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Luxembourg: Labour Regulation

Regulatory Environment

This page was last updated on 7 July 2020.

An employment contract is compulsory and generally permanent. Fixed-term contracts are regarded as an exception to this rule, and the circumstances in which it is possible to conclude a fixed-term contract are circumscribed by law.

All employers are bound by the minimum wage. The pay rate of most blue-collar workers and some white-collar employees is set by collective bargaining contract. Increases in the cost of living automatically trigger wage hikes. Executive pay is set by negotiation.

Employees enjoy extensive protection. After an initial probationary period, it is difficult to discharge employees. Employees who have been discharged because the employer was experiencing economic problems are entitled to be the first to be rehired when the company expands. Acquired rights are protected by law in situations where a company is merged into or taken over by another.

The workforce has broad rights to information and consultation, and in some cases determination of company policies. Equal pay must be given for equal work.

The legal working week (five days) is 40 hours. The maximum working week (inclusive of overtime) is 48 hours. The statutory maximum daily working time is ten hours. In businesses with continuous operation or shift work, longer hours are permissible, but in most circumstances the permission of the Labour and Mines Inspectorate will be needed.

The statutory minimum wage supplement for overtime (at the time of writing) is 40% for all employees. Overtime rates for working on Sundays and public holidays are much higher. In some circumstances, time off must be given in addition to paying overtime.

Where an employee has claimed unfair dismissal, the burden of proof rests on the employer. Compensation for unfair dismissal (reparation de la resiliation abusive) consists in an award for damages or, where the court deems it appropriate, a recommendation of reinstatement. If the employer refuses to agree to the latter (under Luxembourg law the employee's right to insist on reinstatement exists only in certain cases of wrongful dismissal), the court may order the employer to pay the employee compensation equal to one month's pay over and above the damages awarded.

An SA or a SARL with at least 1,000 employees, a state equity participation of 25% or more or operating under a government concession must provide for one-third labour representation on the board of directors. An SA or SARL with 150 or more employees must establish mixed-works councils. All firms with more than 15 employees must have at least one labour delegate.



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