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August 18, 2022

The different types of employment contract

Congratulations – you’re going to sign a contract to start your career or re-join the working world! But before you do, it’s worth looking into the type of contract you’ve been offered.

Permanent contract (CDI)

Concluded for an indefinite period of time, this employment contract must be drawn up in duplicate by the time the employee starts working. One copy is reserved for the employer and the other for the employee. This contract may include a probationary period, during which time the parties can more easily cancel their respective commitments. After the probationary period, the contract may be terminated in several ways:

  • dismissal by the employer, which must provide grounds for its decision;
  • resignation by the employee;
  • termination by mutual agreement between the two parties.

Fixed-term contract (CDD)

This contract is for meeting one-off company needs for a specific and temporary task, justifying the use of a fixed term. It must include a precisely set term at the time of its conclusion. The CDD can be renewed twice for a maximum period of 24 months, except for seasonal contracts. The initial contract must include a renewal clause, otherwise an addendum is necessary. Except during the probationary period, the CDD can only be terminated by either of the parties in the following cases:

  • termination by mutual agreement between the two parties.
  • gross misconduct by one of the parties;
  • you may be hired under a CDI before the term of the CDD.

Temporary and assignment contracts

Temporary contracts are concluded between a temporary work agency and the hiring company, whereas assignment contracts are concluded between a temporary work agency and the employee. These contracts may only be concluded for a specific and temporary task, under the same conditions as a fixed-term contract. Possible reasons for such a contract include1:

  • the replacement of a temporarily absent employee;
  • seasonal work;
  • a temporary increase in the company’s activity;
  • a delay in the arrival of an employee recruited under a CDI;
  • a position for which a CDI is not allowed (as listed in the Labour Code).

Temporary workers have the same status as the company’s own employees. The remuneration must include at least the basic salary and extra pay, as well as bonuses, benefits and any equipment in use at the company.

Employment initiation contract (CIE)

The purpose of the CIE is to provide its beneficiary with hands-on training during working hours in order to facilitate their entry into the workforce. Not all Luxembourg employers offer this type of contract. This contract may be concluded by persons registered as jobseekers with the National Employment Administration (ADEM) for at least 3 months, and who are under the age of 30.

This contract is concluded for a duration of 12 months and may be extended by an additional 6 months under certain conditions. It is subject to remuneration, where the minimum amount is based on your age and qualifications. While not subject to the same conditions as a traditional employment contract, this contract must comply with the usual rules regarding overtime, night shifts and working on public holidays or Sundays.

The CIE may be terminated under these conditions:

  • by the employee for valid and compelling reasons, by registered letter to the employer and subject to eight days’ notice;
  • by the employer during the first six weeks: by registered letter to the employee, subject to eight days’ notice and with ADEM in copy;
  • by the employer after six weeks: by writing to ADEM for permission and, if permission is granted, sending the employee a registered letter, subject to eight days’ notice.

No matter your type of employment contract, ignorance of the law is no excuse and you are bound to respect your obligations as defined in the Labour Code. Any company-specific documents (collective agreement, company agreements, internal rules) you may sign are also binding. Failure to comply with them may result in sanctions, up to and including dismissal. We therefore recommend that you read such documents carefully before signing, asking for clarifications where necessary.

1Please refer to Articles L. 131-4 and L. 122-1 of the Luxembourg Labour Code for more information.