How to hire in Luxembourg through an EOR

Luxembourg requires every employment contract in writing, delivered by the employee's start date. Miss this, and you'll face fines up to €1,250 per violation from the Labour Inspectorate.

Contract types

Most companies use the indefinite-term contract, or CDI. It's the default for ongoing roles, easier to manage long-term, and avoids the strict renewal limits that come with fixed-term contracts.

Stick to CDI unless you have a clear temporary reason for a CDD. If a court decides your CDD wasn't justified, it'll be converted to a CDI, which means full employee protections kick in, including notice periods.

What has to be in the contract

Luxembourg law sets a clear list of required terms. Make sure your contract covers all of them.

• Names and addresses of you and the employee.
• Start date and place of work.
• Job nature and duties.
• Daily/weekly hours and schedule.
• Base salary, index, pay frequency, bonuses, benefits.
• Paid annual leave duration.
• Notice periods (or legal/collective agreement reference).
• Trial period length.
• Any collective bargaining agreement reference.

There's no official language requirement, but use one the employee actually understands. Oral contracts are technically valid but treated as CDIs by default, so always put it in writing to have a clear record of agreed terms.

Probation runs from 2 weeks to 12 months, depending on the role and salary level. Higher pay or qualifications allow for a longer period. Either side can end it immediately with no notice or pay in lieu, and it counts toward the CDD total duration.

Contractor vs employee

The key test is subordination: does the worker follow your instructions, use your tools, and work set hours under your direction? If yes, they're an employee, regardless of what the contract says. Luxembourg courts look at how the relationship actually works, not what it's called.

If you misclassify someone, you'll owe back social security contributions (13-14.4% employer share), taxes, and potentially 6-12 months' salary in damages. Fines range from €250 to €25,000 per case, and repeat offenses double that. The worker also gets full employee rights applied retroactively, including paid leave and notice.

Non-compete clauses require you to pay the employee during the restriction period (at least 50% of salary) and must protect a genuine business interest. Courts only enforce narrow ones. Broad restrictions tend to fail. On IP, employees own their inventions by default unless the contract states otherwise and the work is directly related to their role.

For roles where you're directing the work closely, use a CDI. If the relationship is genuinely independent, document that clearly and make sure there's no subordination. It's worth getting local legal advice before you sign anything.

Luxembourg gives employees 26 days of paid annual leave. That's more than many countries offer, and local candidates will expect you to at least match it.

Leave accrues at 2.167 days per full month worked. Employees need three months on the job before they can take any. Part-timers get it pro-rated by hours. Full-time parental leave pauses accrual, but maternity leave doesn't.

On top of that, there are 11 public holidays. If one falls on a non-working day, employees can usually shift it to another day.

All leave types

Here's what the law requires. Pay is full unless noted, and job protection applies to all of these.

These are legal minimums. Employees can't waive annual leave except on termination.

Mandatory benefits

Social security contributions total 24.05%. Your share as the employer is 14.7%-16.1%, which breaks down as: pension 8%, health 3.05%-5.4%, dependency 1.4%, accident ~1%. The employee contributes 11.05%-12.45%. Health insurance and pension are both covered through this.

There are no mandatory private health or pension top-ups. That said, meal vouchers are standard practice across most employers (up to €13/day, tax-free; you typically contribute 20-60%). Eco-cheques (€150-€200 twice a year) and transport reimbursement (€50+/month) are also common and sometimes required under collective agreements.

What employees actually expect

If you're hiring skilled workers, the legal minimums probably won't be enough. In finance and tech especially, 30+ days of annual leave is the norm. Adding 2-5 extra days puts you in a more competitive position.

Private health insurance matters too. The statutory system covers the basics, but employees generally want faster access, dental coverage, and international options. Budget around €100-200 per person per month.

Remote work setups are standard post-2020. A €50-100/month stipend for home office equipment and internet is a reasonable expectation. Flexible hours beyond the standard 40-hour week also help.

Meal vouchers and eco-cheques are expected, not optional extras. Skip them and you'll find it harder to compete with local employers who also offer 13th or 14th month pay tied to holidays.

Meeting the legal minimums keeps you compliant. To actually attract strong candidates, plan to budget 10-15% above minimums for these extras. Work-life balance is a real priority for workers here, and your package should reflect that.

Letting someone go in Luxembourg without solid grounds can lead to unfair dismissal claims, rehire orders, or significant payouts. Protections are strong, especially during leave or for certain groups, so you'll want to get the process right from the start.

Firing someone

You can terminate for just cause (dishonesty, negligence, fraud) without notice. Outside trial periods, most dismissals require notice, but they can't be abusive, discriminatory, or vexatious. Employees can request written justification within one month of being let go.

Unfair dismissal applies if you lack cause, discriminate, or fire someone during sick leave, maternity leave, or parental leave. Protected groups include pregnant workers, those on leave, and staff using flexible working arrangements. Trial periods of up to two weeks limit terminations without mutual agreement, except in cases of serious misconduct.

Luxembourg is firmly employee-friendly. Fixed-term contracts run to their end date unless there's serious misconduct; ending one early otherwise means paying out the remainder, up to the equivalent of an indefinite contract notice period. Collective dismissals involving 7 or more people for non-conduct reasons come with additional procedural requirements.

Document performance issues carefully, hold a pre-termination interview (with a decision issued within 8 days), and use registered letters. One important update: employment now automatically ends after 78 weeks of fund-paid sick leave within a 104-week period, up from the previous 52/104 rule.

Notice periods

Notice starts on the 15th of the month if the letter arrives before that date, or on the 1st of the following month otherwise. Notice periods are the same for both employer and employee, based on tenure. During the notice period, employees are entitled to 2 paid half-days per week for job searching, plus payment for any untaken leave.

Severance

Severance applies after 5 years of service for dismissals without notice, or where notice isn't actually served. The formula is one month's salary per year of service, calculated up to 25 years. Smaller firms with fewer than 20 employees can extend the notice period instead of paying severance.

There's no severance entitlement under 5 years unless the contract says otherwise. Employees are also entitled to a certificate of employment on departure.

Work permits and visas

You can hire foreign nationals through an EOR. The EOR acts as the legal employer and handles permit sponsorship where needed. EU, EEA, and Swiss citizens can work freely with no permit required.

The main routes for non-EU workers are the salaried employee residence permit for skilled hires and the EU Blue Card for higher earners. You'll need a job offer, a qualification match, and a salary at or above market rate (often €70,000 or more for the Blue Card). Processing typically takes 3 to 9 months, so build that into your timeline.

There's no digital nomad visa in Luxembourg. The EOR manages sponsorship and applications through the Immigration Directorate. For non-EU hires, work authorisation needs to be in place before the person starts, so starting early matters.

Other things worth knowing

Luxembourg follows EU GDPR strictly. You'll need consent or a valid legal basis to process employee data, and an EOR will typically handle the compliance side of that.

Trade unions and staff delegations are common, particularly in larger companies. They're consulted on dismissals and working conditions. Collective bargaining agreements can set terms that go beyond what the law requires, so it's worth checking what applies to your sector.

A right-to-disconnect scheme becomes mandatory by June 30, 2026, for employees who use digital tools for work. You'll need to define the policy through a collective agreement or company policy developed with staff input. Fines for non-compliance run from €251 to €25,000, and there's no minimum company size threshold.

The Labour Code update from April 1, 2025 expands coverage for EU cross-border workers. Right-to-disconnect enforcement kicks in after 2026. Both changes add compliance obligations, so it's worth getting ahead of them rather than reacting later.