01. Hiring Practices

Requirement for Foreign Employees to Work

• EEA Nationals

All EU citizens enjoy freedom of movement within the EU and the European Economic Area (European Union and Iceland, Norway and Lichtenstein – EEA), as well as Switzerland. This freedom of movement gives them the right to work and reside in any EU Member State for less than 3 months. Nationals of an EU Member State or a country treated as such must, when planning their journey, only have to hold a valid national identity card or passport.

EU citizens are entitled to reside in Luxembourg for more than 3 months if they meet one of the following conditions: i) they work as an employee or are self-employed; ii) they have the resources required to ensure that they or their family members are not dependent on the social welfare system and also have medical insurance; iii) they are registered with an approved public or private education institution in Luxembourg, and are attending a full-time educational course or, in this context, a professional training course. In this case, they must be able to demonstrate that they have the resources required to ensure that they or their family members are not dependent on the social welfare system and also have medical insurance. Within 8 days of their arrival in Luxembourg, EU citizens must make a declaration of arrival at the administration of the municipality where they intend to establish residence. EU citizens must also complete a registration form in the same municipality within three months of their arrival in Luxembourg. To register, employees must give a copy of their valid national identity card or passport and an employment contract compliant with Luxembourg labour law, dated and signed by both parties or a commitment to hire, dated and signed by the future employer. A secondary activity of less than 10 hours per week is not sufficient to receive an authorisation to stay for a salaried worker. After five years of residence, EEA nationals can ask for a permanent residence permit from the Immigration Directorate of the Ministry of Foreign and European Affairs.

In response to Brexit, the law of 8 April 2019 revising the amended law of 29 August 2008 on the free movement of persons and immigration, was put to a vote in Luxembourg. The re-worked law provides that British nationals and their family members, who fall within the scope of the Withdrawal Agreement have the same rights as EU citizens and their family members and they keep these rights, even after the end of the transition period provided for in the Withdrawal Agreement. The right of residence is subject to the same conditions as were available to British nationals while they were still citizens of the European Union. After a five-year stay, British nationals have a right to permanent residence in their country of residence (Luxembourg), which can only be withdrawn for serious reasons of public security. Upon due request, a new residence document will be emitted to that effect, to people who fall within the scope of the Withdrawal Agreement, or for British nationals and their family members who are already residents of Luxembourg at the time of the withdrawal, or who arrived during the transition period, and will be valid from the end of the transition period (31 December 2020).

• Non-EEA Nationals

A third-country national who wishes to work in Luxemburg must have a stay permit (serving as work permit). Applicants must send their application to the Immigration Directorate of the Ministry of Foreign and European Affairs. They must state their identity and the exact address in their country of residence and add several documents depending on the type of permit they are applying for. The types of stay permits for which a third-country national can apply are the following: i) work permit for an occupation of less than three months; ii) work permit for an ancillary occupation for people who have obtained a residence permit for private reasons; iii) work permit for an ancillary occupation for a third-country national family member of a third-country national; and iv) work permit for a highly qualified employee for an occupation of more than three months. After five years of residence, non-EEA nationals may apply for long-term resident status from the Immigration Directorate of the Ministry of Foreign and European Affairs.

Does a Foreign Employer need to Establish or Work through a Local Entity to Hire an Employee?

No. In Luxembourg, an employer has to pay social security contributions when hiring employees. In order to be able to pay these contributions, the employer has to file an operating declaration with the Joint Social Security Center (CCSS) in order to register as an employer. This may also be done by a foreign entity. The employer has to submit an operating declaration within 8 days of the date of entry of the first employee.

Limitations on Background Checks

According to article 8-5 (2) of the modified law of 29 March 2013 on the organisation of the criminal record, the employer is allowed to ask the candidate to submit a criminal record certificate no. 3. This request has to be submitted in writing and has to be expressly motivated by the specific needs of the proposed position. Furthermore, this request must already be indicated in the job offer. The employer can only retain the criminal record for 1 month after the conclusion of the employment agreement. If the candidate is not hired, the criminal record has to be destroyed immediately. During the employment relationship, the employer can only ask employees to hand over a recent copy of their criminal record (certificate no. 3) if specific legal provisions provide for this possibility. However, the employer can request a recent copy of a criminal record if the employee receives a new assignment, justifying a new evaluation of the employee’s good repute, in relation to the specific needs of the position, and the criminal record cannot be retained, after its issuance, beyond a period of 2 months.

Restrictions on Application/Interview Questions

In Luxembourg, before recruiting an employee and drawing up an employment contract, employers must first register the vacant position to the National Employment Administration (Agence pour le développement de l’emploi – ADEM). The employer is also required to inform the Luxembourg Social Security Services (Centre Commun de la Sécurité Sociale – Section affiliation) within 8 days of the recruitment and register the employee. During the recruitment process, the employer may use different techniques such as a job interview or a selection test. The employer can also request an excerpt from the criminal record, which can be kept by the employer for a maximum period of 2 months. Former employees dismissed for economic reasons, employees having tendered their notice at the end of their maternity leave or their adoption leave with the aim to fully concentrate on their children’s education and former beneficiaries of employment initiation contracts (contrat d’initiation à l’emploi) who are again unemployed, must be informed of any suitable position that becomes vacant or is created within the company.