End of employment contract in Luxembourg: resignation, dismissal, fixed-term contracts, and employee rights

In Luxembourg, the termination of an employment contract is governed by the Labor Code and can take various forms: resignation, dismissal with notice, dismissal for serious misconduct, termination by mutual agreement, or termination of a fixed-term contract (CDD).

For expatriates and international employees, understanding the rules applicable in Luxembourg is essential in order to anticipate the procedures, notice periods, and any compensation that may be due.

In this article, we explain the different situations in which an employment contract may be terminated in Luxembourg, the applicable notice periods, and employees' rights.

The main ways of terminating an employment contract in Luxembourg

In Luxembourg, the employment relationship can be terminated in several ways:

• resignation by the employee;
• dismissal by the employer;
• dismissal for serious misconduct;
• termination by mutual agreement;
• the end of a fixed-term contract (CDD);
• certain special cases such as retirement or prolonged incapacity.

Each situation involves different rules regarding notice periods, severance pay, and administrative procedures.

Resigning from your job in Luxembourg

Resignation is the employee's decision to terminate their employment contract. It mainly concerns permanent contracts (CDI).

Resignation must be communicated to the employer in writing, usually by registered letter or hand-delivered against signature. No specific reason is required.

Notice period in the event of resignation

In Luxembourg, employees who resign must, in principle, give notice, the length of which depends on their length of service with the company.

The notice period generally begins:

• on the 15th of the month if the letter is sent before the 15th;
• on the 1st of the following month if it is sent on or after the 15th.

During this period, the employee continues to work as normal, unless the employer agrees to exempt them from the notice period.

Dismissal with notice in Luxembourg

Dismissal is the termination of the employment contract at the employer's initiative. When it is not related to serious misconduct, it must be accompanied by a notice period.

The employer may terminate the contract for various reasons, for example:

• a reorganization of the company;
• economic reasons;
• professional shortcomings.

The length of the notice period depends on the employee's length of service.

During the notice period, the employee continues to receive their salary and retains their rights. The notice period may or may not be served. By mutual agreement with your employer, you can negotiate to leave your job before the end of the notice period.

The pre-dismissal interview

In companies with more than 150 employees, the employer must organize a preliminary interview before giving notice of dismissal.

This interview allows the employee to learn about the reasons for the dismissal and to present their observations.

Severance pay

In Luxembourg, an employee with at least 5 years of service is entitled to severance pay, except in cases of serious misconduct.

This compensation is in addition to the payment of any outstanding salary and unused vacation time.

Dismissal for serious misconduct

Dismissal for serious misconduct is an immediate termination of the employment contract, without notice or compensation.

Luxembourg law considers serious misconduct to be any behavior that makes it immediately and permanently impossible to continue the employment relationship.

Situations that may be classified as serious misconduct include, for example:

• theft or fraud;
• acts of violence or harassment;
• serious insubordination;
• abandonment of post.

The employer must notify the employee of the dismissal in writing, explaining precisely the allegations against them.

If the employee believes that the serious misconduct is not justified, they may challenge the decision before the labor court.

The end of a fixed-term contract (CDD)

Unlike a permanent contract, a fixed-term contract automatically ends on the date specified in the contract.

In principle, a fixed-term contract cannot be terminated before its expiry date, except in certain situations:

• serious misconduct;
• mutual agreement between the employer and the employee;
• force majeure.

If the contract is terminated early without valid reason, the responsible party may be required to pay damages.

Termination of the employment contract by mutual agreement

The employment contract may also be terminated by mutual agreement between the employer and the employee.

In this case:

• both parties must agree;
• the agreement must be formalized in writing;
• the end date of the contract is defined jointly.

This solution is sometimes used when an employee wishes to leave their position sooner than the standard notice period.

Final settlement

When an employment contract ends in Luxembourg, the employer must pay the employee all sums due to them.

The final settlement may include:

• remaining salary;
• unused paid leave;
• any bonuses;
• severance pay, if applicable.

This payment is usually made at the end of the contract or shortly thereafter.

Key points to remember about the end of an employment contract

The termination of an employment contract in Luxembourg can take different forms depending on the situation:

• resignation is decided by the employee and requires notice;
• Dismissal may be with notice or for serious misconduct.
• fixed-term contracts generally end on the scheduled date;
• termination by mutual agreement allows for a more flexible separation.

Understanding these rules allows you to approach career transitions with greater peace of mind and to know your rights as an employee in Luxembourg.

For any specific questions, it is advisable to refer to the Luxembourg Labor Code or consult the relevant public authorities.