Employee benefits in Luxembourg

Top 10 of the most relevant employee benefits in Luxembourg

In Luxembourg, employees enjoy a number of statutory benefits, as well as additional benefits that companies offer to attract and retain talent. In this first section we will focus on 10 of the most important benefits available to all employees in Luxembourg by law.

Minimum wage

It may not seem like it but it is, having a minimum wage is a great advantage that many employees in other countries do not have. In addition, the Luxembourg minimum wage is the highest in Europe, and this has been the case for many years. The average Luxembourg minimum wage is 3,085.11 euros per month for skilled workers and 2,570.93 euros for unskilled workers. Below is a chart that will give you an idea of how the Luxembourg minimum wage compares to other European countries.

Source: Eurostat

Working hours and overtime

The right to be compensated for overtime worked is also a major benefit available to employees in Luxembourg. The standard working day in Luxembourg is 8 hours per day and 40 hours per week, so that hours worked above this threshold must be compensated, and there is a maximum limit to the overtime an employee can work which is 2 hours per day and 8 hours per week.

Overtime worked must be compensated with paid time off and rest time must be one and a half hours for each hour of overtime worked. It is only possible to compensate overtime with financial remuneration if it is not possible to compensate overtime by taking time off for reasons inherent to the organization of the company or if the employee leaves the company before recovering the overtime worked. 

If overtime is to be economically compensated, it must be paid at 140%. In addition, the remuneration paid for overtime is tax-exempt and the increased part, which is the 40% supplement, is exempt from income tax and social security contributions.

Paid leaves

In Luxembourg all employees are entitled to at least 26 working days of paid vacation per year, although employers or collective bargaining agreements may increase the number of days. In order to start benefiting from vacation days, employees must have worked for at least 3 uninterrupted months, from which point employees may enjoy the vacation days they have accrued since they started working.

The 26 vacation days are not earned all at once from the beginning or end of the year, vacation days are accrued as time worked is accumulated at a rate of 2.167 vacation days per month worked.

In addition, certain categories of employees are entitled to additional vacation days:

Weekends and holidays

Having the weekend off may appear to be an obvious benefit available to everyone but this is not the case, there are countries where for example the working time is 48 hours a week including Saturday as a working day.

In Luxembourg, as previously mentioned, the working day is 8 hours a day and 40 hours a week, which leaves weekends free. In addition, all employees are entitled to the 11 statutory public holidays in the country:

• New year (January 1).
• Easter Monday.
• May 1st (Labour Day).
• Europe Day.
• Ascension Day.
• Whit Monday.
• national holiday (public celebration of the Grand Duke's birthday on June 23).
• Assumption Day (August 15).
• All Saints' Day (November 1).
• 1st Christmas Day (December 25).
• 2nd Christmas Day (December 26).

In addition, it must be taken into account that holidays may coincide with a day on which the employee did not have to work according to his or her work schedule or fall on a Sunday. Also, there may be non-working days, weekends or public holidays, on which an employee may be obliged to work due to the particular conditions of the company. In all these cases employees in Luxembourg are entitled to compensation, let's look at them case by case.

• Public holiday falling on a normal working day: If the employee has to work this day, he is entitled to a total compensation of 300%.
• Public holiday falling on a normally non-working working day: If a public holiday coincides with a working day on which the employee should not have worked and the employee follows his normal working schedule and does not work on that day, he is entitled to his normal salary and to one day of compensatory leave to be taken within 3 months. If the employee also has to work on that day, he is entitled to the average hourly wage corresponding to the hours actually worked, to a supplement of 100% of the hours actually worked and to a compensatory day off to be taken within 3 months.
• Public holiday falling on a Sunday: in this case, the employee is entitled to one day of compensatory leave. However, if the employee also has to work on this day, he is entitled to the average hourly wage corresponding to the hours actually worked, to a supplement of 100% of these hours for work on public holidays, to a supplement of 70% of these hours for work on a Sunday and to a day of compensatory leave to be taken within 3 months.

Social Security and medical coverage

Luxembourg has a strong, comprehensive and compulsory healthcare system for all. According to the Legatum Prosperity Index 2023 and according to the score in the health pillar, Luxembourg ranks 12th in the world. Furthermore, according to the WHO, Luxembourg is one of the countries that invests the most in health.

The healthcare system covers a wide range of medical services, such as general medical consultations, visits to specialists, hospitalization, prescription drugs and specialized treatments. Although the Luxembourg healthcare system does not cover 100% of the costs, it generally covers 80% of these, the rest must be paid by the patient.

Sick leaves

Employees in Luxembourg are entitled to days off without having to go to work in case of incapacity for work due to illness or accident, however, it is necessary to comply with some requirements. It is necessary to notify the employer by telephone or in writing from the first day of absence and in case of absence exceeding 2 working days it is also necessary to send, at the latest on the third day of absence, a medical certificate of incapacity for work to the CNS.

These days off due to illness or accidents are a great advantage for employees in Luxembourg, however, it should be noted that these days are not days off like a holiday where you can do whatever you want. There are restrictions as to the possibilities of leaving the home, during the first 5 days of sick leave, it is not possible to leave the home even if the departures are authorized by the doctor and after these 5 days, it is possible to leave the home only from 10:00 to 12:00 and from 14:00 to 18:00.

During these days employees are entitled to continuation of remuneration by the employer until the end of the month in which the 77th day of incapacity for work occurs. After this date, employees are still entitled to an allowance but this is granted by the CNS.

Protection against dismissal in case of illness

Another benefit available to employees in Luxembourg, also related to accident-related illnesses, is protection against dismissal during these days of incapacity for work. However, this protection is limited in time and only applies for a maximum period of 26 weeks from the first day of the illness. In addition, this protection is subject to the fulfillment of the reporting obligations, which are the first days’ notice to the employer and the presentation of the certificate to the CNS no later than the third day.

Maternity leave and benefits for pregnant women

Pregnant women working in Luxembourg are entitled to maternity leave, consisting of prenatal and postnatal leave. In addition, during pregnancy and maternity, employees are entitled to certain contractual guarantees and adjustments to their working conditions.

• Prenatal and postnatal leave Prenatal leave begins 8 weeks before the expected date of birth and maternity leave is extended for 12 weeks from the actual date of birth. In total, pregnant women are entitled to 20 weeks of leave. During this period, women are entitled to maternity allowance, paid by the CNS, which corresponds to the highest salary received in the last 3 months prior to maternity leave. Taking into account that the maternity pay can be neither less than the minimum monthly social wage nor more than 5 times the minimum monthly social wage. To be eligible for this leave, women must send to the Caisse Nationale de Santé (CNS) and to their employer a medical certificate stating the expected date of birth during the last 12 weeks of pregnancy. 
• Additional benefits and protections Pregnant women are also entitled to a whole range of protective measures: protection against dismissal from the beginning of pregnancy, special protection for their health and safety when working in a position involving specific risks, protection against the risks of night work, exemptions from work to undergo prenatal examinations, and even flexible hours for breastfeeding among other benefits. The list of benefits is extensive so we advise you to check the dedicated page on guichet.public.lu. In order to benefit from the protections granted to pregnant women, they must notify their employer but are free to do so whenever they wish. This notification must be made by means of a medical certificate attesting to the state of pregnancy sent by registered letter with acknowledgment of receipt, or delivered by hand against the employer's signature. 

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Paternity leaves

In Luxembourg, working fathers also have benefits when their partner gives birth to a child or in the case of the adoption of a child under 16 years of age. In these cases, fathers are entitled to paternity leave consisting of 10 days, or 80 hours, which can be taken in installments. Workers whose working week is less than 40 hours will have a number of hours of leave fixed in proportion to the weekly working hours established in the employment contract. 

If there is no agreement between the employee and his employer as to the number of days of leave, the leave must be taken only once and immediately after the event of either the birth or adoption of the child.

To be entitled to paternity leave it is necessary to present a medical certificate in case of birth or supporting documentation in case of adoption of a child at least 2 months before the foreseeable dates on which you wish to take the leave.

Severance pays

In Luxembourg, employees also obtain benefits for working for several years in a company in the event of dismissal. Normally an employer who dismisses an employee for any reason other than gross misconduct must give notice, however, if the employee has been with the company for 5 years or more, he is entitled to a longer notice period and a severance payment.

The severance pay in Luxembourg depends on the seniority of the employee on the date of expiration of the notice period, however, companies with less than 20 employees may choose to exchange the severance payment for an extension of the notice period of the dismissed employee. In addition, the employer must state its choice in the dismissal letter.

Other benefits and in-kind advantages

In addition to all the benefits listed above, which are mandatory for the employer, there are also other benefits that are not mandatory but that companies in Luxembourg can offer to attract and retain talent. 

• 13-month salary in Luxembourg: companies that wish to do so can add to the salary compensation an extra payment, it can be freely established but generally companies that adhere to this practice provide a payment corresponding to one month of work at the end of the year.
• Meal voucher: Employers may give special cards that employees can use in most restaurants in Luxembourg to receive free meals.
• Take-home car: Some companies allow their employees to use a company car free of charge during certain hours of the day.
• Gym or health club membership: Companies may also offer their employees free access to a company gym.
• Profit-sharing bonus: some companies pay this bonus to employees who have contributed to improving the company's results.
• Private health insurance: Complementary to the public system, some companies finance private health insurance that offers greater coverage or more specialized treatments.
• Daycare and daycare checks: companies may also contribute to daycare costs or provide in-house daycare to assist working parents.
• Technology and work equipment: it is common for companies to provide equipment such as laptops, cell phones and other electronic devices that facilitate work.
• Training and professional development: companies may offer continuing education, grants for professional courses, or even mentoring and leadership development programs.
• Telecommuting and flextime: although not strictly an in-kind benefit, telecommuting and flextime policies are highly valued. Companies that allow this help employees to better reconcile work and personal life.