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What are the benefits of working in Luxembourg?

Posted on January 4, 2021
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What are the benefits of working in Luxembourg?

If you have planned an overseas career in Luxembourg and have landed a job there and plan to move there, you will first need to know the benefits of working in the country

Working hours and paid time off

The working hours in Luxembourg are 40 hours per week and overtime is entitled for extra wages.

Employees are entitled to 25 days of paid holiday annually after working for three months with an employer. The paid leave must be taken during the calendar year to which it applies, but it might be postponed to the next year in extraordinary circumstances.

Minimum wage

Luxembourg has the highest minimum wage in the world. The wages are dependent on the employee’s age and qualifications.

Tax rates

Income tax in Luxembourg is calculated based on the individual’s personal situation (e.g. family status). For this purpose, individuals are granted a tax class. There are three tax classes:

  • Class 1 for single persons.
  • Class 2 for married persons as well as civil partners (under certain conditions).
  • Class 1a for single persons with children as well as single taxpayers aged at least 65 on 1 January of the tax year.

Social security

Luxembourg has a robust social security scheme, giving residents who have contributed to the social security system of the country a broad choice of benefits. These services include not only public healthcare, but also unemployment benefits, pensions for veterans and widowers, as well as sickness, maternity leave, and parental leave.

You must have contributed to Luxembourg’s social security scheme for a while in order to make use of any of these advantages. For starters, you need to have worked at least 26 weeks over the last twelve months to obtain unemployment benefits. Your social security payments are deducted from your monthly salary automatically.

Healthcare and insurance

Healthcare insurance takes care of the reimbursement of medical costs and covers the compensation of any kind of leave taken for medical reasons. The share of the employee is 5.9 percent and the employer and the employee contribute to the payment equally. The average rate is around 25 percent of the gross salary of an employee, with a limit that cannot exceed five times the minimum salary. Self-employed employees pay a contribution of their own. In the event of an accident, sickness, retirement pension, pregnancy, and annual paid leave, the employee is still entitled to compensation.

Maternity Leave

During antenatal and postnatal leave, maternity benefits are paid. In practice, maternity benefits amount to the maximum wage earned in the three months preceding maternity leave for employees or to the contribution base in place for self-employed staff at the time of taking maternity leave.

Parental Leave

Parental leave is taken by a child’s parents who are less than 6 years old. The aim is to take a break in their professional career or to minimize their hours of work in order to completely dedicate themselves to their child’s education. The new parental leave allows both parents to stop working full time for 4 or 6 months, or part time for 8 or 12 months (with the employer consent). The law also offers the option of divided parental leave.

Sickness Leave

All workers under the age of 68 are entitled to statutory sickness pay for a period of up to 78 weeks in case of absence from work due to illness, within a reference period of 104 weeks as of 1 January 2019. The employee is paid directly by the Social Security authorities from the month following the month for which the employee reaches an absence of 77 days.

Employees who are on sick leave are shielded from being fired for the first 26 weeks of their absence. An employee may apply for an invalidity pension if they are still unable to work after the statutory sick pay period has expired.

Pensions

At the age of 65, the normal old age pension is usually granted if a 120-month contribution period of compulsory, voluntary, or elective insurance or purchase periods has been completed. There are several exceptions to the minimum retirement age, such as when a worker can retire at the age of 57 or 60 if specific requirements are met.

Work culture

In their style of communication, Luxembourgers, like most Europeans, are very direct. Tact and diplomacy are, however, highly respected and viewed as a sign of respect.

Despite the traditional focused hierarchies inside corporations and organizations, a management approach emphasizing increased participation of employees and subordinates has grown in popularity in recent decades.

Luxembourgers are pragmatic and sensible. Assertiveness and harsh criticism are not accepted in a world where charm and civility are the norm.

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