02. Employment Contracts

Minimum requirements

Employment contracts are individual-specific (an agreement in which one person agrees to work for another in return for payment) and must exist in writing from the beginning of the employment period. There must be two copies of the signed contract: one for the employer and one for the employee. The employment contract must include:

• the identity of both parties;
• the date on which the contract takes effect;
• the place of employment or, in the absence of a fixed or main place of employment, the contract must state that the employee will be employed in various locations or abroad and must specify the head office or the employer’s residence;
• the nature of employment and a description of the employee’s tasks at the time of hiring, without prejudice to any subsequent change;
• the employee’s normal working hours;
• the normal working schedule;
• the basic salary, any additional payment and the frequency of payment;
• the number of paid holidays or the method for determining the entitlement and the conditions of paid holidays;
• the length of the notice period in the event of termination of the employment contract,
• the length of the trial period;
• reference to additional clauses agreed by the parties;
• where applicable, reference to collective bargaining agreements governing the employee’s working conditions; and
• where applicable, the existence and the description of a supplementary pension scheme, the optional or compulsory nature of this scheme, the rights to related benefits as well as the existence of any personal contributions.

Only the employee has the right to establish, by any means, the existence of the contract in the event no written employment contract exists. Employment contracts concluded orally are automatically deemed permanent employment contracts.

Fixed-term/Open-ended Contracts

 The standard contract in Luxembourg is the open-ended contract. A fixed-term contract is prohibited for permanent work. It is permitted only in order to carry out a specific type of work over a defined period of time, such as: temporary replacement;  seasonal work; performance of work in several specified sectors of activity or occasional and time-defined work; contracts concluded between an employer and a student or a pupil; or urgent and necessary works to prevent a negative impact on the business.

The Labour Code provides for a list of cases in which recourse to fixed-term contracts is authorised. If a fixed-term contract is signed outside the cases provided for by law, i.e. in order to carry out a type of work, which is not a precise and unsustainable type of work, the contract will automatically be reclassified as a permanent contract. By principle, fixed-term contracts cannot exceed a duration of 24 months including the possibility of two renewals. If a compulsory element is not included in the agreement, the fixed-term contract will be deemed an indefinite employment contract.

Trial Period

An agreed trial period may be written and signed before the employee starts working in both indefinite and fixed-term contracts. The general principle is that the trial period cannot be shorter than 2 weeks and longer than 6 months, depending on the qualifications of the employee. A contract can contain a trial period of 12 months, if the salary reaches a certain amount (fixed by a grand-ducal regulation). A trial period that does not exceed 1 month must be specified in weeks, whereas trial periods of over 1 month must be specified in months. Neither party to the employment contract may extend or renew the trial period. If employment is suspended for sick leave, the trial period is automatically extended accordingly, although by no more than 1 month.

Notice Period

Employment cannot be terminated by any party during the first 2 weeks of the trial period. In the event of dismissal during the trial period, the employer is not subject to the same notice periods as after the end of the trial period. The duration of the notice period depends on the length of the initially stipulated trial period. The reasons for dismissal are not required. If the trial period is expressed in weeks, the period of notice shall be as many days as the trial period is weeks. If the trial period is expressed in months, the notice to be given is 4 days per month, with a minimum of 15 days and a maximum of 1 month (see below).