compete clause must apply only to employees who go on to run their own company after leaving their employer.
- The employee signing the employment contract or any modification containing a non-compete clause must be at least 18 years old.
- The employee must earn an annual salary of at least €52,843 (value based on Index 775.17) on the day that the employee leaves the company.
- The non-compete clause must refer to a specific professional sector and professional activities that are similar to those performed for the former employer.
- The non-compete clause must be limited to 12 months, beginning on the day that the employee’s employment contract ends.
- The non-compete clause must be limited geographically to Luxembourg.
Discipline and grievance procedures
Are there specific laws on the procedures employers must follow with regard to discipline and grievance procedures?
Except in specific circumstances, employers need not follow any particular rules with regard to discipline and grievance procedures. However, most employers have discipline and grievance procedures in place (eg, policies regarding discrimination, equal employment opportunities, harassment, specific procedures for investigations and email use).
Unions and layoffs
Is your country (or a particular area) known to be heavily unionised?
Luxembourg has a high rate of trade union membership. However, no official reports on the matter exist.
What are the rules on trade union recognition?
Trade unions protect and defend employees’ interests, ensure the collective representation of members and improve employees’ lives and working conditions. Only trade unions evidencing a ‘general national representativeness’ are recognised – in other words, trade unions which have the capacity to assume their responsibilities and can support a major industrial dispute at a national level.
What are the rules on collective bargaining?
‘Collective bargaining agreements’ are defined as agreements regulating employment relationships and work conditions which are agreed between one or more trade unions and one or more employers’ organisations. The Labour Code regulates the negotiation of and entry into collective bargaining agreements, as well as the scope of agreements. Collective bargaining agreements usually apply to employees of undertakings belonging to a signatory employers’ organisation and may be extended to the whole sector. They may also be declared generally binding on all employees within a specific sector. Collective bargaining agreements usually exclude senior executives from their scope.
Are employers required to give notice of termination?
On termination, employees are entitled to a notice period calculated according to their length of service within the company. Unless the employer and employee have agreed otherwise in the employment contract, notice periods are calculated as follows:
- less than five years of employment – two months;
- between five and 10 years of employment – four months; and
- over 10 years of employment – six months.
Employees dismissed for gross misconduct are not granted a notice period.
What are the rules that govern redundancy procedures?
Employment contracts entered into on an open-ended basis may be terminated with or without notice. In both cases, the employer must notify the employee of his or her termination by way of a registered letter or by providing the employee with a dismissal letter after having sought proof of receipt thereof. If the termination (with immediate effect) is due to gross misconduct, the dismissal letter must include the specific reasons for termination.
Dismissal with notice
The reasons for dismissal with notice must be supported by demonstrable and explicit facts, including reasons in relation to:
- the employee’s aptitude;
- the employee’s conduct; or
- the operating needs of the business, establishment or department.
If requested by the employee within one month of receiving notice of dismissal, the employer must provide him or her with a motivation letter which clearly and precisely specifies the reasons for termination. The employer must send this justification letter by registered letter within one month of the employee’s request. If an employer fails to provide an employee with its grounds for dismissal within the legal timeframe, the dismissal will be deemed unfair and the employee may be entitled to compensation for damages.
Dismissal without notice
Dismissal without notice is possible in the event of gross misconduct by the employee. Gross misconduct is considered as conduct that immediately and definitively makes it impossible to continue the working relationship. The appraisal of this notion is purely factual and rests with the courts, which consider the employee’s professional behaviour, level of education, social situation and any other relevant factors to determine his or her responsibility.
Before notifying an employee of his or her dismissal due to gross misconduct, the employer may temporarily suspend the employee, with immediate effect and without any particular form. Until the employer provides notification of the dismissal, wages must be maintained.
Are there particular rules for collective redundancies/mass layoffs?
The statutory procedure regarding collective dismissals applies as soon as an employer intends to dismiss at least seven employees within a 30-day period or 15 employees within a 90-day period.
The provisions on collective redundancies apply to dismissals not related to employees, but rather for economic reasons.
The statutory procedure requires that a redundancy scheme be negotiated and established with staff representatives. The redundancy scheme must contain certain elements and conditions and specify the minimum compensation to be paid to the employees being made redundant. The Labour Code provides for longer notice periods in the case of collective redundancies. Notifications of dismissal can be made once an agreement has been reached between the parties and the redundancy scheme has been signed.
What protections do employees have on dismissal?
If the employee disagrees with the grounds for dismissal, he or she can bring an action in court against his or her former employer in order to claim material and moral damages on the basis of wrongful or unfair dismissal. The legal proceedings must be initiated within three months of the date on which the reasons for dismissal were notified to the employee. This period can be extended to one year if, during the three-month period, the employee challenges the reasons provided by the employer in support of termination by registered letter.
The appraisal of the seriousness of the reasons for dismissal rests exclusively with the courts.
Jurisdiction and procedure
Which tribunals or courts have jurisdiction to hear complaints?
The labour courts are competent to hear disputes between employers and employees. An employee can sue his or her employer in the court of the employer’s registered seat or where the employee habitually carries out his or her work. An employer may bring proceedings against an employee in the court where the employee is domiciled.
What is the procedure and typical timescale?
Actions are brought by way of a petition which the plaintiff must submit to the court, indicating:
- the name of the parties;
- the purpose of the legal action;
- the points of contention; and
- any arguments.
The parties will then be summoned to appear before the court. After the first hearing, the court will schedule a second hearing, during which the parties will set out their respective arguments. After examining the case, the court will issue its judgment.
It typically takes between eight months and 18 months for a court to reach a first-instance decision.
What is the route for appeals?
Either party can appeal a labour court judgment within 40 days of the date on which the judgment is notified to the parties. Appeals are lodged with the court of appeal and will be sent to the chamber examining labour matters. The matter will be instructed in writing by the judge appointed to this effect, at which point the parties will be invited to a final hearing, during which they will present their arguments. After examining the case, the court of appeal will issue its judgment.