What is a permanent employment contract?

An employment contract is an agreement whereby one person (the employee) undertakes to engage in activity on behalf of another (the employer), under whose subordination the employee places him or herself, in return for remuneration.

The permanent employment contract (CDI) is an employment contract with no expiry date. It is the common law employment contract which can be terminated unilaterally at any time through the will of one of the parties, subject to the existence of a real and serious reason for the termination and compliance with the dismissal procedure when the termination is initiated by the employer.

How is a permanent employment contract concluded?

The employment contract, whether permanent (CDI) or fixed-term (CDD), must be recorded in writing for each individual employee no later than by the time an employee starts work. This contract contains a minimum number of obligatory clauses (see CDI model below).

A law of 24 July 2024 amended the Labour Code to transpose Directive (EU) 2019/1152 on transparent and predictable working conditions.

This law makes it necessary to adapt contract samples from 4 August 2024.

Existing contracts do not have to be adapted. However, if the employee with a contract in place before 4 August 2024 requests it, the employer must provide him/her with a document that complies with the new provisions within 2 months.

The contract must be signed by the employer and the employee and must be drawn up with two original copies, the first copy of which is given to the employer, the second to the employee.

The transmission of contracts in electronic format is now possible, subject to certain conditions:

• the employee has access to it,
• the contract can be saved and printed,
• and the employer keeps proof of its transmission or receipt, in electronic format.

If there is no written agreement, it may be difficult to prove the employment relationship and the terms governing of a working relationship (e.g. remuneration, working hours, etc.).

It will then be up to the person claiming to be bound by an employment contract to prove its existence and content.

The employee may establish the existence and content of his/her employment contract by any means of proof.

If one or more pieces of information have not been provided individually to the employee within the prescribed maximum time limits and after the employer has been duly summoned by the employee to comply, the employee may, within 15 days of notification of the unsuccessful summons, petition the Chief judge  of the Labour court, who shall rule urgently and, as in summary proceedings, with the parties heard or duly summoned, to order the employer to provide the missing information, including under penalty of a fine.

The order of the president of the labour court is provisionally enforceable. It may be appealed by simple request, within forty days of notification through the court registry, to the judge presiding the division of the Court of Appeal to which appeals in labour law are assigned. The case is decided as a matter of urgency, after the parties have been heard or duly summoned.

Posting abroad

If the employee is required to work for more than four consecutive weeks outside the territory of the Grand Duchy of Luxembourg, the employer is required to issue the employee with a written document containing at least the following information:

1. the country or countries in which the work is to be carried out and the duration of the work carried out abroad;
2. the currency in which the basic salary is to be paid, as well as the remuneration to which he/she is entitled under the provisions of the host Member State;
3. where applicable, the benefits in cash and in kind linked to the temporary movement of the employee, as well as the allowances specific to the posting and the terms for reimbursing travel, accommodation and food expenses;
4. where applicable, the conditions for repatriating the employee;
5. the link to the official national website set up by the host Member State on the posting of workers.

The written document shall be provided in paper format or, provided that the employee has access to it, that it can be saved and printed, and that the employer keeps proof of its transmission or receipt, in electronic format.

Employers who fail to comply with these information obligations may be fined between €251 and €5,000 per employee. These penalties are doubled in the event of a repeat offence within two years.

(last updated on 7.01.2025)

Under what conditions can a permanent contract be terminated?

There are several grounds for an employer to notify employees of the termination of a permanent contract. On the one hand, there are grounds relating to the employee’s ability or conduct (dismissal on personal grounds), and on the other hand, grounds relating to the operating requirements of the company (redundancy on economic grounds). In addition, the employment contract may be terminated in the event of serious misconduct by the employee.

If the contract is terminated at the employer’s initiative, reasons must always be given, whereas an employee who resigns does not need to give reasons for terminating the contract.

The party terminating a permanent contract must keep within a certain period of notice which depends on the employee’s seniority in the company. In case of serious misconduct, the employment contract can be terminated without notice by either party.

The parties may also terminate their employment relationship by mutual agreement.

Can the permanent contract be automatically terminated?

The open-ended contract ends automatically in the following cases:

• determination that an employee is not suited for the intended occupation during the preliminary medical examination;
• death of the employer (if the employer is a natural person) or of the employee;
• physical incapacity of the employer (if the employer is a natural person) leading to the cessation of the company’s business;
• declaration of bankruptcy by the employer;
• award of an old-age or disability pension to the employee;
• the day on which the employee’s entitlement to sick pay is exhausted: after 78 weeks of incapacity to work in a reference period of 104 weeks;
• in the event of inability of an employee to perform his/her last job, on the day of notification of the joint committee’s decision on outplacement.