Labour law in Luxembourg: what you need to know before you start

Employment contracts in Luxembourg

CDI, CDD and temporary work: what's the difference?

The CDI (contrat à durée indéterminée) is the standard contract in the Grand Duchy. No end date, real stability for renting a flat or getting a loan. It's the form your employer must use to fill a permanent need.

The CDD (contrat à durée déterminée) is reserved for one-off needs: covering for a colleague on sick leave, a seasonal spike in activity, a time-limited project. It can be renewed twice at most and its total duration must not exceed 24 months. If your employer goes beyond these limits, the CDD is automatically reclassified as a CDI.

Temporary work involves three parties. You sign with a temp agency that sends you on assignment to a client company. The agency pays you, but you work on the client's premises. A single assignment cannot exceed 12 months, renewals included.

What your contract must contain

An employment contract in Luxembourg can't be done on the back of a napkin. Under the law on transparent and predictable working conditions (ouvre dans un nouvel onglet), your employer must give you a written document no later than your first day of work. It must include at least: the identity of both parties, the start date, the workplace, your role, working hours, gross salary (with the applicable index), leave entitlement, notice periods and, if applicable, the probation period.

If a mandatory item is missing, you can request a correction in writing. If your employer refuses, you can even terminate the contract without notice within the first 30 days.

Probation period: duration, tiers and termination

A probation period is not mandatory in Luxembourg, but if there is one, it must be written into your contract. Its length depends on your profile:

During the first 2 weeks, neither party can terminate unilaterally (except for gross misconduct). After that, either side can end the contract with notice calculated on the agreed probation length: 4 days per month of probation, with a minimum of 15 days and a maximum of 1 month. The notice must expire before the end of the probation period; otherwise, the contract becomes permanent.

If you fall ill during probation, the period is extended by the same duration, up to a maximum of 1 extra month. A pregnant employee who hands a medical certificate to her employer is protected from dismissal for the full duration of the statutory protection.

More details on the ITM website (ouvre dans un nouvel onglet).

Working hours, leave and public holidays

40 hours a week: the baseline

In Luxembourg, the legal working time is 8 hours a day and 40 hours a week for full-time employees. That's the standard, but your contract or collective agreement may allow flexible arrangements (flexitime, reference periods, Work Organisation Plans).

Overtime: premium and tax exemption

Any hour beyond 40 per week counts as overtime. The maximum cannot exceed 10 hours a day or 48 hours a week. Overtime is compensated either with time off or with a 40% salary premium, at the employer's discretion. And here's the good news: paid overtime is income-tax exempt and partially exempt from social contributions. Senior managers don't qualify, though.

26 days of leave + 11 public holidays

Every employee is entitled to at least 26 working days of paid leave per year, regardless of contract type (CDI, CDD, part-time). For part-timers, the calculation is done in hours, pro rata. You can start using your leave after 3 months of continuous service with the same employer.

On top of these 26 days, there are 11 public holidays: New Year's Day, Easter Monday, 1 May, 9 May (Europe Day), Ascension, Whit Monday, National Day (23 June), Assumption, All Saints' Day, Christmas Day and Boxing Day. If a public holiday falls on a Sunday, you get a compensatory day off.

Full details on Guichet.lu (ouvre dans un nouvel onglet).

Extraordinary leave

Beyond annual leave, you're entitled to extraordinary leave for certain life events, available from your very first day of work. A few examples: 10 days for the birth or adoption of a child, 6 days for a wedding, 3 days for the death of a close relative, 2 days for moving house (once every 3 years). There's also family leave (12 to 18 days per child depending on age) if your child is ill.

For a long absence, here's what happens during work incapacity.

Salary and indexation

The SSM (salaire social minimum) is the legal floor for a 40-hour full-time week:

The skilled minimum is a 20% premium. To qualify, you need a recognised diploma (DAP or equivalent) or several years of proven experience in your field. We often see cross-border workers starting at the unskilled rate simply because they haven't had their foreign qualifications recognised: that's something worth looking into if you think you're being underpaid.

Salary indexation is a uniquely Luxembourgish mechanism that automatically adjusts all salaries and pensions whenever the cost of living rises by 2.5%. The Statec monitors the price index and, as soon as the threshold is reached, an indexation tranche is triggered. The last one kicked in in May 2025.

We have a more detailed guide on this topic - check out our First Salary simulator to estimate your net pay.

In practice, it all appears on your payslip.

Remote work for cross-border workers

If you're a Luxembourg resident, there's no cap on the number of remote-work days (it's between you and your employer). But if you're a cross-border commuter, it's a different story: the number of allowed days depends on bilateral agreements between Luxembourg and your country of residence.

If you exceed this threshold, the salary earned on days worked beyond the quota becomes taxable in your country of residence, not in Luxembourg. It can also affect your social-security coverage. In short, keep an eye on the counter.

How an employment contract ends in Luxembourg

Resignation: notice by seniority

Want to leave? That's your right, but you must serve a notice period. Resignation must be submitted by registered letter or hand-delivered against a signed receipt. Notice starts on the 15th of the month (if your letter is sent before the 15th) or the 1st of the following month (if sent from the 15th onwards).

A CDD cannot be terminated early through a standard resignation, except in cases of gross misconduct by the employer or by mutual agreement.

Dismissal with notice: duration and severance

If your employer terminates a CDI, they need a real and serious reason (related to you personally or to business needs). The employer's notice periods are longer than the employee's:

From 5 years of service, you're also entitled to a statutory departure allowance based on your years of service. During notice, you get 2 half-days per week paid time off to look for a new job.

You can request the reasons for your dismissal by registered letter within 1 month of the notification. Your employer then has 1 month to reply with specifics. If they don't, or if the reasons don't hold up, the dismissal can be declared unfair by the labour court.

Full details on Guichet.lu (ouvre dans un nouvel onglet).

Dismissal for gross misconduct

This is the most serious procedure. Your employer considers you've committed an act that makes it immediately impossible to continue the working relationship. In this case: no notice, no severance. But the law tightly regulates this process:

• Your employer must notify you of the dismissal in writing, with detailed and specific reasons.
• They have a maximum of 1 month from learning of the facts to act. Beyond that, they lose the right to invoke gross misconduct.
• In companies with more than 150 employees, a preliminary interview is mandatory.

If you believe the dismissal is unjustified, you can take it to the labour court (ouvre dans un nouvel onglet). An employer who misuses this procedure faces significant financial penalties.

Termination by mutual agreement

Employer and employee can also agree to part ways amicably. There's no legal obligation to put it in writing, but it's strongly recommended to protect both sides. Important: in a mutual termination, you're generally not entitled to unemployment benefits. Think carefully before signing.

See also : Understanding the Luxembourg index and calculating your net salary

See also: how to resign: notice period and rights.