Hiring & Contracts

Combining an employment contract and a company directorship in Luxembourg

The answer to "can I be both an employee and a director in Luxembourg?" depends on a single factor: is the directorship held in the same company as the employment contract, or in a different one? In the latter case there is in principle no legal obstacle. In the former, strict conditions apply — in particular the existence of a genuine subordination link and truly distinct duties.

Topic: Hiring & Contracts Sources: Art. L. 121-8 · L. 213-1 · L. 234-71 · Luxembourg Labour Code · ITM position · Labour Court Diekirch, ref. 20231016_JPDTRAV_1174 Updated: 10 June 2026

Different companies: freedom to combine roles

No Luxembourg statutory provision prevents an employee from simultaneously holding a corporate mandate (director, board member, manager…) in a different company. The ITM confirms this expressly in its practical guides.

Common examples: employee of a bank and board member of a real-estate company; commercial director of an SME and minority manager of a separate SARL.

Mandatory ITM notification above 40 h/week: if this combination (or any other accumulation of jobs) results in a normal weekly working time exceeding 40 hours, the employee must notify all positions held to the Labour and Mines Inspectorate (ITM) (Art. L. 213-1 of the Labour Code).

Same company: strict conditions

Combining an employment contract and a corporate mandate within the same legal entity is possible, but subject to three cumulative conditions according to the ITM's position. These conditions are not alternatives — all three must be met simultaneously.

1. Genuine employment contract

The contract must be real and substantive: effective performance of duties, remuneration distinct from the directorship fee, and the actual existence of the employee functions.

2. Genuinely distinct duties

The employment contract must correspond to duties concretely different from those performed under the corporate mandate. Duties that appear distinct on paper but overlap in practice are not sufficient.

Distinct duties are a necessary but not sufficient condition. A salaried commercial director and a technical manager may have objectively different duties — but if the same individual in practice holds ultimate decision-making power over the whole company, a court may still refuse to recognise the subordination link.

3. Effective subordination link: the decisive criterion

This is the central criterion for any employment contract under Luxembourg law. It requires an actual hierarchical relationship: a superior who gives instructions, monitors performance and can sanction failures.

Common blind spot — capital control: the subordination link is particularly hard to establish when the employee-director controls or holds a majority stake in the company. One cannot be one's own line manager. Courts examine: the proportion of shares held, actual decision-making power and the capacity to revoke the mandate.
  • Minority shareholder + director: combination generally feasible.
  • Majority shareholder controlling the company: subordination very difficult to prove, high risk of reclassification.

The Diekirch Labour Court declared itself incompetent in a case where the employee's duties were not distinct from the corporate mandate, finding that the employment contract was a sham (ref. 20231016_JPDTRAV_1174). This does not necessarily imply intentional fraud, but simply a failure to meet the legal conditions for an employment contract.

Decision table

Situation Combination possible?
Employee + director/manager of a different company ✅ Yes, in principle
Employee + minority manager of the same company, distinct duties ✅ Yes, subject to conditions
Employee + majority manager controlling the same company ⚠️ Very difficult — subordination nearly impossible to establish
Employee duties not distinct from the corporate mandate ❌ High risk — contract may be set aside
No effective subordination link ❌ No recognisable employment contract

Exclusivity clauses: what the law prohibits

Article L. 121-8 of the Labour Code provides that any contractual clause prohibiting an employee from working for another employer outside normal working hours is null and void.

This general ban on exclusivity clauses has exceptions for objective reasons recognised by law:

  • health and safety at work;
  • protection of business confidentiality;
  • integrity of public office;
  • prevention of conflicts of interest.
An employer cannot contractually prevent an employee from holding a directorship in another company, unless one of these objective reasons can be demonstrated. A general exclusivity clause without justification is automatically null.

Special cases: protected institutional mandates

For certain specific mandates (member of a professional chamber, body of a social security institution, assessor at the Labour Court…), Article L. 234-71 of the Labour Code provides protective provisions:

  • Special leave with maintenance of normal salary for the exercise of the mandate;
  • Protection against dismissal: work interruption for the mandate does not entitle the employer to terminate the contract before its term;
  • Reimbursement of the employer (gross salary + employer contributions) by the relevant institution, under the conditions of a Grand-Ducal regulation.

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The information in this guide is provided for informational purposes only and does not constitute legal advice. It may contain inaccuracies or may not reflect the latest legislative or case-law developments. For any specific situation, please consult a qualified legal professional.