Hire employees in Luxembourg No entity needed.
Usually, to hire in Luxembourg, your business needs an entity. That means a local office, an address registered as a subsidiary, and an account with a local bank. All of this, plus navigating regional benefits, payroll, tax, and HR laws, can take months.
Luxembourg also treats contractors differently than full-time employees, so misclassifying a contractor could lead to fines. Deel lets you hire employees in Luxembourg quickly, easily, and compliantly. We even automate tax document collection, payroll, benefits, and more.
All the necessary benefits for Luxembourg built right in
Deel allows you to provide localized benefits for employees in Luxembourg within minutes. All in one manageable online dashboard.
- Health Insurance
- Worker Compensation Insurance
Currency: Euro (EUR)
Official language: Luxembourgish, German and French
Payroll Cycle: Monthly
Paid Time Off
In Luxembourg, employees are entitled to 25 days of paid holiday a year.
- New Year’s Day
- Easter Monday
- Labor Day
- Ascension Day
- Luxembourg National Holiday
- Assumption Day
- All Saint’s Day
- St. Stephen’s Day
Individual Income Tax
The individual income tax depends on many variables, such as marital status, level of income, etc. The average ranges up to 42%
Approximately, 13% of employee salary
Employment Contract Details
There are no specific rules governing the language used to write employment contracts in Luxembourg. Contracts must always be in writing and specify the type of employment agreed, trial period and restrictive covenants.
Probation can be set for a minimum of 2 weeks up to 12 months and must be included on the employment contract to be enforced.
Minimum Wage Requirements
The Minimum Wage is EUR 2,142 per month.
Bonus and Expense Payments
Bonuses may be paid and are treated as part of salary. Terms and conditions are determined by the parties and must be included in the employment agreement to be enforced.
Parents can take up 6 months’ full time leave or up to 12 months’ part time leave. During parental leave, the parent receives an allowance that is taxable and is paid to the employee by the state.
- Maternity leave: it can start 8 weeks before childbirth and extends until 8 weeks after the baby is born. It might be extended for another 4 weeks. During maternity leave, employees receive an allowance equal to their salary capped at 5 times the minimum wage from the National Health Fund.
- Paternity Leave: employees can take 2 days’ paternity leave when the child is born, they continue to receive full salary from the employer.
Termination requirements for employees in
Luxembourg does not allow at-will termination of employment for employers; contracts may be terminated by mutual agreement or unilaterally for due cause (serious cause, unfit for the role, extinction of the role).
Termination pay includes basic and variable salary until notice end date, any non taken holidays, benefits in kind and allowances due to the employee until the termination date. Employees with at least 5 years’ of employment are entitled to severance pay equal to 1 month’s salary up to 12 months’ salary for employees employed for at least 30 years.
In Luxembourg, the notice period is based on the length of the labor relationship:
- Up to 5 years of employment - 2 months’ notice
- 10+ years of employment can reach - 6 months’ notice
The employer can only terminate by giving notice. The notice must be justified on objective grounds as specified by the local labour legislation. Indemnity in lieu of notice is not permitted by law.
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