LUXEMBOURG Law and Practice Contributed by: Romain Tiffon and Marie Bentley, ATOZ Tax Advisers
Where applicable, the contract may incorporate provi - sions from collective bargaining agreements. Luxembourg law distinguishes between different types of employment contracts: • permanent (open-ended) contracts, which are the standard form; and • fixed-term contracts, which have a predetermined duration. The duration is therefore regulated by law, as different rules apply depending on the type of contract (see, for example, 4.4 Termination of Employment Contracts regarding the applicable rules for contract termina - tion). 4.3 Working Time Luxembourg law sets clear limits on working time. The normal legal working time is: • 8 hours per day; and • 40 hours per week. However, working time may be extended, subject to legal limits, up to: • 10 hours per day; and • 48 hours per week (including overtime). Overtime is also regulated by law. Overtime is defined as any work performed in excess of the working time set out in the employment contract. Overtime is not automatically permitted, and is allowed only in spe - cific circumstances. It is subject to prior notification and authorisation requirements. Overtime does not always require the consent of both parties, except in limited cases. Additional flexibility in working time can be achieved through specific arrangements, such as a work organi - sation plan, or a flexitime system. These mechanisms allow companies to adapt working hours within the legal framework. 4.4 Termination of Employment Contracts Luxembourg is not an employment‑at‑will jurisdiction. Termination of employment contracts is strictly regu -
lated by law and must be based on legally recognised grounds and procedures. An employer may terminate a permanent (open‑end - ed) employment contract with notice on personal grounds (eg, insufficient performance, behavioural issues) or economic grounds (eg, restructuring, abo - lition of the position, financial difficulties). An employer may also terminate a contract with immediate effect in cases of serious misconduct, which justifies immedi - ate departure (eg, criminal acts or violence). Fixed- term contracts may generally only be terminated early for serious misconduct. During the probation period, termination with notice is possible without stating a specific reason. The dismissal procedure involves the following. • Dismissal must be notified by written letter. • For dismissal with immediate effect, the grounds must be stated in the letter. • For dismissal with notice, the employee may request the reasons, and the employer must respond in writing. If the employer has 150 or more employees, in addi - tion to the above, a pre‑dismissal interview must be held, allowing the employee to respond to the pro - posed dismissal. Dismissal with notice is subject to statutory notice
periods depending on seniority: • two months (less than five years); • four months (five to ten years); and • six months (more than ten years).
Employees dismissed with notice and having at least five years of service are entitled to severance pay, ranging from one month’s to 12 months’ salary, depending on length of service. If a dismissal is found to be abusive, the employer may be ordered to pay damages covering material loss and moral prejudice suffered by the employee. A collective redundancy procedure applies where an employer intends to dismiss for economic reasons:
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