Luxembourg, with its progressive economy, has one of the highest current account surpluses in the Eurozone. The country has historically witnessed sound growth, low inflation, and low unemployment. Luxembourg is ranked as one of the most open and transparent economies in the world. Industrial and service employees have numerous employment opportunities, who arrive in Luxembourg on a daily basis from neighboring countries. Trade is pivotal to Luxembourg’s economy; the combined value of exports/imports equals 424% of GDP.

Currency: Euro

Principal Languages: Luxembourgish, French, and German

Government: Parliamentary Representative Democratic Monarchy

Capital City: Luxembourg City

Major Cities: Esch-sur-Alzette, Dudelange, Schifflange, Bettembourg

Employment Contracts

Employment contracts must be in writing, and a copy must be provided to employees on the employment commencement date. The contracts must have the following details:

  • The names of the parties;
  • The place and nature of employment;
  • The effective date of the contract;
  • The employee's wages;
  • Work hours;
  • The length of any probationary period;
  • Any exceptions or additional clauses;
  • The frequency and mode of salary payment;
  • Any applicable supplementary pension scheme.

Employment contracts must be drafted in one of Luxembourg’s three official languages: Luxembourgish, German, and French. Most employment contracts in Luxembourg are for an indefinite term. Fixed-term contracts can only be used to achieve specific, short-term goals which must be mentioned in the contract.

Work/Time Regulations

Regular work schedule comprises 8 hours per day and 40 hours per week. Employers can ask employees to work for a maximum of 10 hours a day and 48 hours in a week if their average work hours in 4 weeks do not exceed 40. This 4-week reference period can be extended to a maximum of 12 months by a collective bargaining agreement or after getting the permission of the Ministry of Labor and Employment.

A standard workday cannot have more than 1 unpaid rest period. Employees can take at least 11 hours of rest every 24 hours, and at least 44 hours of rest every week.

Overtime work is allowed under special circumstances and only after getting the permission of the Ministry of Labor and Employment. Though permission is not required when overtime is necessitated due to emergencies or accidents provided that additional work hours do not exceed 3 days in a month. Employees (other than senior management) who work overtime are entitled to either 140% pay or compensatory time off at a rate of 150% of the overtime hours worked. Pregnant employees may not be required to work overtime. Employers can only ask workers younger than 18 years old to perform overtime under special circumstances and must pay twice the regular pay.

Employers cannot ask employees to work for more than 2 hours of overtime in a day. Services and industries such as transport, banking, and hotels have special overtime rules.


The following 10 national holidays are observed in Luxembourg:

  • New Year's Day (Jan. 1)
  • Easter Monday
  • Labour Day (May 1)
  • Europe Day
  • Ascension
  • Whit Monday
  • National Day (June 23)
  • Assumption (Aug. 15)
  • All Saints' Day (Nov. 1)
  • Christmas Day (Dec. 25)
  • Boxing Day (Dec. 26)

Salaried workers are allowed to celebrate local holidays instead of national holidays. National holidays that fall on a Sunday are carried over to the following Monday. Employees who work on a national holiday are entitled to twice their regular pay and an extra day off.

Maternity Leave
Women employees can take 16 weeks of maternity leave, out of which 8 weeks can be taken before the expected date of delivery and 8 weeks afterward. If the birth occurs before or after the expected date of delivery, the remaining maternity leave is increased or reduced accordingly so that the employee gets a total of 16 weeks’ leave. Employees are required to submit a medical certificate confirming their pregnancy within 10 weeks before the expected date of delivery.

Paternity Leave
A father is entitled to ten days' leave with pay for the birth or adoption of a child under the age of 16.

Parental Leave
Each parent can take 6 months of full-time parental leave or 12 months of part-time parental leave after getting the employer’s permission. The parental leave can be taken only once and cannot be split into shorter segments.

Sick Leave
Employees can take paid sick leave beginning from the first day of injury or illness up to 52 weeks in a total period of 104 weeks. Private sector employees receive their salary for the month in which they fall sick or suffer an injury occurring up to 3 sucessive months. Employees are required to notify their employer on the first day of absence due to an injury or illness.


Social security benefits such as disability benefits, old-age pension, health insurance, unemployment insurance, family allowance benefits are funded by contributions from employees, employers and the government. Some of them are:

Old-age Benefits
Retirees can start receiving the old-age pension at the age of 65 if they have made paid or credited contributions for at least 10 years. Employees can also retire at the age of 60 or 57 if they have made contributions for a minimum of 40 years.

Disability Benefits
Employees qualify for the disability pension if they are:

  • Under the age of 65
  • Unable to carry out their duties satisfactorily
  • Have at least 12 months of coverage before the disability began

Survivor Benefits
Survivors of a deceased are entitled to survivor’s benefits if the employee had at least 12 months of social security system coverage in the 3 years before death or was receiving a pension at the time of death.

Health Insurance
Health insurance covers the cost of medical treatment incurred by employees and their dependents via their insurance provider subject to timely insurance premium payments by employees.

Family Allowances
Families with children aged less than 18 or less than 27 if the child is disabled or is a student are entitled to monthly family allowance paid in full by the government.

Workers' Compensation
Workers’ compensation covers work-related injuries and illnesses. Employees with a temporary disability are entitled to 100% of their insured earnings for 52 weeks within 104 weeks. Employees up to the age of 65 who are incapable of working due to a permanent disability are entitled to 100% of their average monthly wages in the 12 months before when the accident occurred, or an illness began.

How GPS can Help

With our Global PEO/Employer of Record services, companies can expand into Luxembourg and hire their employees without having to establish a branch office or subsidiary in Luxembourg.

  • Your candidate is hired via our Luxembourg PEO. If needed, we can also help you find the right talent in any country with our comprehensive global staffing services.
  • Your new employee begins work quickly as we take care of employment contracts, statutory and non-statutory benefits, and running their payroll - all in full compliance with Luxembourg laws.
  • Global PEO Services experts manage all day-to-day operational issues such as employee expenses, and severance/termination if required.
  • With no contractor risks, pass on the compliance burden to Global PEO Services.

Spin Off/M&A Support

  • Ensure continuity of payroll, benefits and HR support when acquiring or spinning off a business with employees overseas.

24/7 Support in 150+ Countries

  • Empower your teams with 24/7 support and a single point-of-contact model in which experienced client services directors are in continuous communication with information and advice.
  • We are backed by a mix of 300+ multidisciplinary experts from HR, Payroll, Finance, Tax, and Legal domains who are ready to respond to the expected and unexpected needs of your business on the shortest notice.

Easy Visibility into Your Employee Time & Attendance and Benefits Data
With our Global PEO, you get access to Mihi, our proprietary SaaS solution for time and attendance, vacation, leave management and benefits enrollment and management. Mihi enables clients to have easy access to employee data in real time. It is designed specifically for companies with a global workforce, especially when working in multiple countries with low headcount.

Ready for Growth When You Are
When ready, we can seamlessly transition you from the PEO/EOR model to your own legal entity and provide ongoing international HR, finance, legal, compliance and staffing support. Learn more about our end-to-end international expansion services.

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