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Employer of Record Luxembourg | Employee Benefits in Luxembourg

Payroll Cycle
Employer Contributions
Employee Contributions
Minimum Wage
Hiring Employees
Hiring Contractors
Hiring Expats
Background Checks
Employment Contracts
Employee Benefits
Social Security
Healthcare and Insurance
Leave Policy
Public Holidays
Work Permit and Work Visa
Probation Period
Notice Period
Termination and Severance
Personal Income Tax

An employer of record in Luxembourg takes on the responsibility of managing crucial elements of employment, including the payroll cycle, employer and employee contributions, compliance with minimum wage regulations, comprehensive hiring procedures for employees, contractors, and expatriates, thorough background checks, drafting and administering employment contracts, seamless onboarding processes, provision of employee benefits, adherence to social security regulations, facilitation of healthcare and insurance coverage, implementation of leave policies, observance of public holidays, navigation of work permit and work visa requirements, supervision of probation periods, adherence to notice period guidelines, execution of termination and severance procedures, and compliance with personal income tax obligations.

CapitalLuxembourg City
Time zoneUTC+01:00 (CET)
Total Time zones1
Personal Tax filing deadline31st Mar
Financial YearJan 1st to 31st Dec
CurrencyEuro (EUR)
Date Formatdd/mm/yyyy
Fiscal Year1 January- 31 December

Payroll CycleMonthly. salaries are paid over the end of the week or month
13th Month Salary Yes. paid at the end of the year. employers also pay an additional half month's salary along with one month's salary.

Employer Payroll Contributions in Luxembourg

Employers% of Gross Salary
Employer Payroll Contributions
Pension8% (capped at 11,284.77 EUR per month)
Health Insurance2.80% to 3.05% (capped at 11,284.77 EUR per month)
Accident at Work0.68% to 1.13% (capped at 11,284.77 EUR per month)
Mutual Health Benefit0.60% to 2.98% (capped at 11,284.77 EUR per month)
Health at Work0.14% (capped at 11,284.77 EUR per month)
Total Employment Cost12.22% to 15.30%

Employee Payroll Contributions in Luxembourg

Employees% of Gross Salary
Employee Payroll Contributions
Pension8% (capped at 11,284.77 EUR per month)
Health Insurance2.80% to 3.05%
Dependency Contribution0.014
Total Employee Cost12.20% to 12.45%

Personal Income Tax in Luxembourg - Class 1

Single taxpayer (Class 1)
up to 20,000.00 EUR921 EUR
20,001 EUR to 38,700 EUR5,317 EUR
38,701 EUR to 58,000 EUR13,081 EUR
58,001 EUR to 77,400 EUR21,177 EUR
77,401 EUR to 96,700 EUR29,231 EUR
96,701 EUR to 116,000 EUR37,456 EUR
116,001 EUR to 135,500 EUR45,802 EUR
135,501 EUR to 155,000 EUR54,242 EUR
up to 205,000 EUR76,642 EUR

Personal Income Tax in Luxembourg - Class 1a

Single taxpayer (Class 1a)
up to 20,000.00 EUR0 EUR
20,001 EUR to 38,700 EUR4,271 EUR
38,701 EUR to 58,000 EUR12,325 EUR
58,001 EUR to 77,400 EUR20,420 EUR
77,401 EUR to 96,700 EU28,474 EUR
96,701 EUR to 116,000 EUR36,699 EUR
116,001 EUR to 135,500 EUR45,045 EUR
135,501 EUR to 155,000 EUR53,486 EUR
up to 205,000 EUR75,885 EUR

Personal Income Tax in Luxembourg - Class 2

Married taxpayer (Class 2)
up to 20,000.00 EUR0 EUR
20,001 EUR to 38,700 EUR1,675 EUR
38,701 EUR to 58,000 EUR5,113 EUR
58,001 EUR to 77,400 EUR10,635 EUR
77,401 EUR to 96,700 EUR18,110 EUR
96,701 EUR to 116,000 EUR26,164 EUR
116,001 EUR to 135,500 EUR34,302 EUR
135,501 EUR to 155,000 EUR42,439 EUR
up to 205,000 EUR63,357 EUR

Minimum Wages in Luxembourg

Minimum Wage
AgeMinimum Wage
18-year-old skilled employees2,776.05 EUR
18-year-old unskilled employees 2,313.38EUR

Employee Benefits

Social Security

Luxembourg has a unified social security system governed by the law of 13 May 2008. The system comprises the Caisse Nationale de Santé (CNS) for healthcare and the Caisse Nationale d'Assurance Pension (CNAP) for pension insurance. The Centre Commun de la Sécurité Sociale (CCSS) is responsible for data processing, membership records, and contributions. The social security contributions apply to compensation and earnings up to five times the minimum reference social wage. Both employees and employers contribute to social security, with rates around 3.05% for sickness and maternity leave and 8% for retirement.

Healthcare and Insurance

The healthcare insurance system in Luxembourg covers the reimbursement of medical costs, compensation for sick leave, maternity leave, adoption leave, family-related leave, and dependence. The pension insurance provides statutory pensions to members and offers loans for construction or renovation. Invalidity pensions are also available under Luxembourg law. Employer contributions finance accident insurance.

Required Leave

Holidays and Annual Leave

Employees in Luxembourg are entitled to a minimum of 26 days of paid leave per year, as per the law of 25 April 2019 (which added one day). Some Collective Bargaining Agreements (CBAs), such as those in the banking and insurance sectors, may provide for additional holidays. To be eligible for paid leave, employees must have worked continuously with the same employer for at least three months. Paid leave should be taken within the calendar year it applies to but can be postponed until the following year in exceptional cases, with the condition that it must be taken before 31 March. When a public holiday falls on a non-working day, it is replaced by a compensatory day off within three months. The Labour Code also grants extraordinary leave for family reasons and specified events. Luxembourg has 11 statutory public holidays, including New Year's Day, Labour Day, and Christmas Day.

Maternity and Parental Leave

Maternity benefits are provided during antenatal and postnatal leave. The benefits amount to the highest salary received in the three months preceding maternity leave for employees or the contribution base in force at the time of maternity leave for self-employed workers. Maternity benefits must fall within 1 to 5 times the social minimum wage maximum. Parental leave is available to parents of children under six years old, allowing them to take a break from their professional career or reduce their work hours to focus on their child's education. Parental leave was reformed by a law in November 2016, introducing changes to its duration and the option of divisible parental leave for full-time workers. The reform also introduced a replacement income, providing a real salary compensation during parental leave, with a maximum limit of €3,200.

Sickness and Disability Leave

Employees in Luxembourg are entitled to statutory sickness pay if they are absent from work due to illness. The employee must notify the employer on the first day of absence and provide a medical certificate no later than the third day of absence. Statutory sickness pay is available for up to 78 weeks within a reference period of 104 weeks starting from January 1, 2019 . During sickness leave, the employer continues to pay the employee's salary and is reimbursed 80% of the costs by the Luxembourg Mutual Insurance Scheme. After 77 days of absence, the employee is paid directly by the Social Security authorities. Payment of Social Security premiums is mandatory to finance statutory sickness pay. Employees on sickness leave are protected against dismissal for the first 26 consecutive weeks of absence. If an employee remains unable to work after the statutory sickness pay period, they may apply for an invalidity pension. As of January 1, 2019, the employment contract ceases after 78 weeks of absence due to illness, compared to the previous 52-week period.


The normal old age pension in Luxembourg is typically granted at the age of 65, provided the individual has completed a 120-month contributory period of compulsory, voluntary, or elective insurance or purchase periods. However, there are exceptions to the minimum retirement age, allowing workers to retire at the age of 57 or 60 under certain conditions.

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