Luxembourg

• New Year’s Day
• Easter Monday
• Labour Day
• Europe Day
• Ascension Day
• Whit Monday
• National Day
• Assumption of Mary
• All Saints' Day
• Christmas Day
• St Stephen’s Day

Working Hours

Employees can work up to 40 hours per week.

Minimum Wage

From 1 May 2025, the monthly minimum wage rates are as follows:

• €3,244.48 for skilled employees;
• €2,703.74 for non-qualified employees;
• €2,162.99 for employees aged 17 to 18; and
• €2,027.80 for employees aged 15 to 16.

Employee Tax

Annual income	Tax rate*
Up to EUR 11,265	0%
EUR 11,266 - 13,173	8%
EUR 13,137 - 15,009	9%
EUR 15,009 - 16,881	10%
EUR 16,881 - 18,753	11%
EUR 18,753 - 20,625	12%
EUR 20,625 - 22,569	14%
EUR 22,569 - 24,513	16%
EUR 24,513 - 26,457	18%
EUR 26,457 - 28,401	20%
EUR 28,401 - 30,345	22%
EUR 30,34 - 32,289	24%
EUR 32,289 - 34,233	26%
EUR 34,233 - 36,177	28%
EUR 36,177 - 38,121	30%
EUR 38,121 - 40,065	32%
EUR 40,065 - 42,009	34%
EUR 42,009 - 43,953	36%
EUR 43,953 - 45,897	38%
EUR 45,897 - 100,002	39%
EUR 100,002 - 150,000	40%
EUR 150,000 - 200,004	41%
More than EUR 200,004	42%
Solidarity tax	7% - 9%**
Social security contribution (sickness)	3.05% applicable to base salary, benefits in kind and cash benefits. 2.80% applicable to allowances as well as bonuses.
Social security contribution (pension)	8%
Care insurance	1.40%

*Based on a single person’s income. Tax bands may be different for married couples filing jointly.

**Actual amount depends on the employee’s salary.

Bonuses

There are no statutory bonus schemes in Luxembourg, but a 13th-month salary is common. Other bonus schemes are also popular with individual employers.

Young Employee Bonus

Effective January 2025, employers can offer a ‘young employee’ bonus to workers under the age of 30 who are starting their first permanent contract. The bonus is 75% tax-free, with the following limits based on gross annual pay:

• €5,000 for salaries of €50,000 or less.
• €3,750 for salaries up to €75,000.
• €2,500 for salaries up to €100,000.

All written employment agreements in Luxembourg must include:

• Employer and employee details
• Start date
• Job title and responsibilities
• Workplace
• Working hours
• Salary and leave entitlement
• Probation and notice periods (if applicable)
• Collective agreement details (if applicable)
• Pension scheme details (if applicable)

Fixed-term contracts are also permitted. In addition to the above, they must include the purpose of the contract, employment duration, and renewal terms.

Annual Leave

Each employee is entitled to 2.083 days' paid holiday for each month worked (or 25 days per year).

For part-time employees, the calculation will be done on a pro-rata basis.

Sick Leave

Employees are entitled to fully paid sick leave from the first day of absence to the end of the month during which the 77th day of sickness occurs. After this, the national health agency will pay sickness benefit for up to 53 weeks.

A medical certificate must be provided no later than the third day of absence. Insurance will reimburse up to 80% of the employee’s salary.

An employment agreement will automatically end after a sick leave of 78 weeks over a period of 104 weeks.

Parental Leave

• Maternity leave: at least 20 weeks' paid leave.
• Paternity leave: ten days' paid leave.

Termination Process

Employers in Luxembourg can terminate a contract, provided they give notice and compensation in line with legal requirements.

Dismissal without notice is only permissible if the following procedures have been completed:

• A pre-dismissal interview
• Notification of dismissal
• Administrative formalities

Employees can also terminate the contract by giving notice in line with legal requirements.

Severance Pay

All employees who are dismissed with notice are entitled to severance pay.

The amount of severance due depends on the employee's length of service. It starts at two months' wage after five years and rises to 12 months' wages after 30 years.

Under a Mauve Group Employer of Record (EOR) solution, clients and their international workers benefit from access to Mauve’s Global Master Insurance Programme—a market-leading, unified corporate insurance framework that connects all Mauve entities with two trusted providers. As part of our comprehensive global Employer of Record services, this insurance offering supports companies employing staff overseas by ensuring full compliance with local legal requirements while safeguarding their workforce.

The programme provides international insurance coverage through a combination of the master policy and jurisdiction-specific local policies, where required by law. This structure ensures seamless alignment with local employment laws—an essential element of maintaining global regulatory compliance within any international EOR payroll arrangement.

Coverage includes:

• Employer’s Liability and Public Liability – £10,000,000 combined limit
• Professional Indemnity – £5,000,000 limit
• Worker’s Compensation – Limit varies based on the employee’s country of work

This solution is ideal for organisations seeking to streamline global employee management while ensuring every EOR employee is protected and fully compliant in their respective jurisdictions.

For tailored advice on EOR insurance coverage, payroll compliance, or global compliance services in your target country, get in touch with Mauve’s expert international HR consultancy team.