Menu Map

Regions

Click on a region to see the countries that we cover

View all countries

Employer of Record Luxembourg

Pin

Employer of Record Luxembourg

Using an Employer of Record in Luxembourg simplifies the recruitment process, cuts down on administrative work, and helps businesses expand and achieve their goals.

Currency

Euro

Population

672,000

Capital City

Luxembourg

Minimum Wage

Luxembourgish, French, German

Local Language

€2,141.99 per month

Working Hours

40 hours per week

Employer of Record in Luxembourg

When you hire in Luxembourg, the Employer of Record in Luxembourg acts as the legal employer for your workers, taking care of the entire employment life cycle. This includes handling all the legal legwork, such as payroll, taxes, mandatory benefits, employment contracts, and ensuring compliance with Luxembourg labor laws.

  • Manages all employment aspects
  • Acts as a legal employer
  • Simplifies hiring
  • Compliantly employing a worker

How does an Employer of Record Luxembourg work?

Agility

We handle the legal aspects of hiring workers, including managing HR, benefits, payroll, and taxes.

Company

Focuses on core business activities. Manages assigned employee’s tasks and performance.

Employee

Performs the assigned work, just like any other employee.

Cost Calculator

Use our easy calculator to explore the employment costs in Luxembourg. Share a bit more information, and we’ll deliver a detailed salary breakdown straight to your inbox.

Payment Frequency

Payroll in Luxembourg is monthly.

 

Employee Tax – 15.25% to 51.25%

Income tax: 0% – 36%

Social security: 12.45%

Unemployment Insurance: 2.8%

 

Employer Tax – 14.68% to 16.48%

Social security: 11.88% – 13.68%

Unemployment Insurance: 2.8%

 

Probation Period

Probationary periods in Luxembourg are capped at 6 months.

 

Employment Law

Occupational health services: To help employees back to work in the event of sickness.

Accident prevention: Employers must implement accident prevention measures.

Prohibition of discrimination: Discrimination based on various grounds is prohibited.

Equal treatment: Employees must be treated equally regardless of protected characteristics.

Collective agreements: Can establish additional rights and benefits through collective bargaining.

Data protection: Right to have personal data processed lawfully and fairly.

Freedom of association: Right to form or join trade unions without fear of retaliation.

 

Employee Termination

Termination of employment in Luxembourg is governed by a complex set of laws and regulations. The specific circumstances surrounding the termination, such as the reason for dismissal and the employee’s length of service, will determine the applicable rules.

Mutual Agreement: Both the employer and employee can agree to terminate the contract. This is typically done through a written agreement.

Just Cause: The employer can terminate the contract for a just cause, such as serious misconduct, gross negligence, or repeated absence without justifiable reason.

Economic Reasons: The employer can terminate the contract for economic reasons, such as a downturn in business or restructuring.

Expiration of Contract: If the contract is for a fixed term and is not renewed, it will terminate automatically.

The required notice period for termination varies depending on the employee’s length of service and the reason for dismissal. Generally, longer-serving employees are entitled to longer notice periods.

Employees who are terminated without just cause may be entitled to severance pay. The amount of severance pay is typically calculated based on the employee’s length of service and salary.

Employee Benefits

Statutory Benefits

Medical examinations: These examinations are typically required upon hiring and at regular intervals, often determined by the nature of the job or specific industry regulations. 

Occupational health services: Employers must provide regular health assessments to assess employees’ fitness for work and identify potential health risks. Additionally, they must offer health and safety training to educate employees on safe work practices and emergency procedures.

Common Additional Benefits

Fuel allowance: Reimbursing employees for fuel expenses.

Meal vouchers: Providing vouchers for meals.

Public transport allowance: Reimbursing employees for public transport expenses.

Health insurance: Offering supplementary health insurance to cover additional medical expenses.

Life insurance: Providing life insurance coverage.

Childcare assistance: Providing childcare subsidies or facilities.

Education assistance: Offering tuition reimbursement or educational assistance programs.

Flexible working arrangements: Allowing employees to work flexible hours or remote work.

Statutory Leave

26 days annual leave plus national holidays
Sick leave, determined However, the employee's situation, such as length of service and the nature of their illness.
20 weeks maternity leave
10 days paternity
Bereavement leave which varies in length

FAQ

Think of it like this: Agility EOR becomes the legal employer of your employees, taking care of all the paperwork and compliance headaches.

Agility EOR
  • We manage the onboarding process and ensure everything’s in order before your employee starts
  • We make sure your employees are treated fairly and compliantly in their relevant territory
  • We take care of all HR matters, and can answer any and all HR queries you may have e.g. maternity/paternity leave, holidays, sick pay, and more
  • We provide compliant contracts, process local payroll, and file taxes
  • We issue payslips and handle payments to the employee and authorities
Your Company
  • You find and manage your employees’ daily tasks
  • You support their development through their work
  • You follow our guidance on employment laws and best practices
  • You ensure payroll bills are paid to Agility EOR on time

 

Benefits of using an Employer of Record (EOR)

  • Faster and easier hiring: No need to set up your own legal entity.
  • Reduced risk and compliance burden: We handle the legal and administrative complexities.
  • More time and resources: Focus on your core business while we manage your employees.

There are various ways to employ people in Luxembourg, each with differing levels of costs and compliance:

Employee is employed by you and paid by you from your overseas Company

  • Pros: This option appears to be the cheapest and simplest.
  • Cons: It does not allow for the payment of required social security contributions, and Luxembourg employment law will still apply to the employee.

 

Entity Set-up

  • Pros: This option could be the most cost-effective for employing a large number of personnel, typically more than 15.
  • Cons: Setting up a legal business entity and adhering to Luxembourg’s employment and tax regulations can be costly and time-consuming, particularly for smaller operations. It often becomes impractical for businesses with fewer than 15 employees.

 

Using an Employer of Record
  • Pros: In Luxembourg, using an Employer of Record service is the most time- and cost-effective solution for managing payroll, HR, and compliance tasks, especially for teams smaller than 15 employees.
  • Cons: It can be costly for hiring a large number of employees, and selecting the right Employer of Record provider can be challenging.

 

Hire a contractor in Luxembourg
  • Pros: This solution is cost-effective when the worker is not exclusive to your company and has the flexibility to send a substitute in their absence.
  • Cons: Hiring a full-time worker dedicated solely to your company without proper employment classification is a legal violation in Luxembourg. Misclassification can result in penalties ranging from fines to criminal charges.

Yes, as long as the worker is engaged with other companies, can determine how to perform their own work, and can send another contractor in their place, they can be classified as a contractor.

However, in Luxembourg, if a worker is solely dedicated to your company and their duties and tasks are dictated by your organization, they must be classified as an employee. Failing to do so violates Luxembourg employment law.

Misclassifying an employee can result in substantial fines, the obligation to pay outstanding holiday pay and social security contributions, the potential requirement to establish a local presence, and possible legal action from the employee for breached employment rights.

The initial steps to establishing your business in Luxembourg include registering it with the Commercial Register and obtaining a trade license from the appropriate authorities.

Although the initial registration process may seem straightforward, additional complexities arise when setting up a physical office for tax purposes, opening a Luxembourg bank account (which often necessitates in-person presence), managing payroll software that complies with Luxembourg regulations, and meeting tax filing obligations.

Hiring people in Luxembourg involves meeting specific legal requirements. Simply put, HR compliance ensures that your company strictly adheres to all employment and work practice regulations. But why is this so important? HR compliance in Luxembourg is more than just a formality; it’s essential for protecting both your employees and your business.

Adhering to employment regulations ensures fair treatment of your workforce, covering aspects such as sick leave, annual leave, minimum wage, and proper working hours. This not only creates a positive work environment but also reduces the risk of financial penalties, legal issues, and potential lawsuits due to non-compliance.

By partnering with Agility EOR as your Employer of Record in Luxembourg, you can streamline tax and social security obligations. We handle all employee-related filings and contributions, ensuring full compliance and allowing you to concentrate on running your business with confidence.

Your organization is still in charge of managing your team daily, including handling performance concerns, enforcing disciplinary measures when needed, and promoting a positive work environment through open communication, even though Agility EOR manages the complexities of Luxembourg employment law and compliance.

Agility EOR handles the legal side of things in Luxembourg, so you can focus on managing your team and their daily tasks.

Employers in Luxembourg are responsible for withholding income tax and social security contributions from employees’ salaries, while employees contribute a portion of their earnings to social security funds.

Workers who are employed by a Luxembourg Employer of Record are given a regular employment contract along with legal safeguards. This covers relevant tax credits as well as statutory benefits including maternity leave, yearly leave, and sick pay. It’s crucial to remember that everyone who lives in Luxembourg is covered by the public healthcare system — not just employees.

Agility EOR handles the administrative burden of HR compliance for you:

Trusted Partners: Agility EOR works closely with top employment lawyers and advisors in Luxembourg. This collaboration guarantees that your employment contracts and other critical documents fully comply with local legal regulations.

In-Depth Knowledge: We possess a comprehensive knowledge of the complex elements of Luxembourg employment law, covering areas such as payroll, social security, data privacy, notice periods, and remote work regulations.

Swift Action: If an problem occurs, our internal team are instantly on hand to help and assist.

Wondering if expanding in Luxembourg is right for you?

Read on or speak to a member of our team now

Luxembourg Employer of Record Benefits

When you choose Agility EOR to expand in Luxembourg, we guarantee an EOR Service tailored to the needs of your business

Compliance

We are on top of regulatory changes in Luxembourg so you can relax.

Cost reduction

Allow our economies of scale to work in your favour.

High Service Levels

You and your employees have a dedicated account manager.

Fixed Cost Pricing

We will agree our professional fees up front based on your needs – no nasty surprises!

Consolidated Invoicing & Payments

Make one monthly payment to cover all your tax, social and wages costs from one to one thousand employees.

Fast delivery

You can have 'boots on the ground' within days on our infrastructure.

Reduced Risk

All wage taxes are remitted in full to the Luxembourg authorities by professionals ensuring liabilities are met, giving you peace of mind.

Supply Chain Transparency

We only pay employees through local full employed solutions meaning Luxembourg payroll tax is paid on all funds.

Save Time and Money

Our expertise is at your disposal. The need for you to have internal HR, Payroll and admin staff is eliminated.

Download our full Luxembourg Employment Guide

Find out all about employing in Luxembourg

Team pin

Get in touch

Our team of Employer of Record experts are ready to discuss your global expansion requirements. Fill out your details in the form provided and we will be in touch as soon as possible.