Termination with notice

Does an employer have to call an employee to an interview before proceeding with the dismissal? 

When an employer with at least 150 employees plans to dismiss an employee, he is obliged to call him to a preliminary interview before taking any decision.  

This obligation applies both to dismissal with notice and to dismissal with immediate effect. 

However, a preliminary interview is not required to terminate a probationary contract. 

The purpose of the preliminary interview is to inform employees that their dismissal is being considered, and to inform them of the reasons for the dismissal, so that they can take a stand. 

When the employer ignores this legal obligation and notifies a dismissal without having conducted the preliminary interview, the dismissal will be irregular due to a procedural defect. 

The employee may then be awarded one month’s salary as compensation. However, this compensation cannot be combined with any damages for unfair dismissal. Indeed, the indemnity for formal defect is only granted if the dismissal is judged to be justified by the Court. 

In what form must an employee be informed of the dismissal?

In principle, the termination of the employment contract must be announced to the employee by means of a written letter. 

The letter can be delivered either by registered mail or by hand, with the employee signing a copy as a receipt. 

If the employer does not comply with this formality and dismisses the employee orally, the dismissal is irregular. 

What are the grounds for dismissal with notice?

The reasons that may be given for termination with notice include: 

  • the employee’s fitness for work; 

This is understood to mean the insufficient quality or quantity of work provided by the employee or his frequent absences due to illness which disrupt the smooth running of the business. 

  • employee conduct;  

This refers to the employee’s behaviour towards his or her superiors, colleagues, or company customers, for example. 

  • the operating requirements of the company. 

These reasons are called economic reasons. They are due to the fact that the employer wants to restructure the company or that the company’s financial situation is not good and that jobs have to be cut to reduce costs. 

Does the letter of dismissal have to indicate the reasons to the employee?

No, the letter of dismissal only informs the employee of the termination of the employment relationship. The reasons are only to be provided upon request of the employee, which must be made within one month from the receipt of the letter of dismissal. 

If the employer receives a request for reasons, he must draft a reply within one month and send it to the employee by registered letter. If the employer is late in responding or fails to respond, the dismissal is considered unfair and the employee may claim damages. 

What is the notice period?

Although notified to the employee, the termination of the employment relationship does not take effect immediately, but only after the expiration of a certain period of time, which is determined according to the employee’s length of service. 

Thus, the notice to be given by the employer is: 

  • two months for less than five years of service; 
  • four months for a length of service between five and less than ten years; 
  • six months for a length of service of ten years or more.  

The notice period starts on the 15th of the month if the letter of dismissal is served before the 15th. If the letter is served between the 15th and the last day of the month, the notice period starts on the 1st of the following month. 

Does the employee have to continue working during the notice period?

Yes, because even if the dismissal is pronounced, the employment relationship continues normally until the end of the notice period. This means that the employee must continue to work and the employer must pay the employee’s salary at the end of the month. 

The situation is different if the employer decides in writing to exempt the employee from work during the notice period. In this case, the employee is no longer required to report to work every day. However, the employer is still obliged to pay the employee’s salary each month, with the exception of certain incidental expenses (e.g. meal allowance, travel allowance). 

Note that the employer is not entitled to deduct the days of leave not taken by the employee from the notice period. The employee, exempted from serving the notice period, will receive at the end of his employment relationship a statement of account including the compensatory indemnity for untaken leave.  

If an employee who has been excused from work finds a new job even before the end of the notice period, but with lower pay, the employer must pay the difference between the old and new pay until the end of the notice period.

Is the notice period extended if the employee is ill?

The notice period is a fixed period in that it cannot be extended in the event of illness. 

The notice period therefore ends on the date originally scheduled, even if the employee is ill during the entire notice period. 

When is an employee entitled to job search leave?

When employees have been dismissed, they may request leave to find a new job. This leave can be up to six working days for the duration of the notice period. 

Employees must meet two conditions to be eligible for this leave: 

  • they must register as a job seeker with the National Employment Agency (ADEM); 

To do this, the employee must take one or more days of his annual leave. The maximum six days leave is not intended to allow employees to leave their workstation to complete administrative procedures with ADEM, unless the parties agree otherwise. 

  • they must provide their employer with proof that they are required to apply for a job offer. 

Job search leave is not due if the employee is excused from all work during the notice period. 

However, if the exemption from work is only valid for part of the notice period, the employee is entitled to special leave of up to six days for the period, during which he is required to work. 

When is severance pay paid to a dismissed employee?

This special allowance is to be paid to an employee dismissed with notice who has at least five years of service at the time the notice period expires. 

The severance pay, which is exempt from taxes and social security contributions, increases progressively with the length of service. It corresponds, for example, to one month’s gross salary in the case of length of service between five and fewer than ten years, to two months’ gross salary in the case of length of service between ten and fewer than fifteen years, as shown below: 

Years of service Beneficiaries
5 to fewer than 10 years 1 month’s salary
10 to under 15 years 2 month’s salary
15 to under 20 years 3 month’s salary
20 to under 25 ans 6 month’s salary
25 to under 30 ans 9 month’s salary
30 years and older 12 month’s salary

Can a pregnant woman be dismissed?

A female employee is protected against dismissal from the day she submits her pregnancy certificate to the employer until 12 weeks after the birth. 

During this period, the employer is prohibited from notifying the employee of the termination of the employment relationship and from summoning her to a preliminary interview. Any dismissal or notice to attend a preliminary interview served in violation of the above-mentioned prohibition shall be null and void. 

In the event of dismissal or of being summoned to a preliminary interview before submitting a medical certificate attesting to the pregnancy, the female employee may, within eight days of receiving the dismissal or the summons to the preliminary interview, justify her condition by producing a certificate by registered letter and request the cancellation of her dismissal or her summons to a preliminary interview. 

A pregnant employee who has been dismissed must, within 15 days of the termination of her employment, apply to the president of the Labour Tribunal to have the dismissal declared null and void, with a view to ordering her retention or even reinstatement in the company. 

After this period, the pregnant woman can no longer request that the dismissal be declared null and void, but should be able to bring an action for unfair dismissal in accordance in compliance with the legal forms and time limits. 

Although a pregnant woman is protected against dismissal with notice, her contract may be terminated at the request of the employer if the employer determines that she has committed a serious offence. 

However, the employer cannot send the letter of dismissal on his own initiative.  

He must apply to the Labour Tribunal to obtain a ruling of gross misconduct and termination of the employment contract. 

The employer may lay off the employee pending the court’s decision. In this case, the woman concerned may be able to maintain her salary pending the final decision of the court, provided she applies to the court within 15 days of the notification of the layoff. However, she then runs the risk of having to repay these amounts if her employment contract is terminated, as this will take effect on the day of the layoff. 

Can an employee representative be dismissed?

The following people are protected from dismissal:

  • the full and alternate members of the delegation throughout their term of office, and all equality and safety officers;
  • former members of the delegation during the first six months following the expiry or cessation of their duties. Delegates whose mandate expires because of a transfer of undertaking or establishment are also protected;
  • candidates for representatives during the three months following the presentation of their candidacy.

A dismissal or a summons to a preliminary interview received from the employer to one of these persons shall be considered null and void.

Delegates then have 15 days from the date of termination to apply to the chief judge of the Labour Tribunal to declare the dismissal/notification of the preliminary interview null and void and to order that they remain in the company.

The appeal against the order to intervene shall be brought before the Chief Magistrate of the Court of Appeal within 40 days of its notification.

From 1 January 2016: The law of 23 July 2015 on the reform of social dialogue has reorganised the protection against dismissal of employee representatives.

There are two options available to representatives in the event of dismissal:

  • Annulment proceedings

Within one month of the dismissal, a representative may request by simple petition that the Chief Judge of the Labour Tribunal who shall rule urgently and as in summary proceedings, with the parties heard or duly summoned, to declare the dismissal null and void and to order that it the representative’s job be upheld or, where appropriate, reinstated.

  • Alternative: claim for damages

A representative who has not exercised the annulment remedy may ask the Labour Tribunal to declare the termination of the contract on the date of notification of the dismissal and to order the employer to pay damages, also taking into account the specific damages suffered as a result of the invalid dismissal in relation to his status as a representative enjoying special protection. The representative exercising this option is to be considered involuntarily unemployed from the date of dismissal.

This action must be brought within three months of the notification of the dismissal.

Note: Choosing one of the two claims, for annulment and for damages, is irreversible.

Dismissal for serious misconduct

In the event of serious misconduct, the head of a company may notify the delegation of a lay-off. This decision must state precisely the fact(s) of which the representative is accused and the circumstances that are likely to give them the character of a serious reason.

The fact(s) or fault(s) likely to justify judicial termination for serious reasons may not be invoked after a period of one month from the day on which the party invoking it became aware of it, unless such fact(s) has resulted in criminal proceedings within the month.

During the three months following the date of notification, the representative shall retain his salary as well as the allowances and other benefits to which he would have been entitled if the contract had been maintained. These salaries, allowances and other benefits shall be the property of the representative definitively.

In the month following the lay-off, the representative may request the chief judge of the labour tribunal by simple petition to decide on the maintenance or suspension of wages beyond the three-month period, who shall rule urgently and as in summary proceedings, with the parties heard or duly summoned, pending the final settlement of the dispute.

Any representative who does not wish to remain or be reinstated in the company, may apply to the labour tribunal within three months of being notified of the lay-off for a declaration that the contract has been terminated and for an order that the employer pay damages taking into account the specific damage suffered by the termination of the contract in relation to his status as a representative enjoying special protection. The representative exercising this option is to be considered involuntarily unemployed.

Choosing one of the two requests is irreversible.

The employer may submit his application for judicial termination of the employment contract to the Labour Tribunal, if necessary by way of a counterclaim, not later than one month from the date of notification of the summons to appear before the chief judge of the Labour Tribunal.

Where the Labour Tribunal refuses to grant this request, the effects of the dispensation shall cease ipso jure. Where the Labour Tribunal grants the request, the termination shall take effect on the date of notification of the layoff.

If the employer does not initiate this procedure, the employee may petition the Chief Judge of the Labour Tribunal to order continued execution of the contract by all parties involved or, if he does not wish to remain or, if applicable, reinstated, submit to the Labour Tribunal an application for a statement that the contract has been terminated and a petition for an order that the employer pay damages taking into account the specific damage suffered by the termination of the contract in relation to his status as a representative enjoying special protection. The representative exercising this option is to be considered involuntarily unemployed.

When a laid-off representative finds a new job

When a representative who has been laid off takes up a new paid job, whether salaried or non-salaried, the employer may apply to the president of the labour tribunal for the suspension of wages.

Where a representative whose contract is terminated is ordered to repay the wages received in the meantime

A representative whose contract has been terminated by the Labour Tribunal and for whom the chief judge of the Labour Tribunal has ordered that his salary be maintained pending the final settlement of the dispute may, if he is ordered to reimburse his employer for the salary he has received in the meantime, apply to the Director of the National Employment Agency for retroactive entitlement to full unemployment benefit up to the date of the final settlement of the dispute.

Before a representative can receive the retroactive unemployment benefit, he or she must provide proof of full or partial repayment of the wages received. In the absence of proof of full compliance with the ruling and at the request of the employer and the representative, the Director of the National Employment Agency shall transfer the amount of the unemployment benefit due to the representative directly to the employer, up to the amount corresponding to the ruling that has been made and not yet paid.

This entitlement to full unemployment benefit shall be automatic, unless the representative has been convicted of a criminal offence which has become final and conclusive for the same reasons as the lay-off. If this conviction occurs after the payment of all or part of the full unemployment benefit, the representative must reimburse the Employment Fund for the amounts paid in this respect.

Can an employee start another job while on leave following a dismissal?

Yes, a dismissed employee who has been exempted from performing work may enter the service of another employer.

The previous employer must pay the difference in salary, if any, until the notice period expires.

Dismissal with immediate effect

What is meant by serious misconduct?

Any act or fault which makes it immediately and definitively impossible to maintain employment relations is considered to constitute serious misconduct.

In assessing the facts or faults arising from the employee’s professional conduct, the judges take into account the degree of education, professional background, social situation and all the elements that may influence the employee’s responsibility and the consequences of dismissal.

Examples of serious misconduct include theft, threats, and physical violence against the employer.

For how long can the employer invoke serious misconduct in support of a dismissal?

Serious misconduct cannot be invoked after one month from the time the employer became aware of it.

However, it can be used as a reason for dismissal beyond this one-month period:

  • if the employee’s misconduct has resulted in criminal proceedings;
  • if the employer invokes the previous serious fault in support of a new serious fault committed by the employee.

Please note that the one-month period is suspended by the illness of the employee.

What form should the letter of dismissal take?

In general, the employee must be notified of the dismissal with immediate effect by registered letter.

However, the employee’s signature on the duplicate of the letter of dismissal is also considered as an acknowledgement of receipt.

The letter of dismissal must indicate in detail the serious fault(s) with which the employee is charged. If this is not the case, the dismissal is automatically considered to be unfair, which entitles the employee to various types of compensation (e.g. compensatory indemnity for notice not respected, damages for material and moral prejudice).

What is a precautionary layoff?

The employer who discovers the serious misconduct committed by his employee and who wants to dismiss him, has two possibilities:

  • he sends the letter of dismissal immediately;
  • he first decides to lay off the employee and notifies him of the dismissal within eight days.

As a result of this layoff, the employee is exempt from reporting to his place of work pending the final sanction pronounced by the employer.

The layoff is not subject to any particular form, so it can be done in writing as well as orally.

In the case of an oral dismissal, it is important for the employee to be prepared to receive confirmation from witnesses as to the existence of the sanction and the subsequent suspension of the employment relationship, in order to avoid later being accused of an unjustified absence that could lead to a dismissal with immediate effect on the employer’s initiative.

During the layoff, the employee shall continue to receive his salary and all other benefits arising from his employment contract until the day on which he is duly notified of his dismissal.

The letter of dismissal can be sent at the earliest on the following day and at the latest within eight days after the layoff.

Can an employee in a notice period still be dismissed for gross misconduct?

Yes, if an employee who has been dismissed with notice commits serious misconduct during the period of notice, the employer may dismiss him a second time with immediate effect.

As a result of this second dismissal, the employee no longer has the benefit of the remaining days of notice.

A dismissal with immediate effect deemed to be unfair shall not give rise to compensation for material damage if the dismissal with notice is deemed to be in order.

Case law

Can an employee dismissed for gross misconduct receive unemployment benefits?

In principle, only those who are dismissed with notice can receive unemployment benefit.

An employee who has been dismissed with immediate effect can only receive temporary compensation with the special permission of the Chief Judge of the Labour Tribunal. The duration of the compensation is then limited to 182 days, although an extension for a further 182 days is possible.

The granting of unemployment compensation is also subject to the condition that the employer is also sued for wrongful dismissal.

If an employee loses the case, he or she will be ordered to pay back the provisional unemployment benefits received. If the employee wins the case, the employer must pay the unemployment benefits to the Employment Fund.

Collective redundancies

In addition to individual dismissals, Luxembourg labour law also regulates collective dismissals affecting a group of people within a company rather than individuals.

Before issuing redundancies of each of the employees concerned, an employer is required to negotiate a social plan with the employees’ representatives.

What is meant by collective redundancy?

In contrast to an individual dismissal, a collective dismissal is distinguished by two criteria:

  • the reason given for the dismissal;

Collective dismissal is always based on an economic reason (e.g. restructuring of the company leading to job cuts, poor financial situation of the company forcing it to cut personnel costs, etc.) and not on a reason related to the employee’s suitability or conduct in the company.

  • the number of employees made redundant.

A mass dismissal occurs when the number of dismissals is either at least seven employees in a 30-day period or at least 15 employees in a 90-day period.

What is a social plan?

The social plan is an agreement containing all the measures taken by the company when the collective redundancy is effected that are intended primarily to facilitate the redeployment of the redundant personnel and to attenuate the consequences of the redundancy by granting various financial compensations.

Who negotiates the social plan?

Negotiations for implementing a social plan are conducted by an employer and its representatives and by the employees’ representatives.

Workers’ representatives are understood to be employee representatives. In addition, for those companies bound by a collective labour agreement, representatives of the trade union organisations that are signatories to this agreement will be included in the negotiations.

What is the content of the negotiations?

The law lists a number of matters that must be negotiated:

  • opportunities to avoid or reduce the number of collective redundancies;
  • the possibilities of mitigating the consequences of the redundancies to be made: this is referred to as accompanying social measures (aid for redeployment or retraining of redundant employees, possibilities of immediate reintegration into the labour market).

The following topics will be addressed:

  • application of the legislation on short-time working;
  • possible adjustments to working time, including the application of a longer reference period;
  • temporary reductions in working time not falling within the scope of the legislation on short-time working, providing where appropriate for participation in further training and/or retraining during the working hours released;
  • training or even retraining opportunities for employees to be reassigned within the company;
  • training, continuing education and retraining opportunities to enable employees to be reassigned to another company, possibly in the same sector of activity;
  • application of the legislation on the temporary loan of labour;
  • personal support for career transitions, if necessary with the help of external experts;
  • application of the legislation on early retirement – adjustment;
  • principles and procedures governing the implementation and monitoring of adopted measures.


What are the employer's obligations toward the National Employment Agency (ADEM)?

In the first place, employers are obliged to notify ADEM in writing of any plans for collective redundancies, no later than the start of negotiations with the workers’ representatives.

A copy of this letter should be sent to these representatives.

In addition, employers must give ADEM a copy of the document containing the information to be provided to the employee representatives either before or at the start of the negotiations.

This includes information on the reason for the collective redundancies, the number of employees concerned, the criteria for selecting the persons to be made redundant, the period over which the redundancies are to be carried out, etc.

When can an employer give notice of collective redundancies?

Employers are not free to choose when to implement collective redundancies. They must wait for certain deadlines.

No dismissal can take place:

  • before a social plan is signed;
  • before the signing of the National Conciliation Service (ONC) report in the event that the parties have failed to negotiate;
  • before the setting up of a staff delegation in case this institution is missing despite the legal obligation.

Any dismissal is pronounced before one of these dates, it is null and void.

An employee who is subject to such a premature dismissal may then apply to the Chief Judge of the Labour Tribunal within 15 days to establish the nullity of the dismissal and to order that he remains or be reinstated in the company.

Employees not wishing to bring an action for nullity may bring an action for damages for unfair dismissal against the employer. In addition, they are entitled to severance pay.

What is the notice period for collective dismissal?

The notice period to be observed by an employer moving toward collective dismissal is in principle 75 days, unless the legal notice period based on employees’ length of service or that provided for in the employment contract is longer.

However, this period may be extended by the Minister of Labour and Employment to 90 days or reduced to the normal notice period, provided that the employer and the employees concerned are notified of the extension or reduction no later than 15 days before the end of the 75-day period.

How are employees in collective redundancies informed individually?

Employers must issue a dismissal with notice according to the rules of common law:

  • either by an interview prior to dismissal in companies with at least 150 employees;
  • or by a letter of dismissal submitted to employees by registered letter or delivered by hand with employees signing a receipt.

Does the collective dismissal have to be substantiated individually for each employee?

If, after receiving the letter of dismissal, an employee sends a letter to the employer asking for the reasons, the employer is obliged to give precise details of the circumstances of the dismissal in a letter of motivation.

The fact that it is a collective dismissal does not change this obligation, which also exists in the case of individual dismissals.

An employee in a collective dismissal situation can take legal action against his employer in the same way as an employee who is individually dismissed for personal or economic reasons.

A collective dismissal may, in the case of a single employee, be declared unfair and result in the payment of damages.