Payroll and Benefits Guide Luxembourg
Last updated: May 13, 2025
Contribution
| Employer Payroll Contributions | |
| 8.5% |
Pension
|
| 2.80% to 3.05% |
Health Insurance (up to a maximum of 12,854.64 EUR per month)
|
| 0.5525% |
Accident Insurance (up to a maximum of 12,854.64 EUR per month)
|
| 0.01% to 2.98% |
Mutual Health Benefit (up to a maximum of 12,854.64 EUR per month)
|
| 0.14% |
Occupational Medicine (up to a maximum of 12,854.64 EUR per month)
|
| 11.40% to 15.30% | Total Employment Cost |
| Employee Payroll Contributions | |
|
8.00%
|
Pension (up to a maximum of 12,854.64 EUR per month)
|
|
2.80% to 3.05%
|
Health Insurance (up to a maximum of 12,854.64 EUR per month)
|
|
1.4%
|
Dependency Insurance
|
| 12.20% to 12.45% | Total Employee Cost |
| Employee Income Tax | |
| 0.00% | up to 13,229 EUR |
| 8.00% | between 13,230 to 15,435 EUR |
| 9.00% | between 15,436 to 17,640 EUR |
| 10.00% | between 17,641 to 19,845 EUR |
| 11.00% | between 19,846 to 22,050 EUR |
| 12.00% | between 22,051 to 24,255 EUR |
| 14.00% | between 24,256 to 26,550 EUR |
| 16.00% | between 26,551 to 28,845 EUR |
| 18.00% | between 28,846 – 31,140 EUR |
| 20.00% | between 31,141 to 33,435 EUR |
| 22.00% | between 33,436 to 35,730 EUR |
| 24.00% | between 35,731 to 38,025 EUR |
| 26.00% | between 38,026 to 40,320 EUR |
| 28.00% | between 40,321 to 42,615 EUR |
| 30.00% | between 42,616 to 44,910 EUR |
| 32.00% | between 44,911 to 47,205 EUR |
| 34.00% | between 47,206 to 49,500 EUR |
| 36.00% | between 49,501 to 51,795 EUR |
| 38.00% | between 51,796 to 54,090 EUR |
| 39.00% | between 54,091 to 117,450 EUR |
| 40.00% | between 117,451 to 176,160 EUR |
| 41.00% | between 176,161 to 234,870 EUR |
| 42.00% | over 234,870 EUR |
*Luxembourg income tax liability is based on the individual’s personal situation (e.g. family status). For this purpose, three tax classes have been defined: Class 1 for single persons, Class 2 for married persons as well as civil partners (under certain conditions), Class 1a for single persons with children as well as single taxpayers aged at least 65 on 1 January of the tax year.
*These rates of tax are inclusive of a solidarity tax of 7.00% of taxes (9.00% for taxpayers earning more than 150,000 EUR in tax class 1 and 1a or more than 300,000 EUR in tax class 2).
Employer taxes
Employee taxes
Minimum Wage
General
Skilled employees over 18 years old: the gross monthly minimum wage is 3,165.35 EUR and the hourly rate is 18.30 EUR.
Unskilled employees over 18 years old: the gross monthly minimum wage is 2,637.79 EUR and the hourly rate is 15.25 EUR.
Employees aged 17-18 years old: the gross monthly minimum wage is 2,110.23 EUR per month.
Employees aged 15-17 years old: the gross monthly minimum wage is 1,978.34 EUR per month.
MINIMUM WAGE (PER MONTH)
Payroll
Payroll Cycle
In Luxembourg, the payroll frequency is generally monthly, although some companies pay weekly. Work between the first and last day of the month/week is typically paid on the last day of the month/week.
13th Salary
In Luxembourg, it is customary to pay the 13th salary. The 13th salary is the equivalent of one months’ salary and is paid out at the end of the year. It is also common practice for employers to give an additional half months’ salary as well.
Working Hours
General
The standard working week in Luxembourg consists of 8 hours a day, 40 hours per week.
Overtime
| Aspect | Regulation Details |
| Maximum Ordinary Hours | 40 hours per week (8 hours per day). Any hours worked beyond this threshold are considered overtime. |
| Daily Overtime Cap | Overtime is generally limited to 2 hours per day. |
| Absolute Maximum Work Time | Total working time, including overtime, may not exceed 10 hours per day or 48 hours per week (Labour Code Article L. 211-4). |
| Authorization Requirement | The employer must generally obtain prior authorization from the Inspectorate of Labour and Mines (ITM) before assigning overtime, unless the overtime is required due to an incident, accident, or force majeure (emergency). |
| Exemptions | The overtime rules do not apply to senior managers (cadres supérieurs) who receive significantly higher remuneration and exercise genuine executive/management authority. |
Mandatory Overtime Compensation
Overtime must be compensated, primarily through time off. Monetary payment is usually a secondary option.
| Compensation Method | Minimum Compensation Rate (Statutory) | Notes |
| Primary Method: Paid Time Off | 1.5 hours of paid rest time for every 1 hour of overtime worked. | This is the legally favored method of compensation. |
| Secondary Method: Monetary Pay | Normal hourly wage plus 40% supplement (Total 140%). | This only applies if: 1) Compensation by time off is impossible due to company organization; OR 2) The employee leaves the company before receiving the time off. |
| Tax Exemption | The $140\%$ pay rate is significant because the premium portion ($\mathbf{40\%}$) is largely exempt from taxes and social security contributions. |
Other Mandatory Premiums (Cumulative)
These premiums are separate from and may be cumulative with overtime pay.
| Day/Condition | Minimum Compensation Rate (Supplement) | Total Pay Rate | Notes |
| Sunday Work (Working on the weekly rest day) | +70% supplement. | 170% | The employee is also entitled to compensatory rest (either half a day off or a full day off, depending on hours worked on Sunday). |
| Public Holidays | +100% supplement. | 200% | The employee is entitled to the normal pay for the holiday PLUS a $100\%$ supplement for hours worked, and an equivalent compensatory rest day. |
| Night Work (10:00 PM to 6:00 AM) | +15% minimum supplement. | 115% | The specific percentage is often set higher by a Collective Bargaining Agreement (CBA). |
Leave
Annual Leave (vacation)
Employees receive a minimum of 26 working days of paid leave per year. In addition, certain employees automatically receive additional leave:
- Disabled persons or those who have suffered a work accident- Additional 6 days of leave
- Mining employees- Additional 3 days of leave
- An employee or apprentice who has not received a continuous rest period of 44 hours per week- 1 additional day for every 8 weeks in which the employee doesn’t receive the continuous rest
Additional paid vacation days may be granted by the collective bargaining agreements or the employers.
PTO carryover
In Luxembourg, statutory annual leave cannot be forfeited. Leave should normally be taken in the year it’s earned, but unused leave can be carried over until 31 March of the following year (or later if the employee couldn’t take it for valid reasons, like illness).
Note:
- People 2.0 states that generally, for Luxembourg, workers must use all their PTO in the current year and can only bring them over if they meet certain requirements: for reasons related to company operations and the justified wishes of other employees;
- due to illness (treated as an effective period of work giving entitlement to annual leave);
- due to maternity leave (treated as an effective period of work giving entitlement to annual leave);
- due to an exemption from work for pregnant women;
- due to parental leave (not treated as an effective period of work).
These are the only reasons they can bring them over and if they do, they have until March 31st of the following year to use them. Otherwise, they are lost.
Public Holidays
Public holidays falling on a weekend must be compensated to workers by giving a day off in lieu of within 3 months of the holiday.
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 6 April 2026 | Monday | Easter Monday | Standard holiday |
| 1 May 2026 | Friday | Labour Day (May Day) | Standard holiday |
| 9 May 2026 | Saturday | Europe Day | Standard holiday |
| 14 May 2026 | Thursday | Ascension Day | Standard holiday |
| 25 May 2026 | Monday | Whit Monday (Pentecost Monday) | Standard holiday |
| 23 June 2026 | Tuesday | National Day (Grand Duke’s Official Birthday) | Standard holiday |
| 15 August 2026 | Saturday | Assumption Day | Standard holiday |
| 1 November 2026 | Sunday | All Saints’ Day | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
| 26 December 2026 | Saturday | Saint Stephen’s Day (Boxing Day) | Standard holiday |
Sick Days
Maximum paid sick leave is 26 weeks. Employers pay full salary until the 77th day of sickness leave occurs (whether consecutive or not) over a period of 12 consecutive months. 80% of this pay will be reimbursed by the employers’ mutual scheme insurance. From the 77th day, further leave is paid for by Social Security.
Maternity Leave
Maternity leave in Luxembourg is 20 weeks and can begin 8 weeks before the expected due date. To be eligible, the woman must have been covered by the mandatory health insurance for at least 6 months within the last 12 months before maternity leave. In addition, the woman must notify their employer at least 12 weeks before the expected due date.
Social insurance pays for maternity leave and cannot be lower than the minimum wage and is capped at 5 times the minimum wage.
Paternity Leave
Paternity leave is clarified within the collective agreement/employment contract of generally up to 10 days. The father must notify their employer at least two months before the leave is intended to be taken. Otherwise, this leave can be reduced to 2 days. In addition, this leave does not have to be taken consecutively and can be taken within two months of the child’s birth.
Parental Leave
Parental leave in Luxembourg is dependent on the type of contract and the number of hours worked by the employee. To be eligible, the employee must have been registered with social security at the time of the birth/adoption for at least 12 continuous months and work a minimum of 10 hours per week. This leave is unpaid by the employer, but the Children’s Future Fund provides an allowance.
The parental leave can be taken only once per child and before the child reaches the age of 6 (12 for an adopted child). The leave can be taken either in full, partially, or split with the other parent and is based on the number of hours in the employee’s contract/collective agreement:
- For a full-time employee working 40 hours per week- 4–6 months of full-time leave; 8-12 months of part-time leave (50% of regular working hours); 4 periods of 1-month leave within 20 months; 1-2 half days of leave per week within 20 months
- For a part-time employee working at least 20 hours per week- 4-6 months of full-time leave; 8-12 months of part-time leave (50% of regular working hours)
- For a part-time employee working at least 10 hours per week- 4-6 months of full-time leave
- Salaried employees- must have worked at least 10 hours per week
Other Leave
In Luxembourg, special leave is possible for salaried employees who must leave work for personal reasons.
It must be taken when the event takes place and may not be carried over onto the salaried employee’s ordinary leave and must be mutually agreed upon between the employee and the employer prior to any leave taking place.
This special leave depends on the nature of the stated reason (birth, marriage, death, etc.).
PAID MATERNITY LEAVE (DAYS)
Termination
Termination Process
The termination process varies according to how the employment agreement and collective agreement are in place and is based on the type of contract and reason for termination. For employers with more than 150 employees (or less if there is a collective agreement foreseeing this), a hearing must be conducted before the employee is dismissed.
For employers with at least 15 employees, the employer must notify the economic committee of the dismissal, this notification is required only in the event of a dismissal for economic reasons. If the dismissal is linked to the employee (based on performance, behavior) there is no need of such notification.
| Salary payment interval / date | Final payment on termination | Bank account payment requirement |
|---|---|---|
| Wages stipulated “in cash” must be paid monthly, by no later than the last day of the relevant calendar month. | Upon termination the wages (including cash-salary and accessories) still owed must be paid by the end of the contract, no later than five (5) days after the contract ends. | The law specifies payment of wages “in cash” or monetary form by the employer. |
Notice Period
Collective agreements may contain provisions on periods of notice. Suppose the periods of notice laid out in the collective agreement differ from the statutory periods of notice. In that case, the employer and the employee must observe the periods of notice laid down in the collective agreement.
The amount of notice is dependent on the length of service:
- For employees with less than five years of service, two months’ notice is required
- For employees with between five and ten years of service, four months’ notice is required
- For employees with more than ten years of service, six months’ notice is required
Notice begins on the 15th of the month if the dismissal letter is sent between the 1st and and the 14th of the month. Notice begins on the 1st day of the following month if the letter of dismissal was sent between the 15th and the last day of the month.
It is possible to exempt the employee from work during the notice period, but in this case, the employer keeps paying the full salary every month until the end of the notice period.
Severance Pay
Collective agreements may contain provisions on the amount and calculation of severance pay. If the severance pay process laid out in the collective agreement differs, the employer and the employee must observe the process in the collective agreement.
The amount of severance pay is determined by the length of employment:
- Fewer than five years- No severance pay
- 5-10 years- 1 month’s severance pay or the notice period can be extended by five months for employers with less than 20 employees
- 10-15 years- 2 months’ severance pay or the notice period can be extended by eight months for employees with less than 20 employees
- 15-20 years- 3 months’ severance pay or the notice period can be extended by nine months for employers with less than 20 employees
- 20-25 years- 6 months’ severance pay or the notice period can be extended by 12 months for employers with less than 20 employees
- 25-30 years- 9 months’ severance pay or the notice period can be extended by 15 months
- 30+ years- 12 months’ severance pay or the notice period can be extended by 18 months
Probation Period
The minimum probation period in Luxembourg is two weeks and generally is determined by the employee’s salary and qualification status:
- If an employee receives a monthly salary of at least 4,586.12 EUR, the maximum probation period is one year
- If an employee has a vocational skills certificate or equivalent, the maximum probation period is six months
- If the employee does not have a vocational skills certificate or equivalent, the maximum probation period is three months
Immigration
Citizens of EU and EEA countries and Switzerland do not need a work visa for jobs in Luxembourg. Europeans with Croatian citizenship must still acquire a separate work permit for their first year in Luxembourg.
Anyone who intends to stay longer than 90 days in the country must go to the local municipal office in Luxembourg to declare their arrival and intention to stay within the first week of arriving. An address registration certificate is also necessary.
Any foreigner wishing to stay for longer than 90 days in Luxembourg for work purposes must obtain a work visa.
All Luxembourg employers must have gone through the labor market test. Three days before publishing the job opening in any public advertisement, the declaration of the vacant position must be submitted to the National Employment Agency (ADEM).
If, after two months, the position has not been filled by an EU national, the employer may proceed with extending the job offer to a third-party national.
For highly qualified employees, the employer is not required to undergo the labor market test.
However, the employee will need to declare the open position with ADEM. The employee must have a signed employment contract that is valid for more than one year and can prove they have the qualifications and educational background required to be able to carry out the job duties required. In addition, the salary must be at least 1.5 times the average gross annual salary or 1.2 times the average gross annual salary for certain professions.
For a foreigner to apply for a work visa, the prerequisite is to receive a definite work offer from an employer in Luxembourg before arriving in Luxembourg. This offer/contract of employment must be in accordance with Luxembourgish labor law as it is the premise for approval of a residence permit based on employment. This does mean that should the foreigner terminate the employment with that employer, the visa will become invalid.
For highly qualified employees: The employer is not required to undergo the labor market test, however, still will need to declare the open position with ADEM. The employee must have a signed employment contract that is valid for more than one year and can prove they have the qualifications and educational background required to be able to carry out the job duties required. In addition, the salary must be at least 1.5 times the average gross annual salary or 1.2 times the average gross annual salary for certain professions.
Remote Work
The legal framework for teleworking outlines that telework is defined as work performed outside the premises of the employer, and not restricted to work from home only.
There is a distinction between regular and occasional teleworking.
Regular Teleworking requires the written agreement of both the employee and the employer outlining the place of telework, the working hours, telework allowance (if any), overtime, benefits in kind, etc. The written agreement may result from an individual agreement with an employee, from a Collective Bargaining Agreement or a company agreement. Employers should provide teleworkers with the necessary equipment to carry out their work.
Occasional teleworking is usually required due to unforeseen circumstances or for a small portion of working time and does not require a written agreement, email will suffice, and the employer is not required to provide work equipment or bear the associated costs.
All remote employees should be able to enjoy the same rights and protections as other employees. This includes all benefits in kind that onsite workers are entitled to but excludes compensations specifically linked with the employee’s presence onsite such as a gym or parking space.
Remote employees have a right to disconnect after working hours and should have the same rights as on-site employees.
VAT
General
- Standard VAT rate – 17%
- Intermediary VAT rate – 14%
- Reduced VAT rate – 8%
- Super Reduced VAT rate – 3%
Stay up to date on payroll & employment law changes
Version History
Further mandatory wage indexation- Worker’s base salary will increase by 2.5% as of September 2023.
Probation period – If an employee receives a monthly salary of at least 4,586.12 EUR, the maximum probation period is one year.
Payroll contributions and personal income tax rates have been updated.
Employer Payroll Tax: “Health at Work” tax rose to 0.14%
Questions & Answers
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Payroll and Benefits Guide
in Luxembourg
What’s covered in this guide:
- Employer/employee contributions
- Minimum wage
- Working hours
- Visa requirements
And more...
Public Holidays Calendar
| Date | Day | Holiday | Notes |
|---|---|---|---|
| 1 January 2026 | Thursday | New Year’s Day | Standard holiday |
| 6 April 2026 | Monday | Easter Monday | Standard holiday |
| 1 May 2026 | Friday | Labour Day (May Day) | Standard holiday |
| 9 May 2026 | Saturday | Europe Day | Standard holiday |
| 14 May 2026 | Thursday | Ascension Day | Standard holiday |
| 25 May 2026 | Monday | Whit Monday (Pentecost Monday) | Standard holiday |
| 23 June 2026 | Tuesday | National Day (Grand Duke’s Official Birthday) | Standard holiday |
| 15 August 2026 | Saturday | Assumption Day | Standard holiday |
| 1 November 2026 | Sunday | All Saints’ Day | Standard holiday |
| 25 December 2026 | Friday | Christmas Day | Standard holiday |
| 26 December 2026 | Saturday | Saint Stephen’s Day (Boxing Day) | Standard holiday |
What is the calculation for Pension employer who has monthly salary more than11,284.77
Social Contributions are applied on salary up to a ceiling of EUR 12,854.64 per month (11,284.77 is an outdated figure). Once this rate has been met, no further contribution is applied on the amount above this figure.