Salary in a few key points
What is the salary?
The salary is a direct compensation for the work carried out by the salaried worker on behalf of the employer.
Article L.221-1 of the Luxembourg Labour Code defines the salary as “the overall remuneration of the employee, including, in addition to the cash amount, any other fringe benefits and remunerations, such as, in particular, gratuities, fees, discounts, bonuses, free accommodation and any other similar values”.
Total remuneration includes the cash amount and other fringe benefits.
How is the salary determined?
As a general rule, the salary is freely determined by the employer and the employee. But limits must be respected: the employer must respect the social minimum wage rate (SSM) and, where applicable, the pay scales provided for in the collective labour agreements.
Focus: be attentive to equal pay!
The employer must not take a person’s gender into consideration to determine their salary, as this could make them guilty of an offence.
The difference in salary is justified only if it is based on objective and non-discriminatory grounds, such as the experience, knowledge or responsibilities of the employees.
Work has an equal value if it requires employees to demonstrate a comparable set of:
- Professional knowledge endorsed by a degree, diploma, or professional practice;
- Skills resulting from experience gained;
- Responsibilities and physical and mental stress.
On the other hand, the employer may undertake to pay benefits to certain employees or certain categories of employees. But these differences in pay must also be based on criteria that do not leave room for discrimination.
The social minimum wage (SSM) is a minimum remuneration to be paid by all employers operating in Luxembourg territory; they are public policy provisions that apply to all employees regardless of gender, occupation, sector of activity or even place of residence.
The social wage rates are set according to the age and qualification of the employees. They are re-evaluated every two years.
For 2019, the rates are as follows (index 814.40):
- For persons aged 18 or more and unskilled: 11.9717 euros gross per hour, i.e. 2071.10 euros gross per month
- For persons aged at least 18 and qualified: 14.3660 euros gross per hour or 2485.32 euros gross per month
- For persons aged under 18, the gross minimum wage is reduced.
Please note: the working week is considered to be 40 hours (173.33 hours per month).
To be considered a skilled worker, the employee must:
- either have, for the profession concerned, a recognised official certificate at least equivalent to a vocational skills certificate (certificat d'aptitude technique et professionnelle - CATP) or a vocational diploma (diplôme d'aptitude professionnelle - DAP) from a Luxembourg technical secondary school;
- or have a manual skills certificate (certificat de capacité manuelle - CCM) or a certificate of vocational ability (certificat de capacité professionnelle - CCP) and proof of at least two years' experience in the trade in question;
- or have a preliminary technical and vocational certificate (certificat d'initiation technique et professionnelle - CITP) and proof of at least 5 years' practical experience in the trade or profession;
- or, in the absence of a certificate, provide proof of at least 10 years' practical professional experience (if a certificate exists for the required qualification);
- or provide proof of at least 6 years' practical experience in a trade or profession which requires certain technical skills and where no official certificate is issued after vocational training.
Please note : as trainees are not subject to a contract of employment but to an internship contract, the minimum wage rates do not apply to them. Therefore, their remuneration is at the sole discretion of the employer, with no legal minimum to be respected.
Staff representatives do not receive specific remuneration due to their function, the latter being remunerated as working time.
How to express remuneration in the employment contract?
The parties to the employment contract may either talk of the hourly wage or the monthly wage.
- If the pay mentioned is an hourly wage, then the employer must pay the employee according to the hours actually worked in the course of the month.
- If the pay mentioned in the contract is a monthly wage, the employer must pay each month the base salary mentioned, even if the employee works less than 173 hours in certain months.
Since the salary is the compensation for the work performed by the employee, the employer is not required to compensate the unjustified absences of the employee.
Can the employer make salary deductions?
In principle, salary deductions are prohibited.
However, a salary deduction can take place in 4 limiting cases (article L.224-3 of the Luxembourg Labour Code) :
- In the event of fines incurred by the employee under the Labour Code, by virtue of their status or by virtue of company by-laws that are consistently posted;
- In case of repairs to damage caused by the salaried worker;
- As a result of the provision to the employee: of tools or instruments necessary for the execution of their work and their maintenance and of materials necessary for the work and for which the employees are responsible in accordance with the authorised use or under the terms of their appointment.
- In case of a cash advance.
In addition, salary deductions 1, 2 and 4 cannot exceed 10% of earnings.
What is a benefit in kind?
Benefits in kind are all the benefits provided by the employer to employees, whether or not they are offset by a deduction from the salary or are settled at a value significantly lower than normal market price.
Examples: meal vouchers, accommodation, company car, etc.
For example, an employer who provides accommodation for its employee or who supplies them with food may deduct its value, which corresponds to the benefit relating to the employee's remuneration.
Please note: The sum of the amount of the cash remuneration and the value of the benefits in kind that have been set in the employment contract cannot be lower than the SSM.
What happens in the event of non-payment of the salary by the employer?
An employee whose salary has not been paid may give notice by registered letter to their employer to pay their wage within a certain time (8 or 15 days).
If the employer has not paid the wage at the expiry of the deadline, the employee has several options:
- They may file a complaint with the Labour and Mines Inspectorate (ITM);
- They may file an application for recovery of arrears of wages in summary proceedings before the President of the Labour Tribunal;
- They may file an application on the merits in the Labour Tribunal.
Warning: the choice between the summary proceedings or the application on the merits depends on the situation. In fact, the application for summary proceedings before the President of the Labour Tribunal only applies if the request for recovery does not run into serious disputes. In this case, the employee must act directly on the merits.
The proceedings brought for the payment of remuneration will lapse after 3 years (Article L.221-1 of the Luxembourg Labour Code).
On the other hand, the non-payment of the salary by the employer for several months constitutes for the employee a reason for resignation with immediate effect. Such resignation may be requalified by the judges as unfair dismissal, and the employee could obtain damages.
Sources and information: guichet.lu, itm.lu, Luxembourg Labour Law
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