The Luxembourg social security system has been codified into a single unified system. The rates of contributions apply to compensation and earnings up to a maximum of five times the minimum reference social wage. The employee’s and employer’s contributions are the same (about 3,05 % for sickness and maternity leave and 8 % for retirement).
Healthcare and Insurances
The health-care insurance organises the reimbursement of medical costs and compensation for sick leave, maternity leave, adoption leave, leave for family reasons and also dependence. The pension insurance has the main task to allocate statutory pensions to its affiliates and to grant loans for construction or renovation. Invalidity pensions are also envisaged in Luxembourg law. Accident insurance is financed by employer’s contributions.
There are 10 statutory public holidays established by the Labour Code. They are the 1st January, Easter Monday, 1st May (Labour Day), Ascension, Whit Monday, 23rd June (national holiday, the celebration of the Grand Duke’s birthday), Assumption, 1st November (All Saints), 25th December (Christmas) and 26th December (Boxing Day). In Luxembourg, a public holiday falling on a non-working day is replaced by a compensatory day off to be taken within a period of three months. In addition, the Labour Code provides for several extraordinary leave types for family reasons or other specified events.
Each employee benefits from a minimum of 25 days paid leave per year, with some CBA’s providing for more holidays for example, in the banking and insurance sectors. Employees are entitled to take paid leave for the first time only after having worked with the same employer for an uninterrupted period of three months. Paid leave must be taken during the calendar year to which it applies but can exceptionally be postponed to the following year, in which case it must be taken before 31 March.
Maternity benefits are paid during antenatal and postnatal leave. In principle, maternity benefits amount to the highest salary received during the three months prior to the maternity leave for employees or the contribution base in force at the time the maternity leave is taken for a self-employed worker. Financial maternity benefits must be between one and five times the social minimum wage maximum.
Parental leave is taken by parents of a child who is less than 6 years old. The objective is to take a break in their professional career or to reduce their work hours to fully devote themselves to the education of their child. The new parental leave allows both parents to stop working during 4 or 6 months on a full time basis; or 8 or 12 months on a part-time basis (with the employer consent). The law also provides the possibility of split parental leave: with reduction of the working hours by 20% per week for a period of 20 months; or over 4 one-month periods for a maximum period of 20 months. The reform introduces a real replacement income. The employee receives a real salary compensation, calculated in view of the loss of salary during the parental leave, with a maximum limit of EUR 3,200.
In the event of absence from work due to illness, all employees under the age of 68 are entitled to statutory sickness pay for a period of up to 78 weeks within a reference period of 104 weeks as from 1st January 2019. From the month following the month during which the employee reaches an absence of 77 days, the employee is paid directly by the Social Security authorities. The payment of Social Security premiums is compulsory and allows to finance the statutory sickness pay. Employees on sickness leave are protected against dismissal for the first 26 consecutive weeks of their absence. As from 1st January 2019, the contract lapses with immediate effect after a period of 78 weeks of absence for illness, compared to 52 weeks previously.
Pensions: Mandatory and Typically Provided
The normal old age pension is generally granted at the age of 65, with the stipulation that a 120-month contributory period of compulsory, voluntary or elective insurance or purchase periods has been completed. However, there are exceptions to this minimum retirement age where the worker can retire at the age of 57 or 60 under certain conditions.