GLOBAL EMPLOYER OF RECORD IN LUXEMBOURG
Employer of Record in Luxembourg
Hire the talent you need in Luxembourg without creating a standalone company before the headcount justifies it. Acumen acts as your Employer of Record, giving you room to establish a presence, add people as needed and keep longer-term commitments flexible.
GLOBAL EMPLOYER OF RECORD
Global coverage
Acumen International delivers global employment solutions across 190+ countries.
Strategic markets
Hiring and compliance support across North America, Europe, and Asia-Pacific.
Established jurisdictions
Lawful employment and payroll in regulated, compliance-intensive countries.
Growth economies
Expanding into new regions? Hiring support across fast-moving economies.
Risky and remote locations
Compliant employment solutions in jurisdictions with limited infrastructure.
How an Employer of Record works in Luxembourg
With an Employer of Record, Acumen International is the legal employer of the people who work for your business in Luxembourg. Acumen signs the employment contract under the Luxembourg Labour Code, registers the employee with the Joint Social Security Centre (CCSS), withholds income tax, runs payroll and carries the employer’s obligations. Your business decides who to hire and directs the work.
Employment, self-employment or a student contract
| Model | How Luxembourg law views it | Where it falls short |
|---|---|---|
| Employment contract | Work under an employer’s authority, with social security, indexed pay and dismissal protection | Requires a Luxembourg employer registration, which Acumen International provides |
| Self-employed contractor | Independent work under a business permit, judged on how the relationship works in practice | A contractor working under your direction can be reclassified as an employee, with social security due for past periods |
| Student contract | Work for enrolled students with limited weekly hours during term | Only suitable for students and short, part-time work |
Where an Employer of Record fits Luxembourg
For market entry, a Luxembourg SARL needs a notarial deed, share capital of at least EUR 12,000, a business permit and registrations with the tax and social security authorities. An Employer of Record lets the first employees start while the case for a company is still being made.
For recruitment, the Grand Duchy draws a large part of its workforce from France, Belgium and Germany. Employing a cross-border commuter involves two countries’ rules on social security and tax, and Acumen International applies both from the first payslip, which widens your candidate pool well beyond Luxembourg’s own residents.
For the offer itself, Luxembourg employees expect employment with automatic indexation and the protection that comes with it. An offer through Acumen gives them that from the first day.
Temporary agency work in Luxembourg: the legal basis and its limits
In Luxembourg, an employer can place its employees under a client’s direction through temporary agency work, regulated by the Labour Code. The arrangement has these limits:
- The employer must hold a ministerial authorisation to operate as a temporary work agency.
- An assignment covers a temporary task and cannot be used to fill a lasting, permanent position in your business.
- A mission for the same employee in the same position can last no more than 12 months in total, with no more than two renewals; a mission that breaks these rules is treated as an open-ended contract.
- Missions without a fixed end date, such as replacing an absent employee or seasonal work, follow separate rules and are not bound by the 12-month limit.
- The assigned employee receives pay at least equal to what your comparable employees earn.
- Your business is responsible for working conditions, health and safety while the employee works for you.
- Assigned employees cannot replace staff on strike or be placed on work the law classes as particularly dangerous.
- Placing employees with another business outside agency work requires prior ministerial authorisation and is allowed only in specific situations.
Because of the 12-month limit, Acumen International plans each Luxembourg role with you from the outset, including the point at which a long-term role moves to your own Luxembourg company.
Minimum pay and automatic indexation in Luxembourg
Since the indexation of 1 June 2026, the social minimum wage is EUR 2,771.33 a month for an unskilled employee aged 18 or over and EUR 3,325.60 for a skilled employee, who is entitled to 20% more. The government has approved a further increase to EUR 2,876.60 from 1 January 2027, which Parliament still has to vote on.
Every Luxembourg salary is linked to the cost of living. When inflation triggers an index tranche, all salaries rise by 2.5% on the date set by law, whatever their level, as they did in June 2026. Budgets for a Luxembourg team therefore need to allow for at least one indexation a year in periods of normal inflation.
A 13th month is not required by law, although some sector collective agreements provide for one and many employers pay an annual bonus.
Employment contracts and working time in Luxembourg
| Rule | What it means for you |
|---|---|
| The contract is in writing by the time the employee starts | Terms, pay and working hours are fixed before day one |
| A trial period can run from two weeks to six months | Either side can end the employment quickly during the trial, so objectives need setting early |
| A fixed-term contract lasts up to 24 months, renewals included, with no more than two renewals | Longer or repeated fixed terms become open-ended employment |
| Normal working time is 8 hours a day and 40 hours a week | The weekly hours set the base for overtime and part-time pay |
| Overtime is paid at 140% of the hourly rate, or compensated with 1.5 hours off, and is tax-free | Peak periods have a defined, tax-efficient cost |
| Sunday work carries a 70% premium and work on a public holiday a 100% premium | Weekend and holiday cover needs budgeting in advance |
| A non-compete clause is valid for up to 12 months, only in writing and only above a salary threshold | Restrictive covenants work only for well-paid roles |
Notice, severance and dismissal rules in Luxembourg
An employer’s notice depends on length of service, and an employee resigning gives half the employer’s notice. Severance is due on top of notice from five years of service.
| Length of service | Employer’s notice | Severance |
|---|---|---|
| Less than 5 years | 2 months | None |
| 5 to under 10 years | 4 months | 1 month’s pay |
| 10 years or more | 6 months | 2 months from 10 years, 3 from 15, 6 from 20, 9 from 25 and 12 from 30 |
Procedure and protection
Employers with more than 150 employees must hold a preliminary meeting before dismissing. In every case, the employee can ask for the reasons within one month, and the employer must give them in writing within a further month. A dismissal can be challenged in the labour court within three months. Pregnant employees, employees on parental leave and employees in the first 26 weeks of sickness absence are protected against dismissal.
Employing cross-border commuters in Luxembourg
Many employees in Luxembourg live in France, Belgium or Germany and commute each day. Their tax and social security depend on where they actually work, so working from home needs managing carefully.
| Area | The rule | What it means for your team |
|---|---|---|
| Income tax | Commuters from France, Belgium and Germany can work up to 34 days a year outside Luxembourg without those days becoming taxable in their home country | Home-working days, training and travel abroad are counted against the 34 days |
| Social security | Under the European framework agreement in force since July 2023, telework of up to 49.9% of working time can keep an employee in the Luxembourg system on application | A telework pattern above 25% needs the framework certificate in place |
Acumen International records working days by country, applies for the certificates the framework requires and tells you before an employee’s pattern puts either threshold at risk.
Luxembourg employment risks and how Acumen International covers them
| Risk | Where it arises | How Acumen International covers it |
|---|---|---|
| Worker misclassification | A self-employed contractor working under your direction can be reclassified as an employee, with social security and tax due for past periods | Your Luxembourg team is employed by Acumen International under the Labour Code |
| IP ownership | Economic rights in work created in the job vest in the employer unless agreed otherwise, so they sit with the Luxembourg employer until passed on | Contracts confirm the rights and transfer them onward to your business |
| Client liability for pay and contributions | The business where an assigned employee works can be held liable for pay and contributions the employer fails to pay | Salaries and contributions are paid every cycle, with confirmations available on request |
| Equal pay for assigned staff | Assigned employees must earn at least what your comparable employees earn | Pay is set against your own Luxembourg pay structure before the offer |
| Permanent establishment | An employee who habitually concludes contracts for your company can create a taxable presence in Luxembourg | Signing authority stays with your company and is written into the role description |
| Exit cost | Notice of up to six months, severance from five years of service and court challenges within three months | Notice and severance are modelled in the proposal for each role |
| Sponsor obligations | A non-EU hire depends on the employer’s ADEM certificate, and the first residence permit is limited to one profession in one sector | Acumen International checks the route before the offer and carries the employer’s duties once the permit is granted |
| Pay transparency | The EU Pay Transparency Directive was due for national transposition by June 2026 | Pay structures and job advertisements prepared for the new requirements |
Hiring non-EU nationals in Luxembourg
A non-EU national employed in Luxembourg needs a residence permit for salaried workers, which for the first year covers one profession in one sector. The employer first declares the vacancy to the National Employment Agency (ADEM), which has three weeks to find a suitable candidate on the local and EU labour market before the employer can ask for a certificate allowing a non-EU hire. The candidate then applies for temporary authorisation to stay, and the residence permit follows after arrival. Highly qualified specialists can use the EU Blue Card, and managers or specialists moving within your group can use the intra-corporate transfer permit.
Acumen International’s role
The application needs a Luxembourg employer with a real vacancy, which a business with no Luxembourg presence cannot provide. Acumen International can be that employer where the role and the route allow it, declares the vacancy to ADEM, prepares the employment contract the authorities review and supports the application through to the residence permit. Acumen confirms that the route is open before the candidate resigns from their current job, and carries the employer’s duties attached to the permit afterwards.
Employer cost and income tax in Luxembourg
Employer social security contributions in Luxembourg typically come to around 12% to 15% of gross salary depending on the employer’s accident and absenteeism classes. Pension, health, accident and occupational health contributions are calculated on earnings up to five times the social minimum wage, EUR 13,856.65 a month since June 2026.
| Contribution | Employer | Employee |
|---|---|---|
| Pension | 8.50% | 8.50% |
| Health care | 2.80% | 2.80% |
| Sickness cash benefits | 0.25% | 0.25% |
| Long-term care (dependency) | None | 1.40%, with no ceiling |
| Accident insurance | 0.595% to 1.05% | None |
| Employers’ mutual insurance | 0.23% to 2.66%, by absenteeism class | None |
| Occupational health service | 0.14% | None |
A EUR 6,000 monthly salary
At an employer rate of about 13%, a gross monthly salary of EUR 6,000 costs the employer roughly EUR 6,780. The employee’s contributions come to about 13% of pay before income tax.
Income tax
Income tax is progressive, with a top rate of 42% plus a solidarity surcharge of 7%, or 9% on the highest incomes. Tax is withheld monthly according to the employee’s tax class, which reflects family situation. A reform submitted in January 2026 would replace the tax classes with a single class from 2028. Non-resident commuters who earn at least 90% of their household income in Luxembourg can opt to be taxed as residents.
The Global Payroll Calculator shows the cost of any Luxembourg salary for both a resident and a cross-border employee, so you can compare candidates on equal terms.
Sectors employing through an Employer of Record in Luxembourg
- Banks, investment fund managers and service providers employ portfolio, risk, compliance and fund administration specialists in Luxembourg.
- European institutions, including the Court of Justice of the EU and the European Investment Bank, attract law firms, consultancies and contractors that need staff nearby.
- Payments, e-commerce and fintech companies run European operations from Luxembourg and add product, legal and finance roles.
- Satellite and space companies, led by SES, recruit engineers and business development staff.
- Logistics operators around the Luxembourg airport freight hub and the Bettembourg multimodal platform hire supply chain and operations managers.
In each of these sectors, the first Luxembourg employees usually come before a Luxembourg company, and often from across the border.
Luxembourg hiring cases and how they are handled
| Case | What Luxembourg rules add | How it is handled |
|---|---|---|
| A senior specialist moves to Luxembourg for the role | A tax regime for newly arrived highly paid employees exempts part of their pay for a number of years, subject to salary and eligibility conditions | Eligibility is checked before the offer, and the exemption is applied through payroll |
| Your business operates in banking or insurance | The sector collective agreement sets pay scales, a 13th month and other terms for most employees | The agreement is applied from the first contract and reflected in your cost forecast |
| A hire expects a company car | Private use of a company car is taxed as a monthly benefit based on the car’s price and emissions | The car policy and its tax treatment are agreed with you before the offer |
| An employee living in Luxembourg asks to work from home regularly | Regular telework is set out in writing under the national agreement on telework, including equipment and costs | A telework agreement is issued and its costs included in payroll |
Benefits, payroll and leave in Luxembourg
Competitive Luxembourg packages often include meal vouchers, a supplementary pension plan, private health cover and, for senior roles, a company car. Several of these carry favourable tax treatment within set limits.
Payroll obligations
| When | What happens |
|---|---|
| Before the first working day | The employee is registered with the Joint Social Security Centre |
| Every month | Salary is paid, income tax is withheld according to the employee’s tax card, and contributions are declared |
| Each year | Employees receive an annual salary statement for their tax return |
Leave entitlements
| Leave | Entitlement | Paid by |
|---|---|---|
| Annual leave | 26 working days a year | Employer |
| Public holidays | 11 a year, including Europe Day on 9 May | Employer |
| Sick leave | Full pay until the end of the month in which the 77th day of incapacity within 18 months falls | Employer, then the National Health Fund (CNS) |
| Maternity leave | 8 weeks before and 12 weeks after the birth | National Health Fund |
| Paternity leave | 10 working days | Employer, reimbursed in part by the state |
| Parental leave | 4 or 6 months full time per parent, or split into part-time or fractioned periods | Parental leave allowance from the state |
Sources
- Contribution rates and parameters from 1 January 2026
- Temporary agency work relationship
- Conditions of residence for third-country salaried workers
- Highly qualified third-country workers: the EU Blue Card
- Social parameters applicable in Luxembourg in 2026
- Government approves the minimum wage increase
- Dismissal guide
- Temporary work: missions and labour law
- Cross-border telework: why the threshold stays at 34 days
- Luxembourg personal tax reform: single tax class
FREQUENTLY ASKED QUESTIONS
Got questions?
We’ve got answers
Have questions about hiring globally? You’re not alone. Below you’ll find answers to the most common questions from teams expanding into new markets — from compliance and onboarding timelines to payroll and local benefits.
If you don’t see what you’re looking for, our team of in-country experts is always ready to help you navigate the details.
Can an existing employee move to Luxembourg and stay with our business through Acumen?
Potentially. Acumen can assess the employment and, where required, immigration structure for the move to Luxembourg. If feasible, the employee can transfer into local EOR employment while continuing to work for your business operationally.
How can we build a competitive benefits package for employees in Luxembourg?
Acumen can combine the mandatory employment benefits in Luxembourg with supplementary benefits selected for the role, seniority and hiring market. This is particularly useful for senior, specialist or hard-to-hire positions where a statutory-only package would not be competitive.
Can our employees in Luxembourg sit within the same EOR programme as hires in other countries?
Yes. Acumen can coordinate Luxembourg alongside other EOR markets through one provider relationship, while keeping each employee under the employment rules that apply locally. Global consistency can cover governance, reporting and service ownership without forcing identical employment terms across countries.