An employer of record in Luxembourg is a local entity that legally employs your hire, signs a Labour Code compliant contract, runs payroll with the country's indexed salary system, registers the worker for social security and carries the employer obligations, so a company with no Luxembourg entity can employ someone there. The buyer directs the day-to-day work; the EOR answers for the formal side, and Luxembourg's formal side is unusually prescriptive about what a contract must contain and how employment may end.
What an EOR does in Luxembourg
Luxembourg requires a written employment contract that states far more than most countries ask for: the identities of the parties, start date, place of work, job description, working hours and schedule, the basic salary together with the current index value, paid leave, the notice period, any trial period, and references to applicable collective agreements and supplementary pension schemes. The government's Guichet.lu portal publishes the full list and a model contract from the labour inspectorate, the ITM. A competent EOR issues a contract that meets this checklist, then runs the recurring obligations: payroll against the wage indexation system, social security declarations and leave administration. For one or two hires, that replaces incorporating, registering as an employer and tracking a collective agreement you have never read.
Trial periods are tiered by qualification and salary
The trial period must be agreed in writing at the latest when work starts, and only one trial period is allowed per employment relationship. The floor is two weeks. The ceiling depends on the person: three months for workers without a vocational certification, six months for holders of a vocational diploma, and up to twelve months where the monthly salary is at least EUR 5,188.69. A suspension, for example sick leave, extends the trial by at most one month. An EOR contract that recites a twelve month trial for a mid-salary hire is not compliant, and it is worth checking the tier the provider has applied rather than assuming the template is right.
Notice and severance scale with service
Dismissal with notice in Luxembourg requires a real reason, personal or economic, and the notice period is set by tenure: two months for less than five years of service, four months from five to under ten years, and six months from ten years. From five years of service the employer also owes statutory severance, starting at one month's salary for five to ten years and climbing by steps to twelve months' salary beyond thirty years. Procedure matters as much as the numbers: employers with at least 150 staff must hold a pre-dismissal interview, notice must go by registered letter or hand delivery, and the period starts on the 15th or the 1st depending on when notice lands. These costs sit inside any Luxembourg exit and an EOR quote should surface them, not discover them.
What to check in a Luxembourg EOR
Ask to see the contract template against the Guichet.lu checklist, including the index value clause, because salary indexation is automatic in Luxembourg and a contract that freezes pay in plain euros is wrong from day one. Ask which collective agreement, if any, covers the role; the written contract must reference it. Ask how the provider handles the notice ladder and severance accrual in its pricing, since a hire who reaches five years of service carries a real balance-sheet cost. Nothing here is legal advice; the Labour Code and the signed contract control, and the official Guichet.lu pages linked below are the reference.
Questions people ask about employer of record luxembourg
How much notice does an employer owe in Luxembourg?
For dismissal with notice, two months where the employee has less than five years of service, four months from five to under ten years, and six months from ten years, per the official Guichet.lu guidance. Severance is owed on top from five years of service.
How long can a trial period be in Luxembourg?
Between two weeks and three, six or twelve months depending on the employee's qualifications and salary: three months without a vocational certification, six with a vocational diploma, and twelve only where monthly pay is at least EUR 5,188.69. It must be in writing and only one trial period is allowed.
Does using an EOR change Luxembourg employment law obligations?
No. The EOR is the legal employer and carries the Labour Code obligations, including the written contract requirements, notice periods and severance. Using an EOR moves the obligations to a firm built to handle them; it does not shrink them.
What must a Luxembourg employment contract contain?
Among other items: the parties, start date, workplace, job description, working time and schedule, basic salary with the current index value, paid leave, notice period, any trial period, and references to applicable collective agreements and pension schemes. The Guichet.lu page lists the full set and links a model contract.