Engage In Luxembourg

Table of Contents

About Luxembourg

Capital City

Luxembourg City


As of March 2024, the estimated population of Luxembourg is 654,768.


The currency in Luxembourg is the Euro (EUR). The currency symbol is €.

Exchange Rate Calculator



Luxembourg, a small landlocked Western European country, borders Belgium, France, and Germany. Luxembourg’s rich and diverse history has experienced various changes in its political landscape throughout the centuries. From being a strategic stronghold on a significant military route to becoming a founding member of international economic organizations, Luxembourg has played a substantial role in shaping European cooperation and unity. The country operates under a constitutional monarchy, with the grand duke serving as the chief of state and a prime minister as the head of government. Known for its strong economy, Luxembourg benefits from its proximity to neighboring countries, namely France, Belgium, and Germany. This advantageous location has contributed to a mixed economy characterized by high levels of openness, entrepreneurial activity, centralized economic planning, and government regulation. Additionally, Luxembourg is a member of the European Union, further solidifying its ties with neighboring nations and its commitment to European integration. With a population estimated at around 661,700 in 2023, Luxembourg continues to evolve as a dynamic and influential player in the European community while preserving its cultural heritage and multilingual identity.

Employment Relationship

Permanent Employment

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 two weeks or exceed six months.

Fixed-Term or Specific-Purpose Contracts

In Luxembourg, fixed-term contracts can be concluded for jobs unrelated to the business's regular and permanent activity. Such agreements must be made in writing with an explicitly mentioned end date or specific job. The duration of fixed-term contracts cannot exceed 24 months with the same employer, including renewals. The Labor Minister may exceptionally authorize the increase of the maximum period to 60 months. The legal and contractual provisions applicable to permanent employees also apply to fixed-term employees.

Temporary Employment Contratcs

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 two working days. The temporary work contractor is solely responsible for the salary of the temporary worker as well as 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.

Probationary Period

Employment contracts in Luxembourg can include a non-renewable trial period not exceeding 3 months for employment contracts of indefinite duration. For employment contracts concluded for a fixed period, the trial period is calculated in relation to the term of the contract or is agreed upon by the parties. Trial periods can also be included in temporary employment contracts. The duration of the trial period may not exceed 3 days if the contract is concluded for 1 month or less, 5 days if the contract is concluded for a period exceeding 1 month and eight days if the duration of the contract exceeds 2 months. An employment contract can be terminated during the trial period without any notice. 

Working Hours

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. Employees must be employed by an organization with the capacity for remote work in order to request the option. Any employee of a Luxembourg company governed by private law hired under a fixed-term or indefinite-term contract can participate in telework. When remote work occurs consistently, rules must be agreed upon by both parties in writing. Employers are prohibited from contacting employees during non-working time in violation of their right to disconnect.

Holidays / PTO

Statutory Holidays

Nawruz (first day of the Afghan new year), the Independence Day of Afghanistan (twenty-eight of Asad), Victory of the Islamic Revolution of Afghanistan (eight of Sawr), Start of Ramdan (date may vary), three days of Eid-ul-Fitr (dates may vary), four days of Arafat and Eid-ul-Adha (date may vary), The birthday of Hazrat-e-Muhammad (twelfth day of Rabi-ul-Awal), The day of Ashura (tenth day of Muharram-ul-Haram), Withdrawal of USSR forces from Afghanistan (twenty Sixth day of Dalw).

Paid Annual Leave

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 two weeks long. The leave must be taken within the calendar year or postponed until March 31 of the next year.

Sick Leave

The Labor Code of Luxembourg provides paid sick leave to employees. They are required to inform the employer on the first day of absence and provide a medical certificate on the third day of absence, at the latest. In the event of urgent hospitalization, the employee has eight days from the date of the hospital admission to send a medical certificate to the employer. Employees have the right to 1 additional day within a 12-month period for any exigent circumstances that may arise related to their health. employees are also entitled to 5 days of leave within a 12-month period in total, but have to furnish the employer with a medical certificate from the third day of incapacity. These entitlements are strictly for unforeseeable incidents. Employees are protected against dismissal for a maximum period of 77 days. Salary and benefits are paid until the end of the calendar month in which the 77th day of incapacity for work falls.

Maternity Leave

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. 

Paternity 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. The employer must be notified 2 months prior to the expected start date on which the employee intends to take the leave. The state covers the costs for paternity leave from the third day of absence on specific request from the employer to the Ministry of Labour, Employment, and the Social and Solidarity Economy.

Termination of Employment

Notice Period

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. 

Severance Benefits

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 five 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.

Social Security


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. 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. Contributions to social security are made by both the employees and employers.

Dependents/Survivors Benefit

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 to. 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 to.  If the deceased member did not fulfill eligibility criteria, survivors receive all contributions made by that member or on his or her behalf as a lump sum grant.

Invalidity Benefit

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 six 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 when the insured has completed a qualifying period of 40 years, equal to EUR 1,985.56 (euros) per month. 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 six months are also eligible for long-term care insurance benefits.

Taxation of Compensation and Benefits

Personal Income Tax

Persons who have a tax domicile or habitual residence in Luxembourg or reside in Luxembourg for over six months in a two-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 three 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%.


Types of Visas

Luxembourg is a part of the Schengen Area and offers the following visas: Airport transit visa (Visa A) – required to pass through the international zone in airports; however, it does not allow travelers to enter the Schengen countries. Short-stay visa (Visa C) – used to transit through or stay in the Schengen Area for 90 days within a period of 180 days. It does not give the holder permission to carry out a paid activity in Luxembourg.  Long-stay visa (Visa D) – issued to persons who wish to stay in the Schengen Area for more than 90 days for employment, studying, research, sports, or joining a family member who is an EU citizen, with temporary authorization to stay. 

Work Permit

Third-country nationals who wish to carry out a salaried activity in Luxembourg for more than three 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 three months of entry into Luxembourg. The first residence permit for employees is valid for a maximum of one year for a particular job in one sector with all employers. As of the first renewal, the residence permit is renewable for a maximum duration of three years and gives access to any sector and any profession.

I'm ready to hire in Luxembourg

Get in touch!

Contact us for a free consultation

By submitting this form, you acknowledge that you have read our Privacy policy