Protecting IP when hiring in Luxembourg

Less than a foreign employer expects, and different amounts for different kinds of work. Three regimes apply to the output of a single Luxembourg hire. Computer programs written by an employee in the exercise of their duties, or on the employer’s instructions, carry their economic rights to the employer automatically under the amended law of 18 April 2001 on copyright. Patentable inventions follow a test under the law of 20 July 1992 that turns on what the person was employed to do. Everything else copyright protects, from reports and drawings to design work, documentation and databases, stays with whoever made it until a written assignment moves it.

That last default surprises people. Luxembourg follows the civil-law principle that the creator is the first owner of a work, and an employment contract does not of itself transfer economic rights. An employer used to work made for hire starts from the opposite assumption, and where the Luxembourg contract is silent the company has an argument about an implied licence rather than a title it can license out or put in a data room.

The instruction is short: settle ownership in the contract rather than rely on the defaults, which divide the work in a way no commercial arrangement would choose.

An invention belongs to the employer when the employee makes it carrying out an employment contract that includes an inventive mission matching their actual duties, or carrying out studies or research expressly entrusted to them. That is the rule at Article 13 of the law of 20 July 1992 on patents. Inventions outside those two limbs belong to the employee. In between sits a category the employer may claim: inventions made in the course of the work, in the company’s field, or using its specific techniques or data.

The employee has to inform the employer of the invention, and both sides are then bound to keep it confidential. The inventor keeps the right to be named, which no clause buys out.

The obligation foreign employers tend to miss is financial. Where the employer draws a notable profit from the patent, it owes the inventor an equitable share of it, and a court can fix a special remuneration if the parties do not. That is statutory, so a contract cannot write it away.

What helps in practice is to describe the inventive mission in the job description where the role warrants it, so that what the person creates falls inside the first limb rather than the arguable middle category. That is a drafting choice to settle with Luxembourg counsel, not a rule of law.

Software is the one automatic transfer in Luxembourg copyright law. Where a computer program is created by an employee in the exercise of their duties or on the employer’s instructions, the employer alone is entitled to exercise all the economic rights in it. Published citations of the article number within the 2001 law vary, so have Luxembourg counsel confirm it against Legilux before it goes into a contract.

The limits of that rule matter more than the rule. It covers programs, and it covers employees. Specifications, architecture documents, interface artwork and training material are not computer programs, so they stay with their author.

For everything outside software, the transfer has to be built. An assignment of economic rights has to be proved in writing, and assignment contracts are read restrictively in the author’s favour, so a clause gesturing at “all intellectual property” gets read down. A workable clause identifies each mode of exploitation, the medium, the territory and the duration, and where it covers modes of exploitation that do not exist at signature it is valid only with specific remuneration of its own. Luxembourg practitioners also warn against burying the consideration inside ordinary salary.

One thing stays out of reach. Moral rights, the right to be named as author and to object to distortion of the work, remain with the author and cannot be waived in advance for future works.

A confidentiality clause is valid in a Luxembourg employment contract, and it binds the employee during the relationship and after it ends. The Inspection du travail et des mines (ITM) says so directly, and the usual subject matter is confidential information about the employer’s activities and business relations, including business secrets and manufacturing secrets.

The condition attached to it is the part that fails. The clause has to be circumscribed and precise. Luxembourg courts have held that a blanket prohibition on indiscretion of any kind does not work, which disposes of the one-paragraph wording in most international templates. A clause that survives describes categories: customer and pricing data, source code, product plans, supplier terms, and anything the employer marks as confidential. It also says what happens to devices, accounts and copies when the employment ends.

Behind the contract sits the law of 26 June 2019 on undisclosed know-how and business information, which transposes EU Directive 2016/943 and is the statutory route for a trade secrets claim here. What counts as a protected secret under it, and how it treats the general skill an employee is free to carry away, are questions for Luxembourg counsel on the facts.

There is a structural reason to take the clause seriously. For an employee paid under the non-compete salary floor of €67,641.70, a non-compete is deemed unwritten, so precise confidentiality wording is close to the only post-termination protection available. Our note on what a Luxembourg employment contract has to contain covers where these clauses sit.

Nothing passes automatically from a contractor, including software. The automatic transfer in the 2001 law is written for a program created by an employee, which is read as leaving a self-employed developer’s code with the developer unless the engagement assigns it. Treat that as a well-founded reading rather than an express statutory rule, and draft on the safe side of it: a contractor agreement needs an express present assignment in writing, with the specificity any copyright assignment needs.

So a contractor arrangement is not the lighter-touch option it looks like. It carries more IP paperwork than employment, and it carries it at engagement rather than at the moment of dispute. A company that has paid a Luxembourg-based developer on invoices for two years with no signed assignment does not own the code.

The second exposure runs the other way. Luxembourg decides employment status on how the relationship actually operates, so a long-running contractor working to the client’s instructions and hours can be reclassified as an employee, bringing back pay, back contributions and the termination rules with it. Our note on misclassification risk in Luxembourg sets out how the test is applied.

A Luxembourg non-compete stops the former employee carrying on a similar activity as a self-employed or independent person. It does not stop them taking a salaried job with a competitor, and the ITM says so in terms: the clause does not reach salaried activities performed for a new employer. That is the single largest misconception about Article L.125-8 of the Code du travail, and the sentence at the heart of most international templates, barring the employee from working for a competitor in any capacity, reaches past what the article permits.

The conditions are cumulative and each is a way to lose the clause. It must be in writing, failing which it is null. The employee must be of full age when signing. Gross annual remuneration at departure must exceed €67,641.70, the figure at the index of 992.24 in force from 1 June 2026, and below that line the clause is deemed unwritten. It may run no longer than twelve months after the contract ends. Its geographic reach is confined to localities where the employee could genuinely compete and cannot extend beyond Luxembourg’s national territory. And it has to relate to a determined professional sector and to activities similar to the employer’s.

The clause also falls away on the employer’s own conduct at the end. It is inapplicable where the employer terminates with immediate effect without real and serious cause, fails to respect the statutory notice, or dismisses for serious fault in a dismissal later declared abusive. Only the employee may invoke invalidity. Where a clause is defective for another reason, the outcome is for the court, and Luxembourg commentators differ on whether it is void or reduced, so plan around neither answer.

On money, Luxembourg is unlike Belgium and France: no statutory compensation is required for a standard Article L.125-8 clause, though paid clauses have become more common. The trap runs the other way. Write compensation in and the employer is held to it, because Luxembourg courts have refused to let an employer drop the clause unilaterally to avoid paying the agreed indemnity. Case law has separately been reported as accepting a strengthened clause reaching salaried competition where appropriate financial compensation is provided and the restraint proportionate. That reading is not settled enough to draft from, and anything meant to cover a salaried move to a competitor belongs with Luxembourg counsel.

A foreign template usually gets four things wrong at once: it bars employment as well as self-employment, it runs for two years, it covers Europe or the world rather than localities inside Luxembourg, and it assumes a payment is what makes a restraint enforceable. A clause drafted to the article and backed by precise confidentiality wording protects more. Note too that a non-solicitation clause is tested on its object rather than its label, so one wide enough to stop the person working is assessed as a non-compete.

These clauses go into the contract at signature, because that is the only moment when everything is negotiable. A non-compete should be agreed at the outset, and an employee cannot be dismissed for refusing to sign one. Whether one can validly be added part way through an employment is an open question in Luxembourg and one for counsel. The contract should settle at least the following:

• A present assignment of economic copyright, setting out the modes of exploitation, medium, territory and duration, with separately identified consideration
• A software clause confirming the statutory position and capturing documentation, designs and databases, which are not software
• An inventive-mission description where the role warrants one, a declaration procedure, and an acknowledgement of the equitable share
• A confidentiality clause written by category, surviving the contract, with return of devices and copies
• A non-compete drafted to Article L.125-8, or a decision to rely on confidentiality alone where pay is below the floor

Someone registered to employ in Luxembourg has to sign that contract. Employer of Record Luxembourg is registered to employ in Luxembourg, so the contract is with us, drawn up to Luxembourg requirements and signed in two originals by the first day at the latest. You keep the commercial terms, and the IP position is agreed with you before the document goes out.

A draft is usually ready within hours of the role, salary and start date being agreed. Fees are flat rather than a percentage of pay, starting at €499 per employee per month, and the current rates are set out on the pricing page.