Labor law in Luxembourg

An indefinite-term contract (Contrat à Durée Indéterminée or CDI) in Luxembourg is a written agreement between an employer and an employee. It outlines the terms and conditions of employment, including job duties, salary, working hours, notice periods, and other relevant details.

The CDI is the most common and sought-after type of employment contract in Luxembourg. It offers stability and long-term prospects for the employee, allowing them to build a career with the company. Employers often prefer CDIs for core roles within their organization, as it provides continuity and fosters a strong commitment from the workforce.

Form of the employment contract

The employment contract must be drawn up in 2 copies (for the employee and the employer) and no later than the date of employment. It should also contain the following key points:

• the identity of the parties concluding the contract (names, addresses).
• the effective date of entry into service of the employee. As regards the employment of non-EU nationals, the date of entry into service may be stated on a conditional basis. For exmaple, "the employee will enter into the employer's service on the date of receipt of his work permit".
• the place of work.
• the registered office of the business or, where applicable, the employer's place of residence.
• the nature of the job carried out, and, where applicable, a description of the role and tasks assigned to the employee at the time of his employment.
• the duration of the employee's usual daily or weekly work.
• the usual working schedule.
• the basic salary and the index in force on signing the contract, as well as any additional financial benefits.
• the duration of paid annual leave, or if it is not possible to state this when concluding the contract, the means used to determine and allocate the amount of leave must be stated.
• the notice period that the employer and employee must give if the contract is terminated.
• the duration of the trial period, where applicable.
• where applicable, a reference to the collective agreements governing the working conditions of the employee.
• where applicable, the existence and description of a supplementary pension scheme, the optional or compulsory nature of that scheme, the rights to related benefits and any personal contributions to be made.
• where applicable, any additional or derogation clause which may override the law.

Trial period

Trial period is quite common in most of the companies. It gives the employee a chance to see if they can handle the job, and it lets the employer know if the potential employee is up to the task.

A fixed-term contract is made for a specified period, and it automatically ends upon reaching the agreed end date.

This contract is used when a company needs a temporary replacement for an employee or to cover a specific project or workload.

This type of contract includes the following information in addition to the mandatory clauses that are spelled out in the CDI section:

• the purpose for which the contract was concluded and why a fixed-term contract is used.
• the end date of the contract or, the minimum period of validity of the contract if no end date is stated.
• if it is a replacement contract, the name of the employee being replaced.
• the duration of the trial period, if any.
• a renewal clause, if applicable.

As the description suggests, such contracts are entered into for a specified period of time to cover, for example, the vacancy of an employee on medical treatment or maternity leave, to hire people for seasonal work and others.

A collective labor agreement is an agreement applicable to a specific company or group of companies, concluded between representatives of both employer and employees.

The collective agreement supplements the provisions of the labor law in accordance with the needs and specificities of each sector of activity, especially with regard to organization and work restrictions.

It also establishes employment and working conditions, provides social guarantees not only for employees but also for employers.

When an employee decides to leave their job voluntarily, they must submit a resignation letter to their employer. The resignation letter should be in writing and include the employee's intention to resign, the last working day (usually subject to the notice period as specified in the employment contract or collective agreement), and a professional tone.

The notice period is the period of time an employee needs to continue working after submitting the resignation letter, allowing the employer to find a replacement if necessary. The notice period varies depending on the length of service and other factors specified in the employment contract or collective agreement.  

If the employer decides to terminate an employee's contract, they must provide a termination letter in writing.

The termination letter should clearly state the reason for termination, adhering to the legal grounds allowed for dismissal in Luxembourg (e.g., economic reasons, disciplinary issues, etc.). The employer must comply with the notice period specified in the employment contract, collective agreement, or applicable labor laws when terminating an employee. If no specific notice period is outlined, legal minimums apply.  

It's essential for both parties (the employer and the employee) to adhere to the legal requirements and any contractual obligations when handling resignation or termination matters.

Failure to do so may lead to legal consequences or potential disputes. Additionally, consulting with legal experts or relevant labor authorities can provide guidance on proper procedures and ensure compliance with the labor laws in Luxembourg.