How to hire remote employees in

Luxembourg

It may be a tiny little country, but Luxembourg is a beautiful place home to plenty of great remote talent. In the next few minutes, you’ll learn exactly how you can hire remote talent in Luxembourg—without paying thousands in fees and spending months talking to lawyers about labor laws.

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Employment requirements

Country snapshot

CURRENCY

Euro (EUR)

EMPLOYER TAXES

12.4%-14.64%

PAYROLL FREQUENCY

Monthly

OFFICIAL LANGUAGE

Luxembourgish, German, French

Why hire independent contractors in Luxembourg

Hiring contractors is normally the easier, faster, more flexible choice—but don’t just take it from us. Below are the specific benefits and drawbacks to hiring contractors in Luxembourg.

It’s the fastest way to hire globally

Hiring employees takes months, at the minimum. When you hire with Thera's locally-generated contracts, it’s a matter of days or weeks. This means you can hire the best talent, fast, without losing them to a hellish procession of paperwork.

It’s a lot cheaper

It costs just $0 to sign up for Thera, then $25 per month to hire your contractors with Thera. If you hired employees manually (or did contracting on your own), you’d likely be on the hook for thousands of dollars each month. Setting up an entity alone can cost tens of thousands of dollars.

It’s more flexible for you & your team

HHiring contractors in Luxembourg means you’re generally not on the hook for things like health insurance and paid time off. This makes hiring flexible for you, and it gives your talent more options.

Can be less risky than hiring employees

Hiring employees is a bigger commitment, and can open you up to increased liabilities and regulations. When you hire contractors overseas, your biggest risk is misclassification—but laws surrounding contractor classification are often significantly more straightforward.

Some people want to be employees

The contractor life isn’t for everyone—some people want the security that being an employee often appears to provide. Though it’s rare, this does happen, and it’s one disadvantage of manage an all-contractor team.

You might not have as much control over your talent

Most countries’ contractor-employer relationship laws stipulate that the employer can’t set fixed working hours, among other things. These laws give contractors more freedom over how and when they do their work than an employee would have. In reality, however, most contractors are willing & able to work on the company’s schedule—it’s a matter of setting expectations beforehand.

What to know before you hire in Luxembourg

Hiring in Luxembourg can be confusing, but it’s easier when you know what you’re doing. If you want to hire remote talent in Luxembourg, you have two options: Hire people as contractors, or hire them as employees.

If you want to successfully hire in Luxembourg, you have two options:

Hire talent as contractors

Laws about hiring contractors are significantly more simple in Luxembourg. Onboarding talent takes days, not weeks or months. Both you, the company, and your talent have more flexibility. And in many cases, since you’re remote, the talent you’re hiring is better classified as a contractor, anyway. Of course, it’s not possible in every case, but it’s what we built Thera for.

Hire talent as employees

This is the long route. You can either establish a physical presence with an entity and register as an employer, or you can use an Employer-of-Record (EOR) solution. Odds are, you’ll find using an EOR to be the easier route. Still, using an EOR in Luxembourg is expensive—it can often be $500 per month per employee—and sometimes prone to lengthy onboarding times.

Hire contractors in a couple clicks with Thera

How can I pay people in Luxembourg

If you’re hiring contractors in Luxembourg, you can pay them with Thera in a single click. You won’t need to worry about complicated wire transfers, fees, or currency conversions. We’ll take care of it all. Just make a click and your contractor will get paid in their currency of choice. This is a valuable bonus for talent in countries where the local currency is particularly weak—most people appreciate the ability to receive their payment in stronger currencies.

If you want to hire employees in Luxembourg

If you’ve read up until this point, you’ll know that it’s easier, cheaper, and more flexible to hire contractors in Luxembourg than employees. Still, there are valid reasons why you might want to hire employees instead. The content below is for you—we’ll cover employer taxes and obligations in Luxembourg.

Taxes in Luxembourg

Employer tax

Pension

Health Insurance

Accident at Work

Mutual Health Benefit

Health at Work

Leave

Paid Time Off (PTO)

PTO is calculated by the:

Employees receive 26 working days of paid leave per year. In addition, certain employees automatically receive additional leave:

Disabled persons or those who have suffered a work accident- Additional 6 days of leave
Mining employees- Additional 3 days of leave
An employee or apprentice who has not received a continuous rest period of 44 hours per week- 1 additional day for every 8 weeks in which the employee doesn’t receive the continuous rest.

Public Holidays

There are 11 public holidays.

Sick Days

The duration of sick leave entitlement provided to workers is dependent on how long they have been employed by their employer:

Maximum paid sick leave is 26 weeks. If an employee is sick for 1or 2 days, there is no need to provide a medical certificate.
If an employee is sick for more than 3 days, then a certificate is required.

Maternity Leave

Maternity leave in Luxembourg is 20 weeks and can begin 8 weeks before the expected due date.

To be eligible, the woman must have been covered by the mandatory health insurance for at least 6 months within the last 12 months before maternity leave.

In addition, the woman must notify their employer at least 12 weeks before the expected due date.

Social insurance pays for maternity leave and cannot be lower than the minimum wage and is capped at 5 times the minimum wage.

Paternity Leave

Paternity leave is 10 days. The father must notify their employer at least 2 months in advance of when the leave is intended to be taken, otherwise, this leave can be reduced to 2 days.

In addition, this leave does not have to be taken consecutively and can be taken within 2 months of the birth of the child.

Parental Leave

There are 2 types of parental leave and each leave can be taken once per child:

Following maternity or adoption leave– this leave must be taken immediately after the birth or adoption of a child, otherwise, this leave is forfeited.
Before the child reaches the age of 6 or 12 for an adopted child

Both leaves can be taken either in full, partially, or split with the other parent and are based on the number of hours in the employee’s contract:

40 hours per week- 4–6 months of full-time leave; 8-12 months of part-time leave (50% of regular working hours); 4 periods of 1 month leave within a 20–month period; 1-2 half days of leave per week within a 20–month period.
At least 20 hours per week- 4-6 months of full-time leave; 8-12 months of part-time leave (50% of regular working hours)
At least 10 hours per week- 4-6 months of full-time leave

Split or partial leave is at the discretion of the employer.

To be eligible:

The parent must be registered with social security at the time of the birth or adoption of the child for at least 12 continuous months.
Salaried employees- must have worked at least 10 hours per week
Have an employment contract during the leave

Instead of wages, an allowance is given by the Children’s Future Fund.

Other Leave

None.

Marriage Leave

None.

Bereavement Leave

None.

Termination

Termination Process

Termination in Luxembourg must be done in writing, however, no reason is required by either side unless the cause is immediate dismissal. However, this information must be provided upon request.

For employers with more than 150 employees, a hearing must be conducted before the employee is dismissed. For employees with at least 15 employees, the employer must notify the Economic committee of the dismissal.

Notice Period

The notice period depends on the length of employment:

Less than 5 years of employment – 2 months’ notice
5-10 years of employment– 4 months’ notice
10+ years of employment- 6 months’ notice

Notice starts:

On the 15th of the month if the dismissal letter is provided before the 15th of the month
On the 1st of the following month if the dismissal letter was provided between the 15th and last day of the month.

It is also possible to pay in lieu of notice.

Severance Pay

Severance pay is determined by the length of employment:

Less than 5 years- No severance pay
5-10 years- 4 months’ severance pay or the notice period can be extended by 5 months for employers with less than 20 employees
10-15 years- 2 months’ severance pay or the notice period can be extended by 8 months for employees with less than 20 employees
15-20 years- 3 months’ severance pay or the notice period can be extended by 9 months for employers with less than 20 employees

20-25 years- 6 months’ severance pay or the notice period can be extended by 12 months for employers with less than 20 employees
25-30 years- 9 months’ severance pay or the notice period can be extended by 15 months
30+ years- 12 months’ severance pay or the notice period can be extended by 18 months.

Probation Period

The minimum probation period is 2 weeks and generally is determined by the employee’s salary and qualifications:

If an employee receives a monthly salary of at least 4,474.31 EUR, the maximum probation period is 12 months.
If an employee has a vocational skills certificate or equivalent, the maximum probation period is 6 months.
If the employee does not have a vocational skills certificate or equivalent, the maximum probation period is 3 months.

Employee requirements in Luxembourg

Working Hours

A full time workweek is 40 hours or 8 hours per day.

Overtime

There are strict rules on overtime as it is considered something that is considered abuse if the employer requests overtime work in excess and the employee can refuse.

An employee can work 2 hours of overtime per day and cannot exceed 8 hours per week. In addition to this, a pregnant woman cannot be forced to work overtime, and overtime for adolescents is forbidden.

Overtime can be compensated either through payment at the rate of 150% of the regular pay or time off.

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