Permanent employment contract (CDI)

This page was last modified on 07-01-2016

Any employer wishing to recruit an employee must conclude an employment contract either before or on the first day of employment.

The employment contract is an agreement that governs a work relationship through which one person undertakes to work under another in return for remuneration.

Although labour law recognises the validity of an oral contract, it is strongly recommended to conclude a contract in writing, detailing the nature and conditions of the work relationship.

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Who is concerned

An employer recruiting a new employee in response to a lasting need for personnel as part of the normal and permanent activity of the business generally must resort to a permanent employment contract (contrat à durée indéterminée - CDI).

The employer can only use fixed-term contracts (contrat à durée déterminée - CDD) in exceptional cases in response to isolated needs of the business.

It is not necessary to draw up an employment contract for trainers or sportsmen who:

  • do not carry out this activity as their main activity and;
  • are paid an allowance which does not exceed 12 times the monthly social minimum wage per year (i.e. gross amount of EUR 23,075.52 as from 1 January 2016).

Prerequisites

An employer who decides to hire a new employee must draw up an employment contract before or at the moment of the entry into service of the employee.

The act of signing an employment contract seals the relationship between the employer and the employee.

The contract only becomes a "salaried" employment contract if the following 3 elements are combined:

  • a hierarchical relationship between the employer and the employee: the employment contract places the employee under the employer's authority;
  • the provision of work services: the main obligation for the employee consists of carrying out work for the employer;
  • a remuneration : there must be a counterpart for the work carried out by the employee for the employer. In principle, the counterpart takes the form of cash (salary, bonus, premium, etc.) which may, in certain cases, be combined with a payment in kind (free accommodation, company car, mobile phone, etc.).

Preliminary steps

Furthermore, before recruiting an employee and drawing up an employment contract, employers must first submit a declaration of vacant position to the National Employment Agency (Agence pour le développement de l'emploi - ADEM).

The declaration will enable ADEM to check whether there are any jobseekers who have employment priority.

Moreover, an employer must first inform his workers under a fixed-term contract about the vacant position provided the vacant position is for a permanent employment contract.

How to proceed

Form of the employment contract

The employment contract must be drawn up:

  • at the latest when the employee enters into service and;

  • in two copies - one of which is kept by the employer and the other one given to the employee.

It is recommended to conclude the employment contract in writing as employment contracts concluded orally are automatically deemed to be permanent employment contracts. In the case of a dispute, the employee must provide proof of its existence.

Mandatory information in all employment contracts

All employment contracts must include the following mandatory information:

  • the identity of the parties concluding the contract (names, addresses).
    NB: in the event of a change of address, the employee must notify his employer;

  • the effective date of entry into service of the employee. As regards the employment of non-EU nationals, the date of entry into service may be stated on a conditional basis, for example:

    • "the employee will enter into the employer's service on the date of receipt of his work permit and, in any case, at the earliest on dd/mm/yyyy", or;

    • 'the validity of this contract is subject to the employee obtaining his work permit within 6 months from the contract date';

  • the place of work: if the employee has to work in various locations and/or abroad, as opposed to a fixed or principal location, this must be expressly stated in the employment contract;

  • the registered office of the business or, where applicable, the residence of the employer;

  • the nature of the job carried out, and, where applicable, a description of the role and tasks assigned to the employee at the time of his employment. The employer can also state that the employee may be assigned to other tasks;

  • the duration of the employee's usual daily or weekly work;

  • the usual working schedule;

  • the basic salary and the index in force on signing the contract, as well as any additional financial benefits (incentives, 13th month, head-of-household premium, bonus, etc.). The value of remuneration in kind (e.g. meals, housing) has to be indicated precisely for it to be deducted from the salary;

  • the duration of paid annual leave, or if it is not possible to state this when concluding the contract, the means used to determine and allocate the amount of leave must be stated;

  • the notice period that the employer and employee must give if the contract is terminated;

  • the duration of the trial period, where applicable;

  • where applicable, a reference to the collective agreements governing the working conditions of the employee;

  • where applicable, the existence and the description of a supplementary pension scheme, the optional or compulsory nature of this scheme, the rights to related benefits as well as the existence of any personal contributions;

  • where applicable, any additional or derogation clause which may override the law. These clauses must be favourable to the employee. If this is not the case, they are declared null and void.
    Example: the employer concludes an employment contract which includes a 6 months notice period for the employee in case of resignation, whatever his length of service at the time of resignation.

    However, the notice period in case of resignation is determined by law according to the employee's length of service in the business. It may vary between 1 and 3 months.

    This derogation clause in the employment contract is unfavourable to the employee and is therefore declared null and void.

    However, if a clause of the employment contract provides for a longer notice period in case of dismissal than stipulated by law, the clause is deemed admissible for it is favourable to the employee. This clause is therefore valid.

Trial period

It is possible to include a trial period in any employment contract, i.e. a probation period that begins at the start of the employment contract.

The trial period is meant to:

  • give the employee the opportunity to ensure the job is suitable for him;

  • give the employer the opportunity to assess the competences of the salaried worker.

During this period, the 2 parties may rapidly terminate the employment contract.

The trial period must be stipulated in writing, at the latest when the employee starts work.

If the contract is concluded orally or following a fixed-term employment contract, it cannot include a trial period.

If the business has a collective agreement in place with a provision stating that the employment contract of each new worker begins with a trial period, it is not necessary to include a trial period clause in each individual contract.

Duration of the trial period

The minimum duration of the trial period is 2 weeks.

The maximum duration of the trial period depends on the employee's level of qualification and salary. It is set to:

  • 3 months maximum if the employee does not have a vocational skills certificate (CATP) / vocational diploma (DAP) or equivalent: (national diploma awarded after the successful completion of initial vocational training or an apprenticeship);

  • 6 months maximum if the employee has a vocational skills certificate (CATP) / vocational diploma (DAP) or equivalent, or a higher level of training;

  • 12 months maximum if the employee receives at least a gross monthly salary of EUR 536 at index 100 (i.e. EUR 4,154.91 as from 1 August 2016).

If the trial period stated in the contract exceeds these maximum limits, the trial period clause is deemed null and void for the excess period.

Example: the employer concludes a permanent employment contract with an employee and includes an 8-month trial period. The hired employee has a level of qualification higher than a vocational skills certificate and his gross monthly salary is EUR 3,100.
Therefore, the hired employee can only be subject to a trial period of 6 months. The other 2 months stated in the contract are considered a surplus and are therefore not applicable.

If the trial period does not exceed one month, it must be stated in weeks. In other cases, it must be stated in whole months.

In the context of the same working relationship, only one trial period may be implemented. The trial period cannot be renewed for the same position or any similar position and not within the framework of the employee's promotion to a new position.

Suspending the trial period

Should the contract be suspended during the trial period (due to illness, leave for family reasons, etc.), the trial period is suspended throughout the whole period of absence.

When the employee returns to work, the trial period is automatically extended for a period equal to the period of suspension. However, the maximum period of extension is 1 month.

Example: an employee is hired on 1 January and his employment contract states a trial period of 3 months. The trial period should therefore end on 31 March.
On 1 March, the employee submits a medical certificate to his employer, covering the period from 1 March to 10 March inclusive.
As a result, the employer may extend the employee's trial period by 10 days; instead of ending on 31 March, the trial period will end on 10 April.

If an employee gets pregnant during the trial period under a permanent employment contract, the trial period is suspended from the day the employee submits a medical certificate to her employer confirming her pregnancy. The remaining part of the trial period starts again at the end of the period of protection against dismissal.

The pregnant employee is protected against dismissal from the first day her pregnancy is confirmed by a medical practitioner until the twelfth week after the birth (except in the case of dismissal for serious misconduct).

Who to contact

3, rue des Primeurs
L-2361 - Strassen
Postal box BP 27, L-2010
Luxembourg
Phone: (+352) 247 76100
Fax: (+352) 247 96100
Email contact@itm.etat.lu

Opening hours
from Monday to Friday from 8.30 to 12.00 and 13.30 to 16.30
2, Circuit de la Foire Internationale
L-1016 - Luxembourg
Postal box B.P. 1604
Luxembourg
Phone: (+352) 42 67 67 - 1
Fax: (+352) 42 67 87
Email contact@cdm.lu

18, rue Auguste Lumière
L-1950 - Luxembourg
Postal box B.P. 1263 - L-1012
Luxembourg
Phone: (+352) 27 494 200
Fax: (+352) 27 494 250
Email csl@csl.lu

Opening hours
Monday to Friday from 08.00 - 12.00 and 13.00 - 17.00