As of March 2024, the estimated population of Luxembourg is 654,768.
The currency in Luxembourg is the Euro (EUR). The currency symbol is €.
Permanent employees are defined as persons employed on a contract for an indefinite duration for the regular and permanent activity of the business. Employment agreements must be made in writing. Permanent employment contracts can include a trial period upon entry into work, which may not be shorter than 2 weeks or exceed 6 months.
All employment contracts, whether for an indefinite or fixed term, must be concluded in writing. Written labor agreements must include such information as the nature of work, salary and benefits, duration of the paid leave, working time, and length of the notice period, etc.
Employers in Luxembourg can hire temporary employees only through temporary work agencies. A temporary employee is an employee who engages under an assignment contract with an employer to carry out specific and temporary jobs. This contract is made in writing and sent to the employee within no later than 2 working days. The temporary work contractor is solely responsible for the temporary worker's salary, social charges, and related taxes. The pay of a temporary employee cannot be less than that of a permanent employee with equal qualifications. Temporary employees have the same access to collective facilities, such as catering and transport, as permanent employees.
In Luxembourg, employers can include a probationary period in employment contracts, but this must be clearly documented in writing before the employee starts. Without a written agreement specifying the trial period, the probationary clause is null and void, and the employment relationship continues without a probationary period. Probationary periods generally last between 2 weeks and 6 months, though specific rules apply based on the employee's qualifications or salary. For employees with lower qualifications, the probationary period is limited to 3 months, while those earning a high salary may have a probationary period of up to 12 months. For contracts without a fixed term, the probationary period is determined based on the contract's minimum duration. The probation period also counts toward the maximum allowable duration for a fixed-term contract. During probation, either party can terminate the contract under specific rules. If not terminated by the end of the probationary period, the contract automatically becomes permanent. Temporary employment contracts also allow probationary periods, which are limited to 3 days for contracts of 1 month or less, 5 days for contracts over 1 month, and 8 days for contracts exceeding 2 months.
The Labor Code of Luxembourg dictates that working hours cannot exceed 8 hours per day and 40 hours per week. In exceptional cases, working hours may be extended to up to 12 hours, compensated with an extra holiday, so that the average weekly working hours do not exceed 40 hours over four weeks. The standard working time of night workers may not exceed eight hours, on average per 24-hour period calculated over 7 days. Effective June 23, 2026, employees will be entitled to a right to disconnect after working hours. It applies to all employees using digital tools for professional purposes, without distinction of role or seniority. Employers are required to implement a specific framework—through collective agreements or company-level policies—defining how this right is ensured in practice. This framework must include practical, technical, and organizational measures such as limiting after-hours communication and raising awareness. In case of non-compliance by the employer, they can be liable to an administrative fine of EUR 251 to 25,000, imposed by the Director of the Labour and Mines Inspectorate, depending on the circumstances and the seriousness of the breach.
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All employees are entitled to a paid recreational leave of 26 days per year, regardless of their age. Sundays and statutory holidays are not included in annual leave. If, during the annual leave, the employee falls sick, the days of sickness recognized as such by the medical certificate are not considered a part of paid annual vacation. The right to annual leave is acquired after 3 months of work with the same employer. The leave can be taken all at once or split on request of the employee, in which case one of its parts must be at least 2 weeks long. The leave must be taken within the calendar year or postponed until March 31 of the next year.
Employees are entitled to paid sick leave for illnesses, with the condition that they submit a medical certificate after the third day of incapacity. In the event of urgent hospitalization, the employee has 8 days from the date of the hospital admission to send a medical certificate to the employer. The employer pays 100% of the employee's salary for up to 77 days within 18 months. If the sick leave exceeds this period, the employee may be eligible for different compensation. After this, the National Health Fund starts the payment of sickness benefits. During this period, the employer can file for reimbursement from the government, which compensates up to 50% of the costs after the first 3 days of illness. Additionally, employees are entitled to 1 day per year for urgent personal matters and 5 days to provide personal care or personal assistance to a family member or to a person who lives in the same household as the employee and who requires considerable assistance for a serious medical reason.
The Labor Code of Luxembourg grants a total of 20 weeks of paid maternity leave to pregnant employees: 8 weeks before and 12 weeks after childbirth. It is prohibited to employ a pregnant woman in night work. Pregnant employees and nursing mothers cannot be required to work overtime. During the employee's absence due to maternity leave, the employer is required to hold the job for the employee, or, if it is not possible, a similar job corresponding to her qualifications and with at least an equivalent salary. An employee cannot be dismissed during her maternity leave.
According to Luxembourg's labor law, employees receive 10 days of paid paternity leave in case of the birth of a child or adoption of a child under the age of 16 years. This leave may be divided in agreement with the employer and must be used immediately after the child’s birth. The employee must notify the employer at least 2 months before the expected date of birth or adoption. The state covers the costs for paternity leave from the 17th hour of leave on specific request from the employer to the Ministry of Labour, Employment, and the Social and Solidarity Economy.
In Luxembourg, the required notice period for termination of an employment contract depends on the duration of the employee's service and is as follows: Under 5 years of service – 2 months' notice period Between 5 and 10 years of service – 4 months' notice period More than 10 years of service – 6 months' notice period The notice period can be waived if the responsible party pays compensation in lieu of notice to the other party. The employer can dismiss the employee without notice in cases of gross misconduct.
Luxembourg's Labor Code states that employees who are dismissed for a reason other than serious misconduct must be given notice of dismissal. If they have worked in the business for 5 or more years, they are also entitled to severance pay. Severance pay amount is based on an employee's length of service as follows: 5 to 10 years of service – 1 month's salary Ten to 15 years of service – 2 months' salary 15 to 20 years of service – 3 months' salary 20 to 25 years of service – 6 months' salary 25 to 30 years of service – 9 months' salary More than 30 years of service - 12 months' salary The employer and the dismissed employee may also agree on a voluntary severance package. In addition, businesses with fewer than 20 employees may: Disburse the severance pay, or Extend the dismissed employee's notice period The employer must specify the option they have chosen in the letter of dismissal.
The legal retirement age in Luxembourg is 65 years. Employees are eligible for an old-age pension if they have paid mandatory, optional, or retroactive purchase insurance premiums for at least 120 months. Early retirement age is 57 years for persons with at least 480 months of compulsory insurance, or 60 years with at least 480 months of periods of compulsory insurance, continued insurance, optional insurance, retroactive purchase periods, or additional periods, including at least 120 months of compulsory insurance. Effective July 1, 2026, the required term of insurance contributions for early retirement will increase to 481 months, gradually increasing to 488 months by 2030. The old-age pension consists of two components: flat-rate increases and proportional increases. The flat-rate increases are granted according to the duration of the insurance. The proportional increases are granted according to the contributory income realized during the insurance career. The minimum old-age pension is 90% of the reference amount when the insured has completed a qualifying period of 40 years (compulsory insurance periods, continued insurance, optional insurance or retroactive purchase periods, additional periods). If the insured has not completed the 40-year requirement but has at least 20 years of insurance, the minimum pension is reduced by a fortieth for each missing year. Mandatory periods of insurance are the ones for which compulsory contributions are paid. Additional periods of insurance are periods that are not covered by contributions, but they can be used to make up the 40-year contribution period required for retirement at 60, such as 9 years of education and training periods. Both the employees and employers make contributions to social security.
Survivors of an insured member who had paid at least 12 contributions or persons receiving invalidity/old-age pension are eligible for benefits. Survivors include spouses, partners, and children of the deceased, subject to certain requirements. Pension for the spouse or partner is made up of 75% of the proportional increases, as well as the total flat-rate supplements and special flat-rate increases to which the pensioner or the insured person was or would have been entitled. Pension for a child is 25% of the proportional increases and special proportional increases, as well as 33.33% of the flat-rate increases and special flat-rate increases to which the beneficiary of the pension or the deceased insured person had or would have been entitled.
Social security insurance in Luxembourg provides invalidity benefits to insured persons under 65 years of age who have suffered a loss of working capacity such that they are prevented from exercising their profession. Disability pension for temporary disability is paid for a maximum of 6 months. The disability pension for permanent disability consists of flat-rate increases, special flat-rate increases, proportional increases, and special proportional increases. The minimum disability pension is 90% of the reference amount, which is EUR 2,436.04, effective June 1, 2026, when the insured has completed a qualifying period of 40 years. Disabled pensioners who require regular assistance from others to carry out basic day-to-day tasks for at least 3.5 hours a week for a minimum of 6 months are also eligible for long-term care insurance benefits.
Persons who have a tax domicile or habitual residence in Luxembourg or reside in Luxembourg for over 6 months in a 2-year period are considered residents. Residents are taxed on income from sources in Luxembourg and their worldwide income, while non-residents are taxed only on their income from sources in Luxembourg. Married couples are taxed collectively. The tax year runs from January 1 through December 31. Individual taxpayers are categorized into 3 classes depending on their marital status. The taxable amount is calculated differently for each class. Income tax rates are progressive and range from 8% to 42%. Effective January 2028, Luxembourg will replace these 3 classes with a single unified class, U. From this date, all new taxpayers, as well as those currently in tax classes 1 and 1a, will be taxed according to this new tax class. Taxpayers who were taxed collectively before January 1, 2028, will be able to continue benefiting from the rate of the former tax class 2 for 25 years.
Luxembourg is a part of the Schengen Area and offers the following visas:
Third-country nationals who wish to carry out a salaried activity in Luxembourg for more than 3 months must obtain a residence permit for working. Citizens of EU member countries do not require a permit to work in Luxembourg. The application for a residence permit must be submitted to the Immigration Directorate of the Ministry of Foreign and European Affairs within 3 months of entry into Luxembourg. The first residence permit for employees is valid for a maximum of 1 year for a particular profession in 1 sector with all employers. As of the first renewal, the residence permit is renewable for a maximum duration of 3 years and gives access to any sector and any profession. Third-country nationals who wish to work as highly qualified workers in Luxembourg for a period of more than 3 months can apply for an 'EU Blue Card.' EU Blue Card is a combined work and residence permit designed for highly qualified non-EU nationals. They must hold a valid visa to work, have an employment contract of at least 6 months for highly qualified work, and be offered an annual salary at least equal to the amount set by Grand-Ducal regulation (EUR 65,652). They must be able to prove the qualifications required for the job. After 5 years of regular and uninterrupted residence on EU territory as an EU Blue Card holder, of which the last 2 years preceding the application were spent in Luxembourg, third-country nationals can apply for long-term resident status.
