The Luxembourg social security system has been codified by the law of 13 May 2008 into a single unified system. The CNS (Caisse Nationale de Santé) and the CNAP (Caisse Nationale d’Assurance Pension) are the two national healthcare and pension insurance administrative units. A central administrative unit called CCSS (Centre Commun de la Sécurité Sociale) is in charge of the data processing, membership records and contributions of all affiliates to the various schemes. The rates of contributions apply to compensation and earnings up to a maximum of 5 times the minimum reference social wage. The employee’s and employer’s contributions are the same (about 3,05% for sickness and maternity leave and 8% for retirement).
Healthcare and Insurances
The healthcare insurance organises the reimbursement of medical costs and compensation for sick leave, maternity leave, adoption leave, leave for family reasons and also dependence. The pension insurance has the main task to allocate statutory pensions to its affiliates and to grant loans for construction or renovation. Invalidity pensions are also envisaged in Luxembourg law. Accident insurance is financed by employer’s contributions.
Holidays and Annual Leave
Each employee benefits from a minimum of 26 days of paid leave per year (the law of 25 April 2019 having added one day), with some CBA’s providing for more holidays (e.g., banking and insurance). Employees are entitled to take paid leave for the first time only after having worked with the same employer for an uninterrupted period of three months. Paid leave must be taken during the calendar year to which it applies, but can exceptionally be postponed to the following year, in which case it must be taken before 31 March. In Luxembourg, a public holiday falling on a non-working day is replaced by a compensatory day off to be taken within a period of 3 months. In addition, the Labour Code provides for several extraordinary leave types for family reasons or other specified events. There are 11 statutory public holidays established by the Labour Code:
- 1 January (New Year’s Day)
- Easter Monday
- 1 May (Labour Day)
- 9 May (Europe Day – added in 2019)
- Ascension Day
- Whit Monday
- 23 June (national holiday, the celebration of the Grand Duke’s birthday)
- Feast of Assumption
- 1 November (All Saints’ Day)
- 25 December (Christmas Day)
- 26 December (Boxing Day).
Maternity and Parental Leave
Maternity benefits are paid during antenatal and postnatal leave. In principle, maternity benefits amount to the highest salary received during the 3 months prior to the maternity leave for employees or the contribution base in force at the time the maternity leave is taken for a self-employed worker. Financial maternity benefits must be between 1 and 5 times the social minimum wage maximum. Parental leave is taken by parents of a child who is less than 6 years old. The objective is to take a break in their professional career or to reduce their work hours to fully devote themselves to the education of their child. The parental leave was reformed by a law of 3 November 2016. The main changes concern the duration of the parental leave and the introduction of divisible parental leave for people working full-time. The new parental leave allows both parents to stop working during 4 or 6 months on a full time basis; or 8 or 12 months on a part-time basis (with the employer consent). The law also provides the possibility of split parental leave: with reduction of the working hours by 20% per week for a period of 20 months; or over 4 one-month periods for a maximum period of 20 months. The reform introduces a real replacement income. The employee receives a real salary compensation, calculated in view of the loss of salary during the parental leave, with a maximum limit of €3,200.
Sickness and Disability Leave
In the event of absence from work due to illness duly notified by informing the employer on the first day of absence and providing them with a medical certificate at the latest on the 3rd day of their absence, all employees under the age of 68 are entitled to statutory sickness pay (indemnité pécuniaire de maladie) for a period of up to 78 weeks within a reference period of 104 weeks as from 1 January 2019. The employer must continue to pay the employee’s salary and receives reimbursement of 80% of the costs from the Luxembourg Mutual Insurance Scheme. From the month following the month during which the employee reaches an absence of 77 days, the employee is paid directly by the Social Security authorities. The payment of Social Security premiums is compulsory and allows to finance the statutory sickness pay. Employees on sickness leave are protected against dismissal for the first 26 consecutive weeks of their absence. If an employee is still unable to work after the end of the statutory sickness pay, they may apply for an invalidity pension (pension d’invalidité). As from 1 January 2019, the contract lapses with immediate effect after a period of 78 weeks of absence for illness, compared to 52 weeks previously.
Pensions: Mandatory and Typically Provided
The normal old age pension is generally granted at the age of 65, provided a 120-month contributory period of compulsory, voluntary or elective insurance or purchase periods has been completed. However, there are exceptions to this minimum retirement age, where the worker can retire at the age of 57 or 60, under certain conditions.