Luxembourg Country Facts

Luxembourg Top Talent

Finding and recruiting top talent in any overseas territory poses many potential trip wires for companies taking steps to build their international profile.

This is certainly the case in Luxembourg, a founder member of the European Union which hosts many of the economic bloc’s major institutions and has a record of accomplishment of attracting highly qualified employees to its large number of global corporations. Enclosed by Belgium, France and Germany, Luxembourg’s employment market proves a magnet for workers from those countries enjoying the free movement across borders to add to a well-educated, multi-lingual workforce.

Luxembourg may rank well outside the World Bank’s top 50 nations with a Gross Domestic Product (GDP) of 83.70 billion US dollars for 2021, but with a GDP per capita of over US$120,000 one of Europe’s smallest countries is ranked at No.1 with the title ‘the world’s richest nation’.

This potential – and the challenges it brings – underlines why Bradford Jacobs’ global experience is indispensable for taking the smartest recruitment route into Luxembourg – ideally placed for expansion among other EU members and further afield.

The Recruitment Process in Luxembourg

Businesses in Luxembourg tend towards a strict hierarchical structure, although within the workplace itself a more relaxed and inclusive atmosphere prevails … perhaps a reflection on staff who travel in from neighboring Germany, France, and Belgium.

The employment market is dynamic, with the finance, banking and IT sectors generally accounting for around 30% of vacancies. Multi-lingual applicants will always have an advantage in the job stakes. French, German, and English are official languages, with French dominant in the private sector, while Luxembourgish is more common in the public sector.

Jobseekers can register with the national Employment Agency (Agence pour le développement de l’emploi, ADEM) and employers must register all vacancies with the agency. Citizens from the European Union (EU), European Economic Area (EEA) and Switzerland can search through EURES, the jobs’ portal that links jobseekers with potential employees.

In-comers can be reassured that Luxembourg provides a comprehensive framework of regulations and statutes that safeguard employment rights.

Recruitment is the first stage of making your company operational and competitive in Luxembourg. It is vital to know where to locate the finest talent to be a perfect fit for your company’s expansion plans. So … contact Bradford Jacobs.

Foreign companies establishing a legal entity in Luxembourg typically choose a private limited liability company, Société á Responsabilité Limitée (S.a.r.l.), to operate under the Luxembourg Commercial Companies Act. This Act was significantly revamped and modernised in 2016 ad introduced a simplified form of a company limited by shares, a Société par actions simplifiée (SAS).

The company must then follow strict procedures to register and onboard employees. Steps include:

• Decide on the company type, generally an S.a.r.l. or SAS as detailed above
• Select a company name, which must be unique and reserved with the Companies Register
• The company name must have the suffix S.a.r.l. or SAS
•  Deposit in the bank minimum share capital of approximately €12,000 (US$13,537), which must be fully paid up on incorporation
• Register from one to 100 shareholders
• Provide incorporation documents, generally including a notarized Incorporation Deed, Articles of Association, and the share register
• Obtain Certificate of Good Standing from the Registry of Commerce and Companies

Once incorporated, other steps must be followed to employ staff and operate payroll. The main requirements include:

• Sending a ‘start of employment declaration’ to the Joint Social Security Center (Centre commun de la sécurité social, CCSS) for each new employee and obtaining their tax card for deductions from the relevant RTS tax office, which can be found on the Luxembourg Inland Revenue website
• Applying for a business permit from the General Directorate for Small and Medium-sized Enterprises of the Ministry of the Economy
• Registering your company with the CCSS to obtain an employer’s registration number (matricule employeur) to verify your tax class according to business activities
• Ensuring the company is registered within eight days of the first employee commencing work. Failure brings fines of €50 (US$56) per employee to a maximum of €2,500 (US$2,820)
• Registration can be completed online via SECUline (DECAFF procedure)
• Obtaining each employee’s 13-digit national identification number (matricule) from the CCSS
• Ensuring contracts are in place with employees

Additional payroll support includes:

• Calculating employees’ monthly salary and sending their pay slips
• Submitting employees’ and employers’ wage tax returns
• Creating and submitting your company’s annual accounts and year-end statements
• Creating payment schedules for salaries and any insurance contributions
• Ensuring accurate personal income tax returns are filed for you and your employees

Legal Checks on Employees in Luxembourg

Scope: Apart from the mandatory medical examination, other checks are generally permissible with applicant’s permission, if they do not contravene discrimination or data protection regulations.

Medical Checks: Employers must ensure potential employees undergo medical examination with a doctor from the occupational health service with which the company is registered. The check is compulsory regardless of the type of work or the sector. In some cases, employers are required to organize medical checks during employment.

Educational Qualifications and References: Allowed with the applicant’s permission, as long as they are relevant to the role.

Criminal Record Checks: Employers can ask applicant to provide their criminal record. If they are not hired the record must be immediately destroyed; if hired, the record can be retained only for one month.

Discrimination: During recruitment or employment, Luxembourg’s Labor Code prohibits discrimination in the workplace and in general on grounds of gender, marital or family status, membership, or affiliations, political or religious beliefs, racial or ethnic background, disability, and age.

Required: Applicants must comply with all work permit and visa immigration requirements

Basic Facts on Hiring in Luxembourg

Companies hiring staff for international expansion into Luxembourg must comply with a framework of employment and taxation regulations that are applied at state and municipal level. Some areas are not subject to mandatory state regulations, which is when collective and trade union agreements and directives from the European Union (EU) can come into play. Basic requirements include:

• Each employee must have been given a written contract no later than the first day of employment
• Contracts must be in a language understood by all parties, although there are no specific regulations. English is commonly used and generally accepted in courts
• Mandatory information required for all contracts includes identities and addresses of all parties, employment start date, place, and type of work, working hours, annual leave, notice periods, any trial period
• There must be two copies, each signed by both parties
• Oral agreements are permanent contracts
• The standard contract is open-ended, indefinite. The Labor Code allows fixed-term contracts only in certain cases and they cannot exceed a total of 24 months, including a maximum two renewals. A trial period can be written into a contract before employment starts.

After hiring and onboarding, employers must be aware of other considerations. Minimum standards apply to such as sick leave, minimum wages, working hours, maternity allowances, paid vacations, termination, and severance, notice periods and social insurance payments. Other rules regulate workplace discrimination.

To hire employees, companies must follow strict procedures to set up a legal entity in Luxembourg to run their own payroll. The first decision is to select a company type. The typical choice is for a private limited liability company, Société á Responsabilité Limitée (S.a.r.l.), to operate under the Luxembourg Commercial Companies Act, which was revamped in 2016. The reform introduced a simplified form of a company limited by shares, a Société par actions simplifiée (SAS).

Further steps include:

• Select a company name, which must be unique and reserved with the Companies Register
• The company name must have the suffix S.a.r.l. or SAS
•  Provide minimum share capital of approximately €12,000 (US$13,537), which must be fully paid up on incorporation after opening a business bank account for the deposit
• From one to 100 shareholders
• Provide incorporation documents, generally including a notarized Incorporation Deed, Articles of Association, and the share register
• Obtain Certificate of Good Standing from the Registry of Commerce and Companies
• Apply for a business permit from the General Directorate for Small and Medium-sized Enterprises of the Ministry of the Economy
• Registering your company with the CCSSto obtain an employer’s registration number (matricule employeur) to determine the tax class according to business activities
• Ensuring the company is registered within eight days of the first employee commencing work

Once staff have been recruited, employers’ responsibilities include:

• Sending a ‘start of employment declaration’ to the Joint Social Security Center (Centre commun de la sécurité social, CCSS) for each new employee
• Obtaining their tax card from the relevant RTS tax office on the Luxembourg Inland Revenue website, to make deductions from their salary
• Obtaining each employee’s 13-digit national identification number (matricule) from the CCSS
• Ensuring the company is registered within eight days of the first employee commencing work. Failure brings fines of €50 (US$56) per employee to a maximum of €2,500 (US$2,820)