Special contracts in Luxembourg: agency work, apprenticeship and CAE

1 — Agency work (temporary employment)

Agency work is based on a tripartite relationship: the temporary employment agency (TEA) concludes a service agreement with the user company and an employment contract with the temporary worker. This arrangement allows the user company to meet a temporary need without concluding a direct employment contract itself.

Operating licence

The activity of a TEA requires a licence from the Minister responsible for Labour, granted after consultation with ADEM and the ITM (Art. L. 131-2). The licence is generally issued for a maximum of 12 months, renewable. It may become indefinite after three consecutive years of licensed activity (Art. L. 131-3).

Cross-border posting

A temporary employment agency established abroad may post a worker to Luxembourg provided that an employment relationship exists between it and the worker throughout the posting (Art. L. 141-1). The posting must be part of a service contract for a specific and time-limited purpose (Art. L. 141-1, §2 ter).

Probationary period in agency work

The probationary period in an agency work contract is strictly limited (Art. L. 131-7): 3 working days for an assignment of one month or less, 5 working days for assignments over one month, and 8 working days for assignments over two months. The probationary clause may not be renewed.

2 — Employment initiation contract (CAE)

The CAE is a professional integration scheme for young jobseekers under 30 who have been registered with ADEM for at least three months (Art. L. 543-14). Its purpose is to provide practical training in the workplace, possibly supplemented by theoretical training offered by the host organisation.

Tripartite structure

The contract is concluded between three parties: the host organisation (employer), the young jobseeker and ADEM. This tripartite framework distinguishes the CAE from an ordinary employment contract and involves ADEM at every stage, including certain terminations.

Termination rules

The CAE has a specific termination regime (Art. L. 543-22):

• By the employee: written notice by registered letter with 8 days' notice, for valid and compelling reasons.
• By the employer — first 6 weeks: written notice by registered letter with 8 days' notice.
• By the employer — after 6 weeks: same procedure, but requires prior agreement from ADEM.
• Serious misconduct: the 8-day notice period does not apply; termination is immediate.

Financial support from the Employment Fund

For the first 12 months of the contract, the Employment Fund reimburses the host organisation monthly (Art. L. 543-20):

• 50% of the allowance paid to the young person plus the employer's social security contributions;
• this rate rises to 65% when the young person belongs to the under-represented gender in the employer's sector.

3 — Apprenticeship contract

The apprenticeship contract organises vocational training on a work-study basis for an apprentice within a company, combined with theoretical instruction at a school or training centre. It is subject to strict requirements: mandatory written form under pain of nullity, cumulative conditions for the training employer (age, good character, qualification), a 3-month probationary period, and prior agreement of the professional chambers required to terminate after the trial period.

Quick comparison of the three arrangements