Luxembourg
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Introduction
General Overview & Economic Facts
- Luxembourg (Grossherzogtum Lëtzebuerg) is a country in Western Europe
- Luxembourg boasts a developed economy with the world largest GDP per capita ranking, with a nominal GDP ranking of 69th (2019) and 100th for PPP
- Luxembourg ranks 23rd on the HDI with, considerable equality, and extensive civil liberty and freedom of press
Why Employ In Luxembourg?
- The main exports from Luxembourg are machinery and equipment, steel products, chemicals, rubber products and glass
- 11.78% of the population is between the ages of 15 and 24 years, with 43.93% of the population being between the ages of 25 and 54. Luxembourg has a fairly youthful population, making it a favourable country to employ young, energetic employees
Overview Of The Labour Law
- Luxembourg’s chief source of labour law is the Labor Code of 2006. Additional sources of labour law include European law, international treaties, regulations and collective bargaining agreements
- The labour laws protect employees against discrimination based on age, religion, sexual orientation, gender expression, and race
Fun Country Facts
- Luxembourg is the last Grand Duchy in the world
- Public transport is free in Luxembourg
- The restaurant Chiggeri, has the world’s largest wine list with about 2000 different wines
Why Use Playroll Services For Luxembourg?
- Employing in Luxembourg requires companies to have their own legal entity in the country as well as managing payroll, employee benefits, taxes and legal compliance. This can get quite complicated, especially with the complexity of employment laws in Luxembourg
- With Playroll’s Employer of Record services, your team will be employed by our established legal entities in each country
- We will take care of payroll, employee benefits, taxes, legal compliance and provide ongoing employee support, so that you can focus on growing a thriving team
Employer Contributions
These are additional costs incurred by employers over and above the employee’s monthly gross salary and/or bonus.
Pension Fund
Medical
Called National Health Fund (CNS) in Luxembourg
Calculated on monthly salary
Medical Insurance
2.80%
Calculated on maximum salary of EUR 132,115.80 per year
Cash benefits/Sick pay
0.25%
Calculated on maximum salary of EUR 132,115.80 per year
Allowances and bonuses
2.80%
Calculated on maximum salary of EUR 132,115.80 per year
Accident Insurance
0.75%
Calculated on maximum salary of EUR 132,115.80 per year
Mutual Health Benefit
Health at Work
Employee Contributions
These are costs incurred by employees that reduce their monthly gross salary and/or bonus to determine their net “take home” pay.
Medical
Called National Health Fund (CNS)
Calculated on monthly salary.
Medical Insurance
2.80%
Calculated on maximum salary of EUR 132,115.80 per year
Cash benefits/Sick pay
0.25%
Calculated on maximum salary of EUR 132,115.80 per year
Allowances and bonuses
2.80%
Calculated on maximum salary of EUR 132,115.80 per year
Dependency Insurance
1.40%
There is a contribution-free deduction of EUR6,605.76 per year
Income Tax
Income Tax is ‘Pay As You Earn’
Income tax includes solidarity tax.
Income tax brackets are based on classes based on the employee’s personal status as:
Class 1- single with no children
Class 1a- single with children/single aged 65 years or older on 1 January of the tax year
Class 2- married/civil partners
Income bracket per annum – Class 1
20,000.00 – 38,700.00
EUR 921.00
38,700.00 – 58,000.00
EUR 5,317.00
58,000.00 – 77,400.00
EUR 13,081.00
77,400.00 – 967,000.00
EUR 21,177.00
967,000.00 – 116,000.00
EUR 29,231.00
116,000.00 – 135,500.00
EUR 37,456.00
135,500.00 – 155,000.00
EUR 45,802.00
155,000.00 – 205,000.00
EUR 54,242.00
205,000.00 or more
EUR 76,642.00
Income bracket per annum – Class 1a
20,000.00 – 38,700.00
EUR 0.00
38,700.00 – 58,000.00
EUR 4,271.00
58,000.00 – 77,400.00
EUR 12,325.00
77,400.00 – 967,000.00
EUR 20,420.00
967,000.00 – 116,000.00
EUR 28,474.00
116,000.00 – 135,500.00
EUR 36,699.00
135,500.00 – 155,000.00
EUR 45,045.00
155,000.00 – 205,000.00
EUR 53,486.00
205,000.00 or more
EUR 75,885.00
Income bracket per annum – Class 2
20,000.00 – 38,700.00
EUR 0.00
38,700.00 – 58,000.00
EUR 1,675.00
58,000.00 – 77,400.00
EUR 5,113.00
77,400.00 – 967,000.00
EUR 10,635.00
967,000.00 – 116,000.00
EUR 18,110.00
116,000.00 – 135,500.00
EUR 26,164.00
135,500.00 – 155,000.00
EUR 34,302.00
155,000.00 – 205,000.00
EUR 42,439.00
205,000.00 or more
EUR 63,357.00
Employment Terms
General
Minimum Wage
- Unskilled Worker/ Unqualified Employee- EUR 2,201.93
- Skilled Worker/ Qualified Employee- EUR 2,642.32
Working Hours
- Maximum of 8 hours per day and 40 hours per week
- Minimum of 60-minute meal interval after 6 hours of work
- Typical working hours are 09h00 to 18h00, Monday to Friday
Overtime
- Maximum of 8 hours per week
Notice Period
- Employed between 0 and 5 years- 2 months’ notice
- Employed between 5 and 10 years- 4 months’ notice
- Employed for 10 or more years- 6 months’ notice
Severance Pay
- Employed between 0 and 5 years- 0 months’ pay
- Employed between 5 and 10 years- 1 months’ pay
- Employed between 10 and 15 years- 2 months’ pay
- Employed between 15 and 20 years- 3 months’ pay
- Employed between 20 and 25 years- 6 months’ pay
- Employed between 25 and 30 years- 9 months’ pay
- Employed for 30 or more years- 12 months’ pay
Probation Period
- There is no statutory probation period
- It is common to have a probation period between 2 weeks and 12 months
Bonus
- There is no statutory bonus
- Many employers pay a 13th month ‘bonus’ to their employees usually payable at the end of the year
Public Holidays
- January 1st – New Year’s Day
- April 18th – Easter Monday
- May 1st – Labour Day/May Day
- May 9th – Europe Day
- May 26th – Ascension Day
- June 6th – Whit Monday
- June 23rd – National Day
- August 15th – Assumption of Mary
- November 1st – All Saints’ Day
- December 25th – Christmas Day
- December 26th – St Stephens’s Day
Leave
Paid Leave / Vacation Days
- Paid leave
- Paid by employer
- 26 days per year
Sick Leave
- Paid leave
- Paid by employer and Social Security
- Maximum of 78 weeks over a 18-month period
Maternity Leave
- Paid leave
- Paid by Social Security
- 20 weeks per year
Paternity Leave
- Paid leave
- Paid by Social Security
- 10 days per year
Parental Leave
- Paid leave
- Paid by Social Security
- Until the child is 6 years old for biological children and 12 years for adopted children
- Full time leave- between 4 and 6 months per child
- Part time leave- between 8 and 12 months per child per year
- Partial leave- maximum of 20 months per child
Bereavement Leave
- 1 day- death of the spouse’s/partner’s second-degree relative (grandparents, grandchildren, brothers and sisters, brothers-in-law and sisters-in-law)
- 3 days- death of spouse or partner, or spouse’s/partner’s first-degree relative (parents, parents-in-law, children, children-in-law)
- 5 days- death of minor child
Marriage Leave
- 1 day- employee’s child’s wedding
- 3 days- employee’s wedding
Adoption Leave
- Paid leave
- Paid by Social Security
- 12 days per year