Luxembourg
Employer of Record & PEO in Luxembourg
Hire & manage teams remotely in Luxembourg without a local entity. We handle HR compliance, payroll & taxes so you can focus on your business.
Native Language
Luxembourgish
GDP
$83.77 billion
Payroll Frequency
Monthly
Capital city
Luxembourg City
GDP per capita
$131,302
Internet
Fast
Currency
Euro (EUR)
Timezone
UTC +1
English Speaking
>80%
Population
643,939
Employment Cost
High
Cost of Living
High
How NNRoad Employment & PEO Services Work?
NNRoad provides professional employment organization (PEO) & employer of record (EOR) services for companies looking to hire and manage teams in Luxembourg. Registering a legal entity in Luxembourg as a means for employment is an outdated practice that takes both time (months) and money (thousands of USD). NNRoad’s employer of record and PEO services enables companies to hire and manage employees in Luxembourg in full accordance with local labor laws in under a week.
Employer of Record in Luxembourg
Employer of Record (EOR) services are for companies who do not have a legal entity in Luxembourg, but who want to hire in Luxembourg. Employment and full liability are outsourced to NNRoad.
➊ You interviews & select the candidates you want to hire in Luxembourg.
➋ NNRoad arranges a local labor contract with your new employee.
➌ NNRoad arranges a service contract between your organization & NNRoad.
➍ NNRoad organizes, manages & processes payroll in Luxembourg in full compliance with local employment laws.
➎ You maintain a normal working relationship and manage your team in Luxembourg while NNRoad manages payroll & HR liabilities.
Payroll & PEO in Luxembourg
Professional Employment Organization (PEO) services are for companies who have a legal entity in Luxembourg, and want to outsource their payroll. Employment liabilities are shared between your organization and NNRoad.
➊ You interviews & select the candidates you want to hire in Luxembourg.
➋ NNRoad organizes, manages and processes payroll for your local employees in full compliance with local employment laws.
➌ You maintain a normal working relationship and manage your team in Luxembourg while NNRoad manages payroll & HR compliance.
Advantages of NNRoad's Luxembourg Employment Services
- With EOR/PEO solutions you can manage client meetings, sales, quality control, marketing, R&D and customer support without a local company in Luxembourg.
- Pay as you go
- Dedicated account manager – One point of contact for multiple locations
- Employment & termination processing
- Complete payroll solution and statutory benefit according to local laws
- With EOR/PEO solutions you can hire staff while waiting for the registration of your company in Luxembourg.
- NNRoad only works with professional locally licensed partners
- GDPR compliant
- NNRoad manages employee record timekeeping, bonus and allowance, expenses claims and personal leaves according to local law.
- NNRoad provides foreigner VISA application services, if needed
Employment Compliance in Luxembourg
Taxes & Payroll in Luxembourg
Employee Income Taxes:
Income tax in Luxembourg is based on the individual’s personal situation i.e. the family status and a tax class is granted for this purpose as follows:
- Class 1- for single person.
- Class 1a- for single parent with dependent children and person of age of at least 65 on 1st of January.
- Class 2- for married person, widowed taxpayer (for first three years after the death of spouse) civil partners.
Tax Brackets
| Tax due Class 1 | Tax Due Class 1a | Tax Due (Married) Class 2 | Salary/Income |
921 EUR | 0 EUR | 0 EUR | up to 20,000.00 EUR |
5,317 EUR | 4271 EUR | 1675 EUR | between 20,001 EUR and 38,700 EUR |
13,081 EUR | 12325 EUR | 5113 EUR | between 38,701 EUR and 58,000 EUR |
21,177 EUR | 20420 EUR | 10635 EUR | between 58,001 EUR and 77,400 EUR |
29,231 EUR | 28474 EUR | 18110 EUR | between 77,401 EUR and 96,700 EUR |
37,456 EUR | 36699 EUR | 26164 EUR | between 96,701 EUR and 116,000 EUR |
45,802 EUR | 45045 EUR | 34302 EUR | between 116,001 EUR and 135,500 EUR |
54,242 EUR
| 53486 EUR | 42439 EUR | between 135,501 EUR and 155,000 EUR |
76,642 EUR
| 75885 EUR | 63357 EUR | up to 205,000 EUR |
Employer Costs in Luxembourg
Employer Contributions:
8% – Pension
2.80% – 3.05% – Health insurance
0.75% – Accident at work
0.53% – 2.88% – Mutual Health Benefit
0.14% – Health at work
Total employment cost: 12.22% – 14.82%
Employee Contributions:
8% – Pension
2.80% – 3.05% – Health insurance
1.40% – Dependency contribution
Total employment cost: 12.20% – 12.45%
Working Hours and Overtime in Luxembourg
The employee can work legally up to 8 hours a day for a full-time job and no more than 40 hours a week. The maximum working time cannot exceed 10 hours per day, nor 48 hours per week.
Overtime
As per the law up to 2 hours of overtime is allowed per day not exceeding 8 hours per week. In the case of overtime, either employee recovers their overtime hours at 1.5 times of the time off per hour for the overtime worked or they can be paid 140% of the hourly salary for each hour of overtime.
Mandatory Contributions in Luxembourg
Public State Pension
If the employee pays social security contributions on a monthly basis, a portion of it will be applied to his/her state pension. Contribution-eligible earnings cannot exceed five times the minimum social wage, or about €125,000.
The amount the employee receives is determined by the number of years he/she contributed before reaching the age of 65. (the official national retirement age in Luxembourg).
Health Insurance
In Luxembourg, all employees and self-employed workers are required to pay social security contributions, which qualifies them to access state healthcare.
Employees and employers split the expense of healthcare taxes, which are deducted from salaries at the source. The levy is paid to the Luxembourg Health Offices of the CNS, or Caisse de Maladie, which literally means disease fund.
Termination Laws and Severance Pay in Luxembourg
Employment contracts can be terminated by the employer only if the reason is genuine and there is an applicable notice period given to the employee. The notice period can vary from two to six months depending on the length of service as is as follows
- For 5 years & Less-Notice period is 2 months
- Between 5-10 month’s-Notice period is 4 months
- 10 years or more-6 Month’s notice
For a company with more than 150 employees, the employer must call the employee in for discussion before sending the dismissal notice. The dismissal notice is sent through registered post.
Severance pay
The employer is required to pay severance pay to any employee dismissed with notice who has completed at least 5 years of service and the amount depends on the employees’ length of service.
Employee’s length of service | Severance pay |
Less than 5 years | 0 |
Between 5- 10 Years | 1 month |
Between 10-15 years | 2 months |
Between 15-20 years | 3 months |
Between 20-25 years | 6 months |
Between 25-30 years | 9 months |
30Years & above | 12 months |
Holidays in Luxembourg
Public Holidays in Luxembourg
- New Year’s Day – January 1
- Easter – April 18
- Labour Day – May 1
- Europe Day – May 9
- Ascension Day – May 26
- Whit Monday – June 6
- National Day – June 23
- Assumption Day – August 15
- All Saints’ Day – November 1
- Christmas – December 25-26
Paid Leave in Luxembourg
Each employee is legally allowed 26 working days per year of paid annual leave.
Employment Contract in Luxembourg
Employment Contract
Labor contracts are of the following two types:
- Fixed-term contract: This involves a fixed/specific term of work and such contracts are for jobs such as short-term employment for example, for seasonal work or replacement of an absent employee, etc. the maximum duration of such contracts is 2 years and it cannot be renewed.
- Permanent contract: Such contracts are for an indefinite period and should be finalized in writing. These contracts are put together without a deadline to meet the needs of a company.
Probation Period
Probationary periods cannot be less than two weeks with the maximum duration being 3 months. The probationary period can be extended to six months for employees with a professional qualification and to 12 months if employee earns a monthly gross salary of at least €4,474.31.
Types of Leaves in Luxembourg
Sick Leave
An employee who cannot work because of sickness or accident is allowed a maximum of 26 weeks duration provided the employee submits the medical certificate showing the inability to work on the third day of the sickness.
It is not mandatory to provide a medical certificate for leave of 2 days unless the employer asks for the same. However, the medical certificate is compulsory from the 3rd day of absence.
Maternity Leave
A pregnant employee is entitled to 20 weeks of paid maternity leave.
Immigration Laws in Luxembourg
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.
