Dismissal with notice

This page was last modified on 08-03-2016

An employer who dismisses an employee for a reason other than serious misconduct must grant a notice period and severance pay if the employee has been employed in the business for 5 years or more.

If the business employs more than 150 staff, it must conduct a pre-dismissal interview with the employee before effective dismissal can take place.

Businesses with at least 15 staff members must also notify the Economic Committee about each dismissal for reasons that have nothing to do with the employee's person.

Forms / Online services

Carry out your procedure:

  • By downloading a form

    • Notification des licenciements pour des raisons non inhérentes à la personne du salarié
    • CDI - modèle de lettre de licenciement avec préavis - salarié dont l'ancienneté est inférieure à 5 ans
    • CDI - modèle de lettre de licenciement avec préavis - salarié dont l'ancienneté est supérieure à 5 ans
    • CDI - modèle de lettre de licenciement avec préavis - salarié dont l'ancienneté est supérieure à 5 ans avec option de substitution de l'indemnité de départ en délai de préavis

Who is concerned

In principle, employees with a permanent employment contract can only be dismissed with notice.

In principle, he cannot dismiss with notice an employee:

The employer who terminates a fixed-term employment contract (CDD) before its term must compensate the employee which amounts to the total salaries that the employee would have received until the end of the contract. This amount is nevertheless limited to the amount that would have been paid during the notice period of a permanent employment contract (CDI).

An employer who intends to dismiss (for reasons that have nothing to do with the employees' person) at least 7 employees over a period of 30 days or at least 15 employees over a period of 90 days must use a collective redundancy procedure instead of resorting to individual dismissals.

An employer who intends to dismiss an employee for serious misconduct may resort to dismissal with immediate effect.

Note that the staff delegation, both regular and substitute staff representatives, as well as the equal opportunities officer and the safety officer cannot be dismissed:

  • during their legal term of office (5 years);
  • during the first 6 months after the expiration or cessation of their mandate;
  • 3 months before the staff elections as soon as they have submitted their candidacy.
Any redundancy procedure against them is deemed null and void.

How to proceed

The dismissal procedure - steps

Steps of the dismissal procedure according to the number of staff employed
Number of staff

Reasons related to the employee's person

(ability, employee's conduct, frequent absences or long illness)

Reasons that have nothing to do with the employee's person

(reasons related to operational necessities of the business)

< 15 employees

Notification of dismissal procedure

from 15 to 149 employees

Notification of dismissal procedure

  1. Informing the Economic Committee of the redundancy

  2. Notification of dismissal procedure

≥ 150 employees

  1. Pre-dismissal interview

  2. Notification of dismissal procedure

  1. Pre-dismissal interview

  2. Informing the Economic Committee of the redundancy

  3. Notification of dismissal procedure

Reasons for dismissal with notice

Any dismissal must be based on one or more reasons which prevent the continuation of the working relationship. The reasons for justifying a dismissal with notice are:

  • of a personal nature (related to the employee's person);
  • or reasons associated with the operational necessities of the business (not related to the employee's person).

Reasons of a personal nature

The reasons of a personal nature justifying dismissal with notice are related to:

  • the aptitude of the employee, i.e:
    • insufficient quality or quantity of work provided by the employee;
    • frequent and/or prolonged absences due to work incapacity for non-professional reasons which causes an obvious inconvenience to business operations.
      The employer must be able to count on a sufficiently regular cooperation on the part of his employee. By basing his decision on the grounds of disorganised business operations due to extended or repeated absenteeism on behalf of the employee, the employer can dismiss the employee:
  • the behaviour of the employee, i.e:
    • the behaviour of the employee towards the employer, his work colleagues or even his clients;
    • the employee is systematically late;
    • events related to the employee's private life which have an effect on his work.

The dismissal must take place within a reasonable period of time after establishing the facts held against the employee. If the most recent events date back several months, the dismissal may be deemed unfair.

Reasons related to operational necessities of the business

The reasons which may justify a dismissal with notice can also be linked to the fact that the employer wishes to restructure his business and eliminate certain workplaces. These reasons are generally of an economic nature. The employer must explain in a precise and factual manner the reason for the restructuring (e.g. economic difficulties, maintaining business competitiveness in the event of a slowdown of business activity) and the impact on the employee's workplace. The employer must clearly state why the business activity does not allow him to keep the employee in his employ.

In theory, when a business encounters economic difficulties, the financial health of the group to which it belongs does not have an impact on the employer's decision to proceed with a restructuring. However, if a Luxembourg company has economic difficulties but no administrative, legal or financial autonomy from the group to which it belongs, the employer must refer to the difficulties encountered by the group in the letter of dismissal.

In these cases of dismissal for economic reason(s), the employer:

  • can freely choose which employee to make redundant and does not have to justify this choice;
  • does not have to reassign the redundant employee within the company or elsewhere.

However, employees who have been made redundant due to reasons related to operational necessities of the business benefit from priority for re-employment.

Pre-dismissal interview

Number of staff in the business

If a business has 150 staff or more, the employer is legally required to summon the employee to a pre-dismissal interview before dismissing him.

In order to determine whether a pre-dismissal interview is compulsory, the total number of employees must be established, i.e. the total number of individuals employed in the different companies of a group which is considered as a sole economic and social entity.

Summoning a member of the staff delegation, whether a regular or substitute member, or the equal opportunities officer or the safety officer to a pre-dismissal interview is void and of no effect.

Summons to the pre-dismissal interview

In order to summon an employee to a pre-dismissal interview, the employer must write a summons stating:

  • the reason for the summoning, i.e. the envisaged dismissal of the employee;
  • the date, time and location of the interview;
  • that the employee can request to be assisted by:
    • either another employee in the company;
    • or a delegate of a national representative union organisation which is represented in the staff delegation;
  • that the employer can also request to be assisted by:
    • either a member of staff;
    • or a representative of an employers' organisation.

Employers who have decided to be assisted must state this in the summons to the pre-dismissal interview.

It should be noted that the law does not prohibit employers from being represented or assisted by lawyers during the pre-dismissal interview. In this case, the same rights are granted to the employee concerned.

The offences of which the employee is accused must exist at the time of invitation to the pre-dismissal interview.

However, the employer is not required to indicate the motives of dismissal in the summons. They will be explained during the interview.

The employer must also send a copy of the summons to the staff delegation.

It should be noted that since 1 August 2016, employers do no longer have to send a copy of the summons to the Inspectorate of Labour and Mines (ITM).

Pre-dismissal interview procedure

The pre-dismissal interview may take place at the earliest on the 2nd working day after the summons was sent. The purpose is to:

  • inform the employee that his dismissal is envisaged;
  • explain the reasons;
  • provide him/her with the opportunity to explain him/herself.
After the interview, the employer can freely decide whether he/she will proceed with the dismissal.

It should be noted that in businesses with less than 150 staff, the pre-dismissal interview, although it is not mandatory, can take place if the employer wishes so.

However, employers are not exposed to sanctions in the event of immediate notification of dismissal after the pre-dismissal interview. The dismissal remains valid as the obligatory character of the dismissal procedure only applies to businesses with more than 150 staff.

Absence of the employee at the pre-dismissal interview

There are 2 reasons which can explain the absence of an employee at the pre-dismissal interview to which he has been summoned:

  • he has decided not to act on the summons: this decision does not prevent the dismissal procedure from following its normal course;
  • or he is on sick leave: in this case, the employer must take into account 2 possible scenarios:
    • if the employee has informed the employer of his inability to work and/or provided him with a medical certificate before the employer sent the summons., the employee cannot be validly summoned to the interview;
    • if the employee is on sick leave and has informed the employer and/or provided a medical certificate after having received the summons, the dismissal procedure is not stopped from following its normal course, except in the case of emergency hospitalisation, in which case the employee has 8 days from the day of his hospitalisation to provide his employer with a medical certificate.

Informing the Economic Committee of a redundancy

This stage only concerns dismissal with notice for reasons not related to the employee's person (e.g. redundancy for economic reasons, recovery, reorganisation or restructuring measures resulting in job losses).

Any business with 15 employees or more must send a notification to the Economic Committee for each dismissal which is not related to the employee's person.

A business with 15 employees or more must organise social elections to set up a staff delegation.

The notification to the Economic Committee must take place at the latest when the employee is informed of his dismissal with notice.

The employer must send a notification of dismissal for reasons not related to the employee's person to the secretariat of the Economic Committee, preferably by e-mail to emploi@eco.etat.lu.

This notification must include, among others:

  • the name of the company and its NACE code;
  • the official registration number of the employer;
  • the total number of employees before the dismissal(s);
  • the total number of dismissals since the last notification of dismissal broken up by type of dismissal;
  • the dates of entry into service and notification of dismissal for each employee dismissed;
  • the date of the last notification of dismissal sent to the Economic Committee.

Notification of dismissal procedure

Notification deadlines

If the business employs less than 150 staff members, the employer may dismiss with notice immediately.

If the business employs 150 staff or more, the notification of dismissal must take place:

  • at the earliest the day after the pre-dismissal interview;
  • at the latest 8 days after the pre-dismissal interview.

Type of notification

The employer informs the employee of the termination with notice of the employment contract in writing:

  • either by registered letter;
  • or by giving the letter in person to the employee, who must acknowledge receipt by counter-signing a copy of the letter.

The notification must state that it is a dismissal with notice.

The following information may also be listed in the notification:

  • the notice period the employee is entitled to in accordance with his length of service in the company;
  • exemption from work, if applicable.

The reasons for dismissal do not necessarily have to be stated in the letter of dismissal.

The dismissal letter must be written in a language which the employee understands.

N.B. an employee must always inform his employer if there is a change in the employee's home address during his/her period of employment. In fact, if the employer sends the registered letter of dismissal to the only address indicated by the employee as being the home address or address of residency, the notification is deemed lawful and valid.

Statement of reasons for dismissal upon request by the employee

The employer does not have to state the reasons for dismissal in the letter of dismissal.

If the dismissed employee wishes to be informed of the reasons (e.g. if a pre-dismissal interview did not take place), he can request this information:

  • by registered letter;
  • within one month from the day on which he received the letter of dismissal.

The employer is thereby required to respond to the employee:

  • by registered letter;
  • within one month from the date on which the employer received the request from the employee;
  • by giving a detailed description of the reasons for dismissal;
  • in a language which the employee understands.

Notice

An employer who terminates an employment contract for a reason other than serious misconduct must give notice to the employee.

Moreover, a dismissed employee who continues to work during his notice is also entitled to job search leave from his employer during the notice period.

Start of the notice period

The notice period begins on the:

  • 15th day of the current month, if the letter of dismissal was notified to the worker before the 15th;
  • on the 1st day of the following month, if the letter of dismissal was notified to the worker between the 15th and the last day of the month.

The start date of the notice period is usually determined by the date the letter of dismissal was sent by registered mail or the date on which the letter of dismissal was delivered in person against acknowledgement of receipt to the employee.

Example 1
the employer mails the letter of dismissal on 23 July: the notice period will begin on 1 August (the day the letter is actually received by the recipient is not taken into account).

Example 2
the employer mails the letter of dismissal on 31 July: the notice period will begin on 1 August (the day the letter is actually received is not taken into account).

Example 3
the employer mails the letter of dismissal on 1 August: the notice period begins on 15 August (the day the letter is actually received is not taken into account).

If the employer does not comply with the notice period, he must pay the employee a compensatory benefit corresponding to the remuneration due for the period during which the notice was not respected.

Duration of the notice period

The duration of the notice period depends on the employee's length of service at the time the dismissal was notified.

Notice period according to the employee's length of service

Employee's length of service

Notice period to be complied with

less than 5 years

2 months

from 5 to 10 years

4 months

10 years and more

6 months

Exemption from work

The employer may exempt the employee from work during the notice period, in full or in part. In order to do so, the employer must:

  • notify the exemption from work in writing, either in the letter of dismissal or in a subsequent letter;
  • continue to pay the employee the full salary including any other benefits, with the exception of work-related costs (e.g. meal allowance, travel allowance, etc.);
  • continue to grant the employee any salary increases that may occur during the notice period.

The exemption from work is considered as an effective period of work.

Temporary measures to promote employment

Until 31 December 2017, whenever an employee takes on new employment during the notice period, the former employer must pay, until the end of the notice period:

  • the difference between the employee's previous and new salary (if lower);
  • the employer's social security contributions relating to:
    • the difference in salaries paid (if any);
    • the salary paid by the new employer (up to the level of the previous salary).

Example

Previous salary: EUR 2,000
New salary: EUR 1,800

The former employer must pay the following amount until the end of the notice period:

  • EUR 200 for the difference in salaries (including the related social contributions);
  • the employer's social contributions concerning the salary of EUR 1,800 (even though the salary is paid by the new employer).

Remaining leave due

The employer cannot force the employee to take any leave during the notice period. The employee may opt for the payment of an indemnity for unused leave.

Employees who wish to use up their leave entitlement before the end of the notice period, they must make a request to the employer. The employer has the right to refuse the request for leave if operational needs or priorities granted to other employees do not allow for this. In this case, the employee must continue to work as usual until the end of the notice; unused leave entitlements will be paid out by the employer.

The notice period has a fixed deadline. It cannot be extended in the event of illness or accident. Even if the employee is on sick leave during the entire notice period, it will end on the date initially stated.

Moreover, if the employee takes all or part of his leave during the notice period, it is not extended by the same number of days.

Severance pay

Employers must pay severance to any employee dismissed with notice with at least 5 years of service in the company.

Severance pay must be paid out at the end of the notice period (whether the employee continued to work until the end of the notice period or not).

Severance pay is not subject to income tax or social contributions.

The employer and the dismissed worker can also agree on a voluntary severance package.

These payments are, under certain conditions, exempt from tax within the limit of 12 times the monthly social minimum wage for unskilled workers (i.e. EUR 23,075.52 gross annual amount as of 1 August 2016). The employer can apply the exemption without prior request to the Luxembourg Inland Revenue.

Amount of severance pay

Severance pay depends on the employee's length of service on the last day of the notice period (whether the employee has worked during the notice period or not).

Businesses employing less than 20 employees may:

  • either pay severance pay;
  • or extend the notice period of the dismissed employee.

The employer must state his choice in the letter of dismissal.

Severance pay and notice period according to length of service

The employee's length of service

Severance pay
and standard notice period

Option without indemnities
(businesses with less than 20 employees)

Severance pay

Notice

Notice extended without indemnity

Less than 5 years

0

2 months

/

Between 5 and less than 10 years

1 month

4 months

5 months

Between 10 and less than 15 years

2 months

6 months

8 months

Between 15 and less than 20 years

3 months

6 months

9 months

Between 20 and less than 25 years

6 months

6 months

12 months

Between 25 and less than 30 years

9 months

6 months

15 months

30 years and more

12 months

6 months

18 months

Severance pay calculation base

The indemnity is calculated on the basis of wages or salaries effectively paid to the employee during the 12 months which immediately preceded the notification of termination.

The following items are included in wages or salaries:

  • financial allowances in the case of illness;
  • standard incentives and extras, etc.

The following items are excluded from wages and salaries:

  • overtime pay;
  • bonuses;
  • allowance for incidental expenses.

The hypothesis used to calculate the amount of severance pay is that of an employee who has always worked full time in the business.

For persons having successively worked full time and part time, the severance pay is calculated in proportion to the different periods of employment.

Example

An employee is dismissed by his employer for whom he has worked on a full-time basis for 5 years and on a part-time basis (20 hours/week) for 15 years.

At the time of termination of the employment contract, the employee is working part time and receives a monthly gross salary of EUR 1,500.

The severance pay is calculated as follows:

  • total duration of work in the company: 20 years;
  • duration of full-time work: 5 years, ¼ of the total duration;
  • duration of part-time work: 15 years, i.e. ¾ of the total duration;
  • salary received working part-time: EUR 1,500, that is to say a fictitious full-time salary of: 1,500 x 2 = EUR 3,000

The monthly amount of severance pay paid to the employee is:

  • for full-time work: ¼ of EUR 3,000, i.e. EUR 750;
  • for part-time work: ¾ of EUR 1,500, i.e. EUR 1,125.

In other words 750 + 1,125 = EUR 1,875

In view of his 20 years of service, the employee is entitled to a severance pay of 6 months gross salary.

Therefore, the dismissed employee is entitled to a total severance pay of 1,875 x 6 = EUR 11,250.

Who to contact

Ministry of the Economy
19-21, boulevard Royal
L-2914 - Luxembourg
Luxembourg
Phone: (+352) 247-82478
Fax: (+352) 46 04 48
Email info@cdc.public.lu
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