Dismissal with Notice in Luxembourg: Periods by Seniority

1. Statutory notice periods by seniority

Article L.124-3, paragraph (2) of the Labour Code sets three notice periods applicable to open-ended contracts (CDI), calculated on the basis of the employee's continuous years of service within the company:

These periods are statutory minimums: an employment contract or collective agreement may provide for longer periods in the employee's favour. However, no contractual clause may reduce them below the statutory thresholds.

2. Start date of the notice period

Dismissal is notified by registered letter, which takes effect from the third working day following the date of dispatch. However, the notice period itself does not necessarily begin on that same day: the law applies the rule of the 15th of the month.

If the notification takes effect before the 15th of the month (i.e. if the third working day falls before the 15th), the notice period runs from the 15th of the current month.

If the notification takes effect on or after the 15th of the month (i.e. if the third working day falls on or after the 15th), the notice period runs from the 1st day of the following month.

3. Waiver of notice period

The employer may decide to release the employee from the obligation to work during the notice period (Art. L.124-9). This waiver is a unilateral option for the employer: it does not require the employee's agreement.

Maintenance of rights during the waiver period

The waiver does not alter the end date of the contract or the employee's fundamental rights. The employee continues to receive their basic salary and all contractual benefits (thirteenth month, meal vouchers, health insurance, etc.) until the notice period expires, and continues to accrue paid leave entitlement.

However, reimbursement of professional expenses — lunch allowances, home-to-work travel costs — ceases to be due, since the employee is no longer required to attend the workplace.

Taking up new employment during the waiver period

An employee released from working during the notice period is free to take up employment with another employer from the first day of the waiver. In that case, the former employer is not released from their obligation to pay remuneration until the end of the notice period, but they pay only a differential complement: the difference between the salary received in the new job and the salary that would have been due in the former job, capped at the amount owed (Art. L.124-9).

4. Extended notice option for employers with fewer than 20 employees

Companies employing fewer than 20 employees benefit from a derogatory regime under Article L.124-7, paragraph (2): the employer may choose, in the dismissal letter itself, to replace the payment of the statutory severance pay with an extension of the notice period.

In that case, the notice period is set at a significantly longer duration than the ordinary statutory periods, based on seniority:

This mechanism is designed to spread the cost of termination over time for smaller structures, by substituting a prolonged paid notice period for the immediate payment of a lump-sum indemnity. From the employee's perspective, the counterpart is remaining bound to the employer (unless released) for a potentially very long period.

5. Collective dismissal

Where the employer carries out a collective dismissal within the meaning of Article L.166-1 of the Labour Code, a specific regime applies to the notice period. The general period is 75 days from notification (Art. L.166-6).

This 75-day period does not, however, automatically replace individual notice periods: if the statutory period based on the employee's seniority (2, 4 or 6 months) or the contractual period provided by an applicable collective agreement is longer than 75 days, that more favourable period applies instead.

6. Serious misconduct: no notice period

In the event of dismissal for serious misconduct — i.e. an act or fault that makes the immediate and permanent continuation of the employment relationship impossible — the employer may terminate the contract without notice and without severance pay (Art. L.124-10). This route is reserved for the most serious situations and requires notification by registered letter stating the alleged facts with precision.

Dismissal with notice and dismissal for serious misconduct are two distinct and mutually exclusive regimes: a dismissal notified with a notice period cannot subsequently be reclassified as a dismissal for serious misconduct, and vice versa. The employer must therefore choose the applicable regime at the time the letter is sent.