Payroll Peo Services Luxembourg

Compandben Payroll Partner


Compandben has two International Payroll Partners in Luxembourg

Both are local Luxembourg accountung firns, one with Branches in other Benelux areas.

Luxembourg Employment Services

The Compandben Employment Services Provider for Luxembourg will employ staff on behalf of clients, so that the client does not need to set up a legal entity in Luxembourg

Contact Compandben

John Tinsley
Compandben HR Consultancy
5 Rue de L’Orangerie
1202 Geneva
+41 79285 9713 CH
+44 79581 73708 UK

Terms and conditions

Social security
Employee social contributions total approximately 13% of the gross remuneration. Both employee and employer contributions are capped for salaries equal to and higher than 11’009.65 EUR (2021).
Employment contract details

There are no specific rules governing the language used to write employment contracts in Luxembourg.

Contracts must always be in writing and specify the type of employment agreed, trial period and restrictive covenants. The employment contracts can be in any language, however, the employee and employer must understand the terms.

Contract backdating
It is not possible to back date contracts. Contracts must be signed and registered before or on the work start date.
Fixed-term contracts
A fixed-term contract should only be concluded for specific and objective reasons (precise and temporary tasks).A maximum of two renewals for up to 24 months. Fixed-term contracts cannot be terminated early by the employer.
Probation periods

Probation can be set for a minimum of two weeks up to 12 months and must be included on the employment contract to be enforced.

Notice periods during probation depends on the length of the probation period and start from one day to one month. Contracts cannot be terminated during the first two weeks of probation, except in cases of misconduct.

Maximum working hours and overtime

Normal working hours are generally 40 hours per week and 8 hours per day. In certain cases, working hours can be extended, but they cannot exceed 10 hours per day or 48 hours per week.

Overtime is compensated with either time off or a supplement.

Minimum wage requirements

The minimum monthly wage in 2021 raise to 2’201.93 EUR for unqualified employees and 2’642.32 EUR for qualified employees. A qualified employee is one who holds an official training certificate or the equivalent experience.

Salaries are indexed according to the cost of living, increasing or decreasing by at least 2.5% however indexation applies to low incomes only. 2 of 3


Bonuses may be paid; these may be either discretionary or contractual. Discretionary bonuses are at the employer’s discretion and are not treated as salary, whereas contractual bonuses are part of salary and can only be modified with the employee’s consent.

Terms and conditions are determined by the parties and must be included in the employment agreement to be enforced.

Statutory paid holiday

Statutory paid holiday entitlement is 26 days per year. Collective bargaining agreements often provide for an additional holiday bonus.

Public holidays for 2021:

  • Jan 1 New Year’s Day
  • Apr 5 Easter Monday
  • May 1 Labour Day
  • May 9 Europe Day
  • May 13 Ascension Day
  • May 24 Whit-Monday
  • Jun 23 Luxembourg National Holiday
  • Aug 15 Assumption Day
  • Nov 1 All Saint’s Day
  • Dec 25 Christmas Day
  • Dec 26 St. Stephen’s Day

Please note the above lists the national public holidays additional regional holidays may also apply, Collective agreements may also grant additional days.

Sick leave

The employer pays full salary (all benefits included) to employee from the date on which he is informed about the sickness until the end of the month during which the 77th day of sickness leave occurs (whether consecutive or not), over a reference period of 12 consecutive months. 80% of the overall remuneration paid by the employer during the sickness period will be reimbursed by the employers' mutual scheme insurance (mutualité des employeurs).

As from the month following the 77th day of sickness leave, the National Health Agency (Caisse Nationale de Santé) (CNS) will pay, for a period of 52 weeks over a period of 104 weeks, sickness benefits to the employee.

Parental leave


Maternity leave starts 8 weeks before birth and extends until 12 weeks after the baby is born. During maternity leave, employees receive an allowance equal to their salary capped at five times the minimum wage (2’201.93 EUR in 2021) from the National Health Fund.


From January 2018 paternity leave will be extended allowing fathers to take 10 days’ (from 2 days’) paternity leave within two months of the child being born. Employees receive full salary from the employer. 3 of 3


Parents can take up 6 months’ full time leave or up to 12 months’ part time leave. During parental leave, the parent receives an allowance equal to their average monthly income with a ceiling at 3569.99 EUR per month. The allowance is taxable and paid to the employee by the state.

Notice periods

Notice periods vary according to seniority and start from two months for less than five years’ seniority up 6 months for 10 years or more of seniority. Notice periods begin on the 15th day of the current month if the letter of dismissal was notified to the employee before the 15th, or the 1st day of the following month if the letter of dismissal was notified to the employee between the 15th and the last day of the month.

Termination rules and costs

Terminations in Luxembourg are often complex and should be considered with local experts before any notice is issued.

Luxembourg does not allow at-will termination of employment for employers; contracts may be terminated by mutual agreement or unilaterally for due cause (serious cause, unfit for the role, extinction of the role). As a result of this complexity terminations are often a negotiated process.

Termination pay includes basic and variable salary until the notice end date, untaken leave, benefits in kind and allowances due to the employee until the termination date. Employees with at least five years’ seniority are entitled to severance pay equal to one months’ salary, up to 12 months’ salary for employees employed for at least 30 years.