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.
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.
If you have friends or acquaintances living in Luxembourg or who have lived there, ask them what an average or good salary is for your trade or profession. 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 organisations. These additional benefits are usually taxable, however, and this should be taken into account when calculating your net take-home pay or comparing competing job offers.
13th Month’s Salary & Bonuses
Many employers pay a 13th month ‘bonus’ to their employees; a few even add a half of a 14th month’s pay to that, usually payable at the end of the year. This year-end or Christmas bonus ( prime de fin d’année/jaarpremie) should be incorporated into your contract if you’ve been quoted an annual salary. In your first and last year of employment, the 13th month bonus (and any holiday bonus related to vacation time) is paid pro rata if you don’t work a full calendar year. Some employers offer a variable profit sharing or productivity bonus ( participation aux benefices/aandeel in de winst or prime de productivité/produktiviteitspremie), depending on the performance of the company, branch or department.
Some employers operate a separate profit-sharing or performance-related bonus system, whereby they pay an annual sum (usually at the end of the year or the end of the fiscal year if the company doesn’t operate on a calendar year system). The amount of the bonus depends on the company’s overall performance, the attainment of specific goals during the year, and may be calculated as a percentage of each employee’s annual or monthly salary over the period. Your eligibility for this type of bonus may or may not be part of your employment contract. (It certainly makes a nice surprise at the end of the year if you get one!)
Working Hours & Overtime
Working hours in Luxembourg vary according to your employer, your position, the industry in which you’re employed and the regional or industry collective agreements that apply to your employer. The standard working week (i.e. the hours you’re expected to work on a regular basis) can be no longer than 40 hours. After that, workers must be paid overtime, at rates that vary according to the requirements and conditions of the extra hours worked. Of course, none of these restrictions applies to you if you’re a top executive ( direction/directie) or manager ( cadres/kaderleden) or if you own your own company (in which case, you love your work so much that you don’t even notice the hours ticking by).
The working week in Luxembourg is legally limited to 40 hours, with the payment of premiums for all overtime or work at ‘unusual hours’. There’s a legal maximum working day of ten hours, after which all work must be paid at overtime rates. Overtime must be approved in advance by the Ministry of Employment. The government of Luxembourg has granted permission for Sunday work to a few industries that operate continuous processing lines, as well as to a few of the tourist industries. Sunday work, however, must be entirely voluntary and is always paid at double the normal salary rates.
In Luxembourg, some companies operate flexi-time working hours. A flexi-time system requires all employees to be present between certain hours, known as the block time, for example, from 8.30 to 11.30am and from 1.30 to 4pm. Employees may make up their required working hours by starting earlier than the required block time, reducing their lunch break or working later. Most business premises are open from around 7am until 6 or 7pm. Smaller companies may allow employees to work as late as they wish, provided they don’t exceed the maximum permitted daily working hours (see above). Because flexi-time rules are often quite complicated, they may be contained in a separate set of regulations.
This article is an extract from Living and Working in Holland, Belgium & Luxembourg.