As one of the most prosperous regions in Europe, worker wages in Luxembourg are generally above average, although not as high as those in neighbouring Germany and France.
Known as the Grand Duchy of Luxembourg, it’s a prominent financial centre, with its roots stretching back to the 10th century. The Duchy’s history is intrinsically linked with that of its more powerful bordering countries, especially Germany.
Luxembourg has a minimum wage and permits a lower starting salary for workers under 23 or 18 years of age. Annual salary increases are often controlled by an industry collective agreement and pegged to local cost of living increases. In Luxembourg, your salary may depend on your age and, while salary levels rarely appear in job advertisements, the desired age range will give you an idea of what an employer is willing to pay.
The Duchy has high taxes but offers great opportunities and lifestyle
Taxes in Luxembourg are higher than what you may be used to in your home country, particularly if you’re coming from the UK or the US, so remember to take this into account when considering your salary. Although Luxembourg has a reputation as something of a tax haven, this is largely based on indirect taxes rather than income tax.
For many employees, particularly executives and senior managers, their remuneration is much more than the money they receive in their monthly pay packets. Some companies provide benefits such as a company car, private school fees, interest-free home or other loans, and membership of local clubs or sporting organizations. These additional benefits are usually taxable, however, and this should be taken into account when calculating net take-home pay.
In common with some other Euro countries, employers pay a 13th month ‘bonus’ to their employees. This year-end or Christmas bonus – called a prime de fin d’année/jaarpremie – should be incorporated in employment contracts for those on an annual salary. Some employers in Luxembourg also provide a variable profit sharing or productivity bonus – a participation aux benefices/aandeel in de winst or a prime de productivité/produktiviteitspremie – depending on the performance of the company, branch or department.
Year-end bonuses often depend on the company’s overall performance, reaching specific goals during the year past, and may be calculated as a percentage of each employee’s annual or monthly salary over that period. However, employee eligibility for this type of bonus may or may not be part of an employment contract, but of course it makes for a very nice surprise at the end of the year if they get one!
Agents of Bradford Jacobs are totally on the ball when it comes to Professional Employer Organisation, to make your expansion into Luxembourg processes painless and easy. We can help you hire your candidate of choice, handle HR matters and payroll, and ensure that you’re in compliance with local laws – all without the expense of setting up a branch office or subsidiary. Our agents in Luxembourg and our worldwide Employer of Record Platform is designed to provides you with piece of mind, allowing you to concentrate on running your business.
With Bradford Jacobs in-country legal experts and our experienced and trained staff, we can guide you smoothly through the many of complex laws and regulations of hiring staff in Luxembourg. When negotiating terms of an employment contract and sending a job offer letter to an employee in Luxembourg, it is a legal requirement to put a strong employment contract in place, in Luxembourgish as well as English, which sets out the terms of the employee’s compensation, benefits, and termination requirements. An offer letter and employment contract in Luxembourg should always state the salary and any compensation amounts in Euro rather than a foreign currency.
Here’s some hugely attractive reasons you should use Bradford Jacobs’ agency services in Luxembourg:
- You have a contractor overseas and you want to take them on full-time as a company employee.
- As they’re a contractor, your company is currently in a non-compliant relationship with them.
- Your company wants to invest in these resources and show your commitment to them by offering then full-time work under your company banner.
- The contractors are asking for the improved status afforded by full-time employment.
- You’re seeking cost-effective solutions in upgrading contractors to employee.
- Legal complications need to be avoided when converting contractors to employees.
- Avoid the costs and risk of maintaining a foreign corporate entity. You see that the compliance and financial perspective as it stands is too high in terms of investment and just does not tie-in with your long term goals.
- It needs to be done quickly. You’d like to hire today, but are in need of an interim solution while setting up your foreign entity.
Well, our single answer to all of these dilemmas is – no problem!
PEO in Luxembourg
For companies wishing to hire employees in Luxembourg, our expert advisors can walk you through the nuances of employment and hiring in Luxembourg – and indeed in every other European state. Within just 24 hours following your initial call to us, Bradford Jacobs will send you a customized proposal to match your exact specifications and requirements. You can have your employees up and running within a few days of the paperwork being signed and sealed.
Remember, whether foreign national expatriates or local national hires, Bradford Jacobs can assist with Luxembourg business visas, work permits, local payroll, taxes, and general employment support. Our services will drastically decrease your time to market, fully compliant and without the hassles and headaches.
How Luxembourg PEO works
Our aim as the Employer of Record for your international employees is to provide specific payroll, HR and ‘in-country’ compliance services.
In the first instance, Bradford Jacobs professionals will consult with you to understand your specific requirements and timeframes and assess the best model to provide our services. As these are co-employer and employee arrangements, there will be some important conditions for you to consider so that the PEO model remains accurate, timely and – most importantly – compliant with the rules and regulations governing staff employment in a specific country.
PEO Luxembourg Service Overview
BRADFORD JACOBS Consulting provides employer of record services for clients that want to hire employees and run payroll without first establishing a branch office or subsidiary say, as an example, in Luxembourg. Your candidate is hired via BRADFORD JACOBS agencies in Luxembourg in accordance with local labor laws and can be set up within a few days. One of our experts is assigned to work with your team, representing your company exactly as if he or she were your employee and working to meet your requirements in that country.
Our PEO service enables clients to run payroll in Luxembourg while HR services, tax, and compliance management matters are lifted from their shoulders onto ours. As global PEO professionals, we manage employment contract best practices, as well as severance issues and even termination if required. We also keep you up to date of any changes to local employment laws in Luxembourg.
Establishing a branch office or subsidiary in Luxembourg to engage a small team is time consuming, expensive and complex. Luxembourg labour law has strong worker protections, requiring great attention to detail and an understanding of local best practices. Our global partners make it problem-free and an easy exercise to expand into Luxembourg. We can help you hire your candidate of choice, handle HR matters and payroll, and ensure that you’re in compliance with local laws – all without the burden of setting up a Luxembourg branch office or subsidiary outfit.
Features and Benefits
- Solutions available for all nationals.
- Employment and business support provided by local professional partners.
- Contractors benefit from the highest legitimate retention through the use of tax and social security treaties, expatriate tax regimes, pension schemes, double taxation agreements and tax claimable expenses.
- Value for money and flexible fees – inclusive of a Luxembourg tax return and expenses claims. These are charged only when the contractor is starts working. If contractors wish to use their own accountants to file income tax returns, we pay their accountants’ fees up to the amount charged by our own accountant.
- EUR 5,000,000 cover for employers’ and business liabilities.
- Single point of contact, so contractors can focus on their job.
- Extensive expertise in Luxembourg tax and social security issues.
For the Employer
- Fast international employee engagement solution.
- Controls operating budgets as all employer costs are provided at the outset to ensure full transparency.
- Time efficient with minimal paperwork required compared to the red tape often encountered when setting up your corporate entity.
- Professional assistance with employment and compliance matters.
- Reduced legal and accounting costs.
- All statutory professional insurances are provided as part of the Bradford Jacobs service.
For the Employee
- Compliant local employment contract.
- Payroll on-time and 100 percent accurate.
- Professional HR assistance with employment related enquiries.
- Up-to-date information on tax regulations and compliance.
Contract of Employment
- Each worker is issued with a comprehensive contract of employment in dual language – in this example case, Luxembourgish and English.
- An overview of the statutory provisions in Luxembourg will be made available to you prior to contract offer. Bradford Jacobs will appraise you of all the salient in-territory HR rules to ensure you have a thorough understanding of Luxembourg laws and protocols.
- In conjunction with in-country expert advisors, Bradford Jacobs will recommend where these provisions can easily be enhanced enabling you to provide a fully competitive salary and benefits package for all your employees.
- Salary, commissions/bonuses and all benefits are agreed with the ‘workside’ employer and are contractually included.
- Fully managed service to assist with routine HR tasks such as absence management and expense processing.
- Guidance on in-territory compliance requirements – such as any legal obligation to record time and overtime provisions.
- Ad-hoc support available around the clock to support you when you need it most in the event of any disciplinary, grievance or other HR matters requiring urgent attention.
- Regular updates provided and advice available to ensure that you are made aware of not only significant changes to existing laws but also to ensure ongoing compliance with all aspects of Luxembourg employment law.
- Bradford Jacobs will bring any issues to your early attention and, where appropriate, work with you to ensure internal policies and handbooks are updated accordingly.
- Accident insurance covering occupational accidents, commuting accidents, and occupational diseases as required by Luxembourg law is provided as standard.
Payroll & Settlement
- Fully compliant international payroll funding process ensuring that employees and competent authorities are paid on time, electronically into the relevant bank accounts
- Statutory filing, submissions and end of year reporting completed as standard.
- Liability payments made in line with local territory requirements to the respective competent authorities well in advance of deadlines.
- Staff payments made to employees on a fixed weekly/bi-weekly/or monthly basis as required in local currency.
- Electronic pay slips provided to employees.
- We hope that you enjoy a long and mutually beneficial relationship with all your employees. If your employee decides to move on, however, you can rest assured that all leaving documentation required by him or her will be issued efficiently. According to the labor law of Luxembourg, your employees will be at risk of having their work permit revoked if they (i) do not perform the works for which they are employed and (ii) lose vital qualifications that are required to execute the job.
- Our Bradford Jacobs’ employment solutions helps you have your mobile workforce officially employed in Luxembourg by our company instead of setting up your own legal entity there. You just choose the right candidate that you need to have working for you in Luxembourg and then leave it to us to handle all the rest – fast and hassle-free.
On-boarding once the contractor registers with us, we take care of all work-related permits and registration formalities. He or she sends us completed time sheets and any approved expenses. We invoice the end client. When the invoice is settled, we deduct all contributions due to the Luxembourg authorities and transfer the remaining salary into the contractor’s bank of choice.
Finally, at the end of the financial year, we prepare the year-end accounts and, at the end of the assignment, we de-register the contractor.
We appreciate each situation and business is different. That is why BRADFORD JACOBS offers a consultative and bespoke solution to every client. Personalised job specifications, job offers and benefits packages are all agreed with you during the set-up process. We know one size does not fit all and rest assured we can accommodate all bespoke requirements.
Sounds good? Then do contact us to arrange an initial consultation with our team.