How the EOR process works in Luxembourg: the five steps

The Employer of Record process in Luxembourg has five steps: agreeing the role and the package, issuing the employment contract, registering the employee with the Centre commun de la sécurité sociale (CCSS) and obtaining the tax card, running the first payroll, then the ongoing monthly cycle. Only the first really depends on the client; the rest is employer-side administration in the order Luxembourg law sets.

The sequence is short because nothing has to be built first. Employer of Record Luxembourg is registered to employ in Luxembourg, so the contract is issued and payroll runs on an employer that already exists. A company forming its own société à responsabilité limitée (SARL) adds eight to fourteen weeks in front of all this, because the business permit, the €12,000 of share capital and the registration come first.

A draft contract is usually ready within hours of the job title, salary and start date being agreed, and onboarding an EU national typically takes one to two days once their identity and bank details are in. The CCSS declaration follows within eight days of the start date, and the first payslip lands on the normal pay date of the first month worked. Third-country nationals are the exception: the work authorisation must be granted before the start date.

Step one is where the client settles what the job is and the EOR checks it against Luxembourg requirements before anything is signed. The inputs are few: job title and duties, gross annual salary, start date, working hours, place of work, any benefits, and the probation you want. Those terms go into a service agreement between the client company and the EOR, a commercial contract and not the employment contract.

Luxembourg floors are applied at this point, and they are easier to fix on paper than after a signature. Pay cannot fall below the salaire social minimum (SSM), which from 1 June 2026 is €2,771.33 a month for unskilled work and €3,325.59 for a skilled post. Paid annual leave is at least 26 working days, on top of 11 public holidays. Probation cannot be shorter than two weeks, and its maximum depends on the employee’s qualification and salary.

Cost is settled here too, because this is where the client commits to it. A standard commercial employer pays about 13.29% of gross in employer social security, within a range of roughly 12.5% to 15.3% by accident and Mutualité class. On €90,000 gross that is €11,961 of contributions and a total employer cost of €101,961, on the parameters in force from 1 June 2026. Our fee starts at €499 per employee per month, a flat amount rather than a percentage of pay, and the pricing page sets out what it covers. Wage indexation belongs in the budget from the first conversation: Luxembourg pay rises 2.5% across the board whenever a tranche triggers, with no employer discretion.

The employment contract is between the employee and the EOR, in writing, in two signed originals, and in place by the first day of work at the latest. Most hires are on a contrat à durée indéterminée (CDI), Luxembourg’s open-ended default; a contrat à durée déterminée (CDD) is available only for a precise and non-durable task, so it does not fit a permanent role. A draft goes out within hours of the package being agreed, and the signature is the event the rest of the timeline hangs on.

Article L.121-4 of the Code du travail lists what the contract must contain: the identity of the parties, the date it takes effect, the place of work, the job title and tasks, working time and the overtime arrangements, remuneration broken out into basic salary, supplements and bonuses with the index cote in force, paid annual leave, the notice each side must give, any probation period, and the social security bodies that collect the contributions. Several of those items may be satisfied by reference to the law rather than reproduced in full. Since the law of 24 July 2024 a staged duty sits on top: the core particulars must reach the employee within seven calendar days of the start, the rest within one month.

Language is the question foreign employers ask most. Luxembourg prescribes no language for the contract itself. The Inspection du travail et des mines (ITM) accepts a contract in any language both parties understand, so an English contract is valid where the employee genuinely reads English, while a contract in a language the employee does not follow is exposed to annulment for defect of consent under Article 1109 of the Civil Code. The administration is a different matter: the CCSS publishes its entry and exit declarations only in French and German. Our guide to Luxembourg employment contracts goes through the clauses one by one.

Registration means two filings with two different authorities, and both follow the signed contract. The first is the déclaration d’entrée, which tells the Centre commun de la sécurité sociale (CCSS) that a person has started work. It is due within eight days of the start date and goes in through MyGuichet.lu, SECUline or on paper. A 30-day tolerance applies, after which the fine is €50 per month of delay, capped at €2,500. Because the CCSS collects every branch of contribution, that declaration covers pension, health cover, cash sickness benefit, accident insurance, occupational health and the Mutualité des employeurs.

The second filing is the tax card. The fiche de retenue d’impôt is issued by the Administration des contributions directes (ACD) and carries the employee’s tax class, deductions and credits, which decide how much income tax comes out each month. Since 1 May 2021 it is a multi-year electronic document that the employer retrieves through the MyGuichet.lu professional space, using an access token the ACD posts to the employer’s registered address. Since 1 January 2022 employees no longer hand over a paper card; they request or amend their own directly with the ACD.

If there is no valid tax card when payroll runs, Luxembourg does not allow an estimate. The employer must apply the most onerous treatment, tax class 1 at a rate that cannot be lower than 33%. The position is corrected once the card arrives, so nobody is permanently out of pocket, but a first payslip at 33% is an unpleasant surprise, which is why chasing the card comes straight after signature.

Immigration runs alongside registration rather than inside it. EU, EEA and Swiss nationals need no permit, although anyone moving to Luxembourg files a déclaration d’arrivée with their commune within eight days. Third-country nationals need a salaried worker authorisation before they start, or the EU Blue Card where the 2026 salary threshold of €65,652 is met.

The first payroll run turns the agreed gross salary into a payslip, a net payment and two sets of filings. Out of gross pay come the employee’s social security contributions at 12.95%, covering pension, healthcare in kind, cash sickness benefit and the contribution dépendance, then income tax under the retenue d’impôt sur les traitements et salaires. The tax scale has 23 bands with a top rate of 42% above €234,870, and a 7% solidarity surcharge is added to the tax due. Most branches stop at the plafond cotisable, the contribution ceiling, €13,856.63 a month and €166,279.56 a year from 1 June 2026; the dependency contribution is uncapped and paid by the employee alone.

On the employer side the EOR pays contributions on top of the salary and declares to the CCSS every month the gross remuneration paid and the hours actually worked. The CCSS calculates the amounts, issues an extrait de compte showing the employee and employer shares, and payment is due within ten days of the date that statement is issued, even where it is disputed. Late payment carries interest of 0.6% for each full calendar month. The wage withholding return goes to the ACD monthly where the withholding is €750 or more, quarterly between €75 and €749, annually below that.

Luxembourg pays twelve monthly salaries. There is no statutory thirteenth month; it becomes an enforceable right only through the contract, a collective agreement or a settled practice known as usage constant, so the contract should say plainly which applies. Benefits agreed at step one are set up in the same run, meal vouchers being the most common: face value up to €15, of which €12.20 is the exempt employer share and €2.80 the employee share. Our guide to how Luxembourg payroll works takes the deductions line by line.

After the first payroll the arrangement settles into a monthly rhythm, with the client managing the work and the EOR managing the employment. Payroll runs, contributions are paid, the withholding is declared, leave is tracked against the 26-day minimum and the 11 public holidays, and absence is recorded.

Contract changes go into an avenant, a written amendment signed by both sides, usually a pay rise, a new job title or a move to part-time hours. Indexation needs no amendment. When the six-month moving average of the national consumer price index rises 2.5% above the previous threshold, pay across the country rises 2.5% from the first of the following month. STATEC publishes the index monthly and the uplift is automatic.

Sickness has mechanics that surprise employers from outside Luxembourg. The employer keeps paying full salary until the end of the month in which the 77th day of incapacity falls, counted over a rolling 18 months, in practice 11 to 15 weeks. The Mutualité des employeurs reimburses 80% of gross salary plus the employer contributions on it, and 100% during the trial period, and the Caisse nationale de santé (CNS) pays from the month after.

Offboarding follows its own fixed order. Employer notice is two months under five years of service, four months from five to ten and six months at ten or more, and an employee resigning gives half of that. Notice does not run from the date of the letter: it begins on the 15th where the letter is posted before the 15th, and on the 1st of the following month where it is posted on or after it, the postmark deciding. Severance, the indemnité de départ, starts at one month’s salary at five years’ service. A déclaration de sortie closes the CCSS record, a final payslip is issued, and the engagement stops there, without the filing tail a company of your own carries. Ending employment in Luxembourg sets out the procedure in full.