Notice periods by length of service, the registered letter and its deadlines, the preliminary meeting, severance pay and the small-employer option: the employer's guide to a dismissal with notice done by the book.
In short. In Luxembourg, a dismissal with notice means a notice period whose length depends on seniority: 2 months under 5 years, 4 months from 5 to 10 years, 6 months beyond. The letter goes out by registered post, and notice runs from the 15th of the month if it is sent before the 15th, otherwise from the 1st of the following month. Severance pay is due from 5 years of service, from 1 to 12 months of salary. Companies with fewer than 20 employees can extend the notice instead of paying severance. The preliminary meeting is only compulsory from 150 employees.
Parting with an employee is one of the most tightly framed decisions in a Luxembourg company's life, and one where a formal mistake costs the most. A badly calculated notice, a letter sent on the wrong day, a reason given too late, and a dismissal that is sound on the merits becomes open to challenge on the form. Here, for an SME owner, is how to run a dismissal with notice in Luxembourg: the durations, the procedure, the severance pay and the payroll treatment of the departure.
What is a dismissal with notice in Luxembourg?
A dismissal with notice is the termination, on the employer's initiative, of an open-ended contract, with a notice period during which the working relationship carries on as normal. It is distinct from dismissal with immediate effect for gross misconduct, which removes the notice, and from termination during the trial period, which follows its own rules. It is the standard route to end a permanent contract, and it is bound by conditions of substance, a real and serious reason, and of form, a precise procedure.
Notice periods by length of service
The notice period the employer must observe depends solely on the employee's length of service in the company on the date of notification.
| Employee's length of service | Notice period |
|---|---|
| Under 5 years | 2 months |
| From 5 to under 10 years | 4 months |
| 10 years and more | 6 months |
Notification is made by registered letter with the post office, or by hand against a receipt or a copy signed by the employee. The letter must be in writing, clearly state that it is a dismissal with notice, and be drafted in a language the employee understands. The start of the notice follows a precise rule: it runs from the 15th of the month if the letter is sent before the 15th, and from the 1st of the following month if it is sent between the 15th and the end of the month. A letter posted on 23 July therefore starts the notice on 1 August; a letter posted on 1 August starts it on 15 August. If the employer does not observe the notice period, it must pay a compensatory indemnity for the unworked period.
The preliminary meeting: only from 150 employees
Many employers believe the preliminary meeting is always required. It is not. It is compulsory only in companies with at least 150 employees. Below that threshold, the employer may hold one voluntarily, and its absence does not affect the validity of the dismissal.
Where it is required, the employee is summoned by registered letter or by hand against a receipt, with a copy to the staff delegation. The meeting can be held at the earliest on the second working day after the summons is sent. A dismissal pronounced without this meeting, in a company bound to hold one, exposes the employer to an indemnity of up to one month's salary for a formal irregularity, regardless of the merits.
Severance pay
Severance pay is due to a dismissed employee with at least 5 years of service at the end of the notice. Its amount rises with seniority.
| Length of service | Severance pay |
|---|---|
| Under 5 years | None |
| From 5 to under 10 years | 1 month of salary |
| From 10 to under 15 years | 2 months |
| From 15 to under 20 years | 3 months |
| From 20 to under 25 years | 6 months |
| From 25 to under 30 years | 9 months |
| 30 years and more | 12 months |
The calculation base is the salary actually paid over the 12 months before termination, excluding overtime, gratuities and incidental expense allowances. Statutory severance pay is in principle subject to neither income tax nor social contributions within the limits set by law: the precise figures are handled on the final payslip, and the Direct Tax Administration stays the reference for a specific case.
The option for companies with fewer than 20 employees
Small structures have a useful lever for their cash flow. A company with fewer than 20 employees can choose, instead of paying severance, to extend the notice period. This choice must be stated expressly in the dismissal letter, failing which the severance stays due. The extended notice then replaces the severance.
| Length of service | Extended notice (without severance) |
|---|---|
| From 5 to under 10 years | 5 months |
| From 10 to under 15 years | 8 months |
| From 15 to under 20 years | 9 months |
| From 20 to under 25 years | 12 months |
| From 25 to under 30 years | 15 months |
| 30 years and more | 18 months |
A departure to prepare and you want a sound calculation of the notice, the severance and the final settlement? We will set it out with you, no guesswork.
Frame a departureMust the dismissal be justified? The request for reasons
Contrary to a widespread fear, the employer is not obliged to state the reasons in the dismissal letter. However, within the month following receipt of the letter, the employee may ask for the reasons by registered post. The employer must then reply by registered post, also within the month, setting out the reasons precisely.
Those reasons must be real and serious, linked either to the employee's person (their aptitude, their conduct) or to the company's operational needs. The dismissal must also come within a reasonable time after the facts: complaints dating back several months can see the dismissal reclassified as unfair. The quality of the reasoning, and its consistency with the facts, sit at the heart of any dispute; on that ground, an employment-law adviser stays the right contact.
Where dismissal is barred or framed
Some situations suspend or bar a dismissal with notice. An employee on sick leave is protected during their incapacity, up to a limit of 26 weeks, provided they met their reporting obligations: we cover this in our piece on sick leave in Luxembourg. Pregnancy and maternity leave, as well as parental leave, also open specific protections. Finally, dismissal for gross misconduct, with immediate effect and no notice, follows a procedure and deadlines distinct from those set out here, as does termination during the trial period.
The cost of a departure and its payroll treatment
A dismissal does not stop at the letter: it is settled on the final payslip and in your books. When the employee leaves, the employer draws up the final settlement, which brings together the last salary, any severance pay and the compensatory indemnity for untaken leave, a point we cover in our guide to paid leave in Luxembourg. A social formality is added: the employee's exit declaration to the Joint Social Security Centre, the counterpart of the entry declaration described in our guide to hiring your first employee in Luxembourg.
For the company, the point is to anticipate the cost rather than discover it. Severance pay, leave to settle, paid but unworked notice: these amounts land on a single payroll and on the month's cash flow. Payroll linked to the accounts, like the one we keep in the Odoo where your books live, shows that cost in your position in real time. The principle of payroll outsourcing is set out in our guide to outsourcing payroll in Luxembourg, and the full cost of an employee, charges included, in our calculation of the real cost of an employee in Luxembourg.
Frequently asked questions
What is the notice period for dismissal in Luxembourg?
The notice the employer must observe is 2 months for under 5 years of service, 4 months from 5 to 10 years, and 6 months from 10 years. It runs from the 15th of the month if the registered letter is sent before the 15th, otherwise from the 1st of the following month.
When is severance pay due?
It is due from 5 years of service, at the end of the notice. Its amount goes from 1 month of salary (5 to 10 years) to 12 months (30 years and more). The base is the salary of the last 12 months, excluding overtime and gratuities.
Is the preliminary meeting compulsory?
Only in companies with at least 150 employees. Below that threshold it is not compulsory, although the employer may hold one voluntarily without this changing the validity of the dismissal.
Must the employer state the reasons in the letter?
No. But the employee may ask for the reasons by registered post within the month following the letter, and the employer must then reply by registered post, within the month, setting them out precisely. The reasons must be real and serious.
Can a company with fewer than 20 employees avoid severance pay?
Yes, provided it chooses to extend the notice instead of the severance and states this expressly in the dismissal letter. The extended notice then runs from 5 months (5 to 10 years of service) to 18 months (30 years and more).
Read on
- Sick leave in Luxembourg: pay, medical certificate and protection
- Paid leave in Luxembourg: 26 days, accrual and carry-over
- Hiring your first employee in Luxembourg: the steps
- What an employee really costs in Luxembourg in 2026
- Accounting firm in Luxembourg: the complete guide for an SME
Why Advena?
We keep the accounts and payroll of Luxembourg SMEs of 1 to 50 employees inside the management tool we deploy ourselves, on a fixed fee from 325 € per month, all in. On a departure, that means a sound final settlement, notice, severance and untaken leave included, the exit declaration to the Joint Social Security Centre, and entries that feed straight into the Odoo where we keep your books, so the cost of the departure shows in your position in real time. To be clear: we handle turning a dismissal into payroll and accounting, but we do not settle a dispute in your place; on the reasoning or a contested procedure, an employment-law adviser is better placed, and we will tell you so.
Accounting, VAT, annual accounts and payroll in a single fee announced upfront. Let's talk about your file.
Request your fixed feeInformation current as of October 2026, based on the rules for dismissal with notice set out by Guichet.lu and by the Labour and Mines Inspectorate. As these rules can change and every situation is specific, this article is informational and not individualised legal, tax or social advice.
