Hiring employees in Luxembourg requires heightened vigilance due to numerous legal obligations as non-compliance can result in criminal and administrative penalties.

No recruitment can take place without first declaring the vacant position to the National Employment Agency (Agence pour le développement de l’emploi). Employers must provide a job description, outline the required profile, and detail the working conditions. Advertising a job without respecting these legal provisions risks an initial administrative fine of EUR 251 for the company, which can be increased up to EUR 6,250 for a repeated breach. Persistent failures can also lead to higher fines and exclusion from public procurement.

The pre-employment medical examination for each new hire is also mandatory. As part of the employer’s responsibility for employee health and safety, this critical step must not be neglected. From a civil standpoint, non-compliance can result in prejudice to the employee entitling them to claim compensation. From a criminal law perspective, the employer faces a prison sentence of eight days up to six months and/or a fine ranging from EUR 251 to EUR 25,000.

Furthermore, legislation requires employment contracts to include specific clauses, notably regarding remuneration, leave, and termination. The Law of 24 July 2024 on transparent working conditions which amended the Labour Code aims to enhance clarity in employer-employee relations by reinforcing these requirements. Since its enactment, omitting these clauses can be costly for the employer, with the risk of fines from EUR 250 up to EUR 5,000 per affected employee.

A last example concerns the hiring of third-country nationals. Given the prohibition on employing third-country nationals who do not have the right to work in Luxembourg, employers must verify their immigration status. Skipping this step is punished by an administrative fine of EUR 10,000 per employee without the right to work. In the presence of aggravating circumstances, the offence is punishable by a prison sentence of eight days to one year and a fine ranging from EUR 2,501 to EUR 125,000. The employer may also be obliged to pay unpaid wages, social security contributions, and taxes, as well as cover the repatriation costs of employees who do not have the right to reside in Luxembourg. Moreover, additional criminal sanctions, such as a ban on professional activities, or temporary or permanent closure of the company may also be imposed.

Accumulating these offences can lead to significant fines as well as prison sentences for the employer. In this legal landscape strictly adhering to Labour Code obligations is imperative for employers. Specialised legal support can support employers to navigate this minefield with confidence.

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