Difference between permanent and fixed-term contracts in Luxembourg

The permanent contract (CDI)

The CDI is the standard form of employment in Luxembourg. It is used when the employer wishes to fill a permanent position linked to the company's normal and ongoing activity.

It must be drawn up in writing and given to the employee no later than at the time of commencement of work (Art. L. 121-4). Termination is governed by strict rules: notice periods calculated on the basis of length of service, genuine and serious grounds, and the right to challenge dismissal before the labour court.

The fixed-term contract (CDD)

The CDD is an exceptional form of contract. It may only be concluded for the performance of a specific and non-permanent task, and must not be used to fill a lasting position linked to the company's normal and permanent activity (Art. L. 122-1).

In Luxembourg, the use of a fixed-term contract is strictly limited to the following situations:

• replacement of a temporarily absent employee or one whose position is temporarily vacant;
• seasonal employment;
• performance of an occasional, one-off task that does not fall within the company's regular activity;
• temporary and exceptional increase in activity, or the start-up or expansion of a business;
• urgent work to prevent accidents or repair equipment;
• employment of a jobseeker registered with the ADEM, under certain conditions.

Duration and renewal of the CDD

Except for specific legal exceptions (seasonal work, researchers), the total duration of a fixed-term contract may not exceed 24 months, including renewals (Art. L. 122-4).

A CDD may be renewed a maximum of twice. Renewal must be provided for by a clause in the original contract or by an amendment concluded before the expiry of the term. Failing this, the contract is presumed to be permanent (Art. L. 122-5).

The contract must in principle include a precisely defined end date. By exception, certain fixed-term contracts (replacement, seasonal) may be concluded for a minimum duration and end upon completion of the contract's purpose (Art. L. 122-3).

Mandatory formalities for the CDD

A fixed-term contract must be drawn up in writing and specify (Art. L. 122-2):

• the precise purpose of the contract;
• the end date or minimum duration;
• the name of the employee being replaced, where applicable;
• the duration of the probationary period, if applicable;
• the renewal clause, if provided for.

Comparison: CDI vs CDD

Risks of reclassification as a permanent contract

A fixed-term contract is presumed to be permanent in the following cases (Art. L. 122-2, L. 122-6, L. 122-9):

• the contract was concluded in violation of substantive or formal rules;
• there is no written document expressly stating that the contract is fixed-term;
• the employment relationship continues after the expiry of the fixed term;
• the employer cannot prove the temporary nature of the task assigned.