Dismissal in Luxembourg: notice period, severance pay and your rights

Key figures to remember

Sources: Guichet.lu (ouvre dans un nouvel onglet), ADEM (ouvre dans un nouvel onglet), IGSS, social parameters as of 1 June 2026 (ouvre dans un nouvel onglet).

With notice or with immediate effect: two very different dismissals

Dismissal with notice is the standard form. Your employer must have a real and serious reason. It can be related to you (performance, behavior, repeated absences) or to the company (restructuring, economic difficulties). They do not have to state it in the letter: it is up to you to request it from them.

Your contract continues until the end of the notice period. You remain paid, you continue to accrue paid leave, and you receive severance pay if you have at least 5 years of service.

Dismissal with immediate effect for serious misconduct terminates the contract immediately. The misconduct must make continuing work 'definitely and immediately impossible' (Guichet.lu). Consequences: no notice period, no severance pay. You only receive pay for your unused leave and, if applicable, your time savings account.

The employer must follow strict rules:

• they have 1 month from the day they became aware of the misconduct to dismiss you;
• the letter must describe the alleged facts precisely;
• they can first suspend you (mise à pied): you remain paid until the dismissal letter. If serious misconduct is not proven, the dismissal becomes unfair: your employer then also owes you the notice period salary and, from 5 years of service onwards, severance pay. The general rules of employment contracts, from probation to termination, are summarized in our guide on labor law in Luxembourg.

During notice period: your salary, exemption from work, your job search

The duration of the notice period is fixed: illness, an accident, or annual leave do not extend it. During this time, your contract continues as normal. Your payslip must not change.

Exemption from work. Your employer can exempt you from coming to work for all or part of the notice period, in writing. They will then pay your full salary and benefits, including pay rises, except for work-related expenses (meals, travel). Once granted, an exemption cannot be revoked.

If you find a new job during the exemption, you can start right away. Your former employer then only owes you the difference, if your new salary is lower, until the end of the notice period (ITM (ouvre dans un nouvel onglet)).

Time off to look for a job. If you work during your notice period, you are entitled to 6 paid working days in total for job interviews. You can take them as hours, half-days, or full days. These hours are paid if you are registered as a jobseeker with ADEM (cross-border workers can register in addition to their home country) and you provide proof of your appointment. No time off if you are exempted from work for the entire notice period.

Your remaining leave. Any remaining days are taken during the notice period or paid out to you at the end.

Severance pay: how much and when

It is due if you have at least 5 years of seniority at the end of the notice period, even if you are exempted from work. It is neither subject to tax nor social security contributions (Guichet.lu).

One month's salary is calculated based on the average of your gross salaries for the 12 months preceding the month in which you were notified of the dismissal. Included: regular bonuses and supplements, sick pay. Excluded: overtime pay, gratuities, expense reimbursements. If you alternated between full-time and part-time, the calculation is done pro rata for each period.

Fewer than 20 employees: the employer can replace severance pay with a longer notice period, specified in the dismissal letter. For example, 5 months instead of 4 for 5 to 10 years of service, up to 18 months after 30 years.

No severance pay in the event of gross misconduct, nor if you received pre-retirement benefits.

Example: Julie, dismissed after 7 years

Julie, 34, lives in Esch-sur-Alzette. She has been an accounting assistant for 7 years in an SME (small and medium-sized enterprise) with 60 employees. She earns €4,300 gross per month, with no variable pay. No preliminary interview: the company has fewer than 150 employees.

• Letter sent by registered mail on March 10, 2026, so before the 15th: the notice period starts on March 15.
• Notice period: 7 years of seniority, i.e. 4 months. End of contract on July 14, 2026.
• Seniority at end of notice period: still between 5 and 10 years, i.e. 1 month of severance pay.
• Severance pay: €4,300 × 1 = €4,300, free of tax and social contributions. The company has more than 20 employees: it cannot replace it with a longer notice period.
• Reasons: Julie requests them by registered mail on April 2. The employer has one month to respond.

Scenario A: she quickly finds a new job. Her employer exempts her from work starting May 1st. On June 1st, she starts a new position at €4,000 gross. Her former employer owes her the difference, €300 in June, then approximately €135 for July 1st to 14th (€300 × 14/31). She keeps her €4,300 severance pay.

Scenario B: she is still searching at the end of the notice period. She registers with ADEM as soon as her contract ends. She worked for more than 12 months before registering: she can receive unemployment benefits for up to 12 months. Amount: 80% × €4,300 = €3,440 gross per month, under the cap of €6,928.33 (2.5 × €2,771.33). With a dependent child, it would be 85%, i.e. €3,655.

Order of magnitude: your collective bargaining agreement may offer better terms.

Unfair dismissal: challenging it before the labour tribunal

A dismissal is unfair when the reason is not real and serious. This is also the case if there is no response to your request for reasons, or during a protected period. The labour tribunal, usually in the place where you work, can award you damages: loss of salary (material damage) and moral damage.

For loss of salary, the judge generally considers a period of about 1 month per year of service, and asks you for proof of job searching (Guichet.lu). Keep your applications and replies.

Deadlines (Guichet.lu (ouvre dans un nouvel onglet)):

• you have 3 months to take the matter to court;
• this period runs from the dismissal letter if you did not request the reasons, otherwise from the employer's response, or from the end of their response month if they remained silent;
• a written claim sent to your employer within these 3 months opens a new 1-year deadline. It must clearly contest the dismissal, arrive after the reasons, and does not count if it is included in your letter requesting reasons.

The application is filed with the clerk's office of the labour tribunal. A lawyer is not mandatory in the first instance, but Guichet.lu strongly advises it. If you lose, you may have to pay your employer a procedural indemnity, often around €800 according to Guichet.lu.

Contested gross misconduct: as a rule, you are not entitled to unemployment benefits. Once registered with ADEM and after bringing the case to court, you can apply to its president for provisional unemployment benefits. This lasts 182 days, extendable up to 364 days, and you must reimburse it if you lose.

Illness, pregnancy: when you cannot be dismissed

Sick. Two conditions: you notified your employer on the same day, and they received your medical certificate by the 3rd day at the latest. In that case, they cannot dismiss you or summon you to a preliminary interview for up to 26 weeks from the start of your incapacity. This also applies to gross misconduct occurring prior to your illness. In the event of urgent hospitalisation, you have 8 days to provide the certificate. A dismissal during this period is unfair (ITM (ouvre dans un nouvel onglet)).

The protection does not apply if you received the dismissal letter before your employer was informed of your illness. After 26 weeks, or upon your return, repeated absences may justify a dismissal with notice if the employer proves business disruption. For your salary during sick leave, read our guide on incapacity for work.

Pregnant. As soon as your employer receives your pregnancy certificate, and up to 12 weeks after giving birth, they cannot dismiss you with notice. If the dismissal letter arrives beforehand, send your certificate by registered post within 8 days: you are protected. The dismissal is then null and void: you can request to be maintained in or reinstated to your position within 15 days of sending the letter (Guichet.lu (ouvre dans un nouvel onglet)).

Maternity leave, parental leave, staff representatives: dismissal with notice is prohibited during these periods.

After the contract: ADEM and unemployment

Resident. To be eligible for full unemployment benefit, you must:

• live in Luxembourg;
• have worked at least 182 days (minimum 16 hours per week) in the 12 months preceding your registration;
• have lost your job involuntarily, be between 16 and 64 years old, and be fit for work and available.

The amount is 80% of your gross salary for the last 3 months, or 85% if you have a dependent child. It is capped at 2.5 times the minimum social wage for the first 6 months, and 2 times thereafter. The duration depends on your months worked, up to a maximum of 12 months, with possible extensions depending on your age (especially from age 50), partial disability, or an employment measure (ADEM (ouvre dans un nouvel onglet)). For managing your budget between jobs: managing your money in Luxembourg.

Cross-border worker. As a rule, it is your country of residence that pays your benefits, according to its own rules. As soon as you receive your dismissal letter, check with its employment service. Have your employer fill out the "Employment Certificate - termination of employment relationship" and send it to ADEM: it issues the U1 form, which proves your working periods in Luxembourg, and forwards it to your country of residence.