Luxembourg HR and payroll glossary

CIS / CI-CO2 Employee tax credit / CO2 tax credit

Crédit d'impôt salarié / Crédit d'impôt CO2

Tax credits paid through payroll. For 2026 the employee credit is €600 and the CO2 credit €216 (together €816) for gross pay between €11,266 and €40,000; both taper away to nil at €80,000, so senior hires get none. Source

Classe d'impôt Tax class

Classe d'impôt (1, 1a, 2)

Income tax depends on the employee's tax class: class 1 for single people, class 2 for married couples and partners taxed jointly, class 1a for some single parents and older taxpayers. On class 1 tax starts above €13,230 and the top rate of 42% applies above €234,870. Source

Contribution au fonds pour l'emploi Employment fund surcharge

Impôt de solidarité / contribution au fonds pour l'emploi

A surcharge on income tax that funds unemployment support: 7% of the tax, or 9% (less €931.80) for a single person with taxable income above €150,000. It is withheld with the wage tax. Source

Assurance accident Accident insurance

Assurance accident (AAA)

Employer-only accident-at-work insurance at a single rate of 0.65% of pay up to the ceiling in 2026, adjusted by a bonus-malus factor based on the firm's accident record. A further 0.14% funds the multi-sector occupational health service. Source

Assurance dépendance Long-term care insurance

Contribution dépendance

An employee-only contribution of 1.4% of gross pay above an abatement of a quarter of the social minimum wage, with no ceiling. Unlike health and pension contributions it is not deductible for income tax. Source

Assurance maladie-maternité Health and maternity insurance

Assurance maladie-maternité (CNS)

Run by the national health fund (CNS). In 2026 the rates are 5.60% for benefits in kind and 0.50% for cash benefits, split equally, so employee and employer each pay 3.05% of pay up to the contribution ceiling. Source

Assurance pension Pension insurance

The state pension contribution rose to 17% in 2026 (16% until 2025), split equally, so 8.5% each for employee and employer on pay up to the ceiling; the State pays a further share. Source

Mutualité des employeurs Employers' mutual insurance

A compulsory employer-only fund that reimburses the pay employers must continue during sickness. The 2026 rate depends on the firm's absenteeism class: 0.23% (class 1), 0.95%, 1.56% or 2.66% (class 4). Source

Plafond cotisable Contribution ceiling

Maximum cotisable

Health and pension contributions are capped at five times the social minimum wage: €13,856.63 a month from 1 June 2026 (€13,518.68 before), €164,589.81 for 2026 as a whole. The dependency contribution has no ceiling. Source

Indexation (tranche indiciaire) Automatic wage indexation

Indexation automatique des salaires / tranche indiciaire

All salaries rise automatically by 2.5% each time inflation triggers a new index tranche; the latest took effect on 1 June 2026. Employers must apply it to every employee's pay, and minimum wage and contribution ceilings move with it. Source

SSM Social minimum wage

Salaire social minimum

The statutory minimum wage, which also drives many other thresholds such as the contribution ceiling. The unqualified rate was €2,703.74 a month from January 2026 and €2,771.33 from 1 June 2026 after indexation. Source

Indemnité de départ Statutory severance pay

Due on dismissal with notice after 5 years' service: 1 month's pay at 5 years, rising to 2 (10 years), 3 (15), 6 (20), 9 (25) and 12 months (30 years), based on the last 12 months' average pay. Not due for serious misconduct; employers with fewer than 20 staff may extend the notice instead. Source

Période d'essai Probation period

Must be agreed in writing: at least 2 weeks and at most 6 months, or up to 12 months for employees paid above a threshold set by regulation (3 months for lower qualification levels). Either side can end it with short notice that depends on its length. Source

Préavis Notice period

Délai de préavis

Employer notice on an open-ended contract is 2 months under 5 years' service, 4 months for 5 to 10 years and 6 months from 10 years. An employee resigning gives half: 1, 2 or 3 months. Source

ACD Direct Tax Administration

Administration des contributions directes

The tax authority. It issues each employee's electronic tax card with the tax class, publishes the withholding tables, and receives the wage tax the employer withholds every month. Source

CCSS Joint Social Security Centre

Centre commun de la sécurité sociale

The single body with which employers register and declare their staff, and which calculates and collects all social contributions (health, pension, dependency, accident, Mutualité) on behalf of the individual funds. Source

ITM Labour and Mines Inspectorate

Inspection du travail et des mines

The labour inspectorate. It enforces the Labour Code on working time, leave (at least 26 days a year) and public holidays, advises employers and employees, and must be notified in certain dismissal and redundancy cases. Source