Annual Leave in Luxembourg

Annual Leave in Luxembourg is a statutory employee right and an important part of workforce planning for employers.

Employees are generally entitled to at least 26 working days of paid annual leave per year, regardless of whether they are employed under a permanent or fixed-term contract. Collective agreements, individual employment contracts or company policies may provide more generous entitlements.

For international employers, annual leave should not be treated simply as an employee benefit recorded in an HR system. It affects payroll, staffing, probation periods, sickness administration, termination calculations and total workforce cost.

Companies planning to Hire Employees in Luxembourg should therefore define leave policies before onboarding begins and ensure that local rules are reflected correctly in employment contracts and HR procedures.

Table of Contents

How Much Annual Leave Do Employees Get in Luxembourg?

The statutory minimum is 26 working days of paid annual leave per year.

A week of annual leave counts as no more than 5 working days, even where an employee normally spreads working hours across more than five days of the week.

This means a standard full-time employee working Monday to Friday receives the equivalent of more than five working weeks of statutory annual leave each year.

The 26-day entitlement is the minimum.

Additional leave can be provided through:

an employment contract;
a collective agreement;
company policy;
sector-specific employment arrangements.

For employers, it is important to distinguish between the statutory minimum and additional contractual leave. The rules governing carry-over or time-savings arrangements may differ depending on which category of leave is involved.

How Annual Leave Accrues

In Luxembourg, statutory annual leave generally accrues progressively throughout the employment relationship.

The standard rule is that employees earn one-twelfth of their annual leave entitlement for each full month of work. Based on the statutory minimum of 26 working days per year, this equals approximately 2.167 days of leave per full month worked.

This means that an employee does not need to complete the full calendar year before building up a leave entitlement.

For example, after six full months of employment, a standard full-time employee would accrue approximately:

26 ÷ 12 × 6 = 13 days of annual leave

After nine full months, the entitlement would be approximately 19.5 days.

Luxembourg rules also provide that a fraction of a month exceeding 15 days is generally treated as a full month for accrual purposes. This can affect the final leave calculation when an employee starts or leaves part-way through a month.

The accrual method is particularly important in several practical situations.

When an employee joins the company during the year, HR needs to calculate a pro-rated entitlement rather than automatically assigning the full annual balance.

The same applies when employment ends before year-end. Payroll should determine how much leave the employee actually accrued, how much has already been taken and whether any unused balance needs to be paid in the final settlement.

For example, if an employee leaves after six months with 13 days accrued but has taken only 8 days, the remaining 5 days may need to be addressed as part of the termination process.

Employers should also distinguish between statutory leave and any additional contractual leave. A company may provide 30 days per year, but its HR system still needs to separate the statutory minimum from any extra leave granted under company policy or contract.

For larger teams, manual calculations quickly become inefficient. Leave accrual should ideally be automated through the HR or payroll system so that balances update correctly when employees join, change working schedules or leave the company.

Accurate accrual records are especially important because annual leave affects not only employee availability but also payroll, workforce planning and final termination costs.

Taking Leave During the First Year of Employment

A newly hired employee generally needs to complete three continuous months of employment with the same employer before exercising the right to take accrued statutory annual leave.

The employee still accrues leave from the start of employment; the three-month rule generally affects when the leave can first be taken.

The employer can allow leave earlier.

This can be useful where a new employee already has pre-booked travel or where the company wants to provide flexibility during onboarding.

Employers should therefore distinguish between:

leave accrual — which begins during employment;

and

the right to take the accrued leave — which is generally available after three months of continuous employment.

Annual Leave During a Probation Period

Annual leave can directly affect the duration of a probation period in Luxembourg, so HR teams should track both leave and probation dates carefully.

If a newly hired employee takes annual leave during probation, the probation period may be extended by the number of leave days taken, subject to a maximum extension of one month.

The purpose of this rule is practical: probation is intended to give both the employer and the employee enough actual working time to assess whether the employment relationship is suitable.

For example, if a six-month probation period is due to end on 30 September and the employee takes 10 working days of annual leave during that period, HR should check whether the probation end date moves accordingly.

This becomes particularly important when leave is taken close to the original probation expiry date.

If HR assumes that probation ends on the date stated in the original contract without accounting for qualifying absence, the company may make a performance or termination decision based on the wrong timeline.

Employers should therefore maintain a clear record of:

the contractual probation start date;
the original probation end date;
annual leave taken during probation;
other absences that may affect the probation period;
the revised probation end date where applicable.

Managers should also be informed of any adjusted deadline. It is not enough for HR to update the date internally if the line manager continues to believe that probation ends earlier.

This is particularly relevant for international organisations where the employee is based in Luxembourg but the manager or HR team is located in another country.

A good practice is to review probation status several weeks before the expected end date rather than waiting until the final days. This gives the employer enough time to assess performance, document concerns and take any required action within the correct legal timeframe.

Annual leave during probation should therefore be treated as both a leave-management issue and an employment-compliance issue.

Who Decides When Annual Leave Is Taken?

Annual leave is generally scheduled taking into account both:

the employee’s wishes;
the operational needs of the business and justified wishes of other employees.

Employees cannot simply take leave without approval, but employers also should not manage statutory annual leave as if it were entirely discretionary.

Luxembourg official guidance states that employers may refuse requested leave in certain circumstances, including genuine operational needs or justified competing requests from other employees.

For example, an employer may need to limit simultaneous leave where approving every request would leave a critical department without sufficient staff.

However, leave refusal should have a legitimate operational basis.

A well-designed leave policy should therefore establish:

how far in advance leave should be requested;
who approves leave;
how conflicting requests are prioritised;
rules for peak business periods;
procedures for changing approved leave.

This provides managers with a consistent process and reduces disputes.

Can Employers Change Approved Annual Leave?

Employers should be cautious about changing leave once it has been approved.

Official guidance indicates that leave dates should generally be changed only for exceptional reasons connected with the proper functioning of the business.

This means an employer should not routinely cancel an employee’s holiday simply because a manager later decides that the employee would be useful at work.

Where operational circumstances genuinely require a change, HR should document the reason and manage the situation consistently.

For international companies, central managers should also understand that Luxembourg leave should not be cancelled solely because another office has adopted different practices.

Can Annual Leave Be Split?

Annual leave can be taken in several periods rather than as one continuous block.

However, where leave is split because of operational needs or the justified wishes of the employee, Luxembourg guidance provides that one period should generally consist of at least two calendar weeks.

This supports the underlying purpose of annual leave: giving employees meaningful time away from work rather than reducing the entire entitlement to isolated individual days.

Companies may still allow individual days where appropriate, but leave planning should enable employees to take genuine periods of rest.

Annual Leave Pay

Annual leave is paid leave.

The employer continues remunerating the employee during the period of statutory leave.

Luxembourg guidance provides that holiday pay is generally based on the employee’s average remuneration. For employees with stable pay, the reference period is typically the previous three months; where remuneration fluctuates significantly, a 12-month reference period may apply. Certain regular overtime and benefits can be relevant, while irregular payments such as some performance bonuses may be excluded.

Employers should therefore be careful when calculating leave pay for employees with:

significant variable remuneration;
recurring overtime;
commission;
benefits in kind;
changing salary levels.

Holiday pay should not automatically be calculated only from basic salary where other qualifying remuneration needs to be considered.

Can Employees Work During Annual Leave?

Statutory annual leave is intended for rest and recreation.

Employees are generally prohibited from carrying out paid work during their annual leave where doing so conflicts with the statutory leave rules. Luxembourg guidance states that an employee may lose the relevant leave allowance if they perform paid activity during the leave period.

This does not mean employers should monitor employees’ personal activities unnecessarily.

The practical point is that annual leave is a protected rest entitlement rather than a mechanism for continuing normal paid employment elsewhere.

What Happens if an Employee Becomes Sick During Annual Leave?

This is one of the most important practical rules for HR teams.

If an employee becomes ill during annual leave and the sickness is properly supported by a medical certificate, the certified sickness days do not count as annual leave days.

If the employee is in Luxembourg, they should generally provide the employer with the medical certificate within 3 days.

If the employee is abroad, they must take the necessary steps to ensure the certificate reaches the employer as soon as possible.

For example:

An employee books 10 days of annual leave but becomes medically unfit for work for 4 certified days during that period.

Those 4 sickness days should not simply remain deducted from the employee’s annual leave balance.

The employee and employer must arrange when the restored annual leave will be taken later.

The employee does not, however, automatically extend the current holiday by those days. If the sickness ends before the originally agreed return date, the employee should still return on the date originally scheduled unless another leave period has been agreed.

Does Sick Leave Continue to Generate Annual Leave?

Yes.

Periods of qualifying sickness absence are generally treated as actual working periods for the purpose of annual leave entitlement.

This means employees continue to accrue statutory annual leave during sickness absence.

This becomes particularly important in long-term sickness cases because substantial annual leave balances can accumulate.

Employers should therefore monitor both sickness and annual leave simultaneously rather than treating them as completely separate HR processes.

Carrying Annual Leave Into the Next Year

As a general principle, annual leave should be used during the year in which it is earned.

However, unused leave can be carried forward in certain circumstances.

Where the employee could not take leave because of operational needs, justified competing employee requests or certain protected absences, unused leave may generally be carried forward until 31 March of the following year.

There are situations where leave may remain available beyond 31 March, particularly where the employee was unable to take it because of circumstances such as continuing sickness or where a specific arrangement with the employer allows later use.

Employers should therefore avoid using a blanket HR-system rule that automatically deletes every unused leave day on 31 December.

Carry-over eligibility should be reviewed based on why the leave was not taken.

Long-Term Sickness and Carry-Over

Special attention is required where an employee remains unable to work because of sickness.

Where annual leave could not be taken because the employee remained medically unfit for work at year-end or beyond the normal carry-over period, the leave can remain deferred while the employee remains unable to use it.

This can create significant accrued leave balances in long-term absence cases.

From a workforce-cost perspective, employers should recognise that unused statutory leave may create a future financial obligation if employment eventually terminates.

Part-Time Employees

Part-time employees are also entitled to statutory paid annual leave.

Their entitlement is calculated proportionately according to their working schedule.

The calculation should reflect working days rather than simply applying the full-time balance mechanically.

For example, an employee who works fewer days per week will normally need fewer leave days deducted to take a complete week away from work.

The objective is that part-time employees receive an equivalent period of annual rest rather than being disadvantaged because of their work schedule.

Fixed-Term Employees

Employees on fixed-term contracts also qualify for statutory annual leave.

The type of employment contract does not remove annual leave rights.

Where a fixed-term contract ends before all accrued leave has been taken, the outstanding balance must be handled as part of the final employment settlement.

This makes accurate leave accrual particularly important for short-duration contracts.

Full-Time and Part-Time Parental Leave

Annual leave treatment can differ depending on the type of parental leave.

Employees working part-time during parental leave continue to receive annual leave calculated in proportion to their reduced working schedule.

Employees on full-time parental leave, however, generally do not accumulate ordinary annual leave during that suspended period.

HR teams should therefore ensure that parental leave is coded correctly in the leave-management system.

Public Holidays Are Separate From Annual Leave

Luxembourg has 11 statutory public holidays per year.

These should not simply be deducted from the employee’s 26-day statutory annual leave entitlement.

If a statutory public holiday falls on a day when the employee would not normally work, compensatory leave may be due.

For example, an employee who normally does not work on Mondays can still become entitled to a compensatory day where a statutory public holiday falls on Monday.

This distinction is important for part-time employees and teams using non-standard work schedules.

For broader information on working schedules and public-holiday work, see Working Hours in Luxembourg.

Additional Statutory Leave for Certain Employees

The standard statutory minimum is 26 working days, but some employees may qualify for additional leave.

Certain disabled employees, disabled war veterans and victims of occupational accidents can receive an additional 6 working days per year, subject to the applicable conditions.

There are also other specific additional-leave provisions for particular categories and working circumstances.

For example, an additional day of leave can arise for each qualifying eight-week period in which an employee or apprentice has not been able to receive the required continuous 44-hour weekly rest period.

Employers should therefore review the employee’s individual circumstances rather than assuming that 26 days is always the complete annual entitlement.

Collective Agreements Can Provide More Leave

Collective agreements may provide annual leave above the statutory minimum.

For example, sector agreements can establish additional leave based on age, seniority, working conditions or other criteria.

Luxembourg’s insurance-sector collective agreement, for instance, provides 26 days for employees under 50, 27 days for employees aged 50–54 and 28 days for employees aged 55 or over.

This is why employers should check whether a collective agreement applies before configuring annual leave in payroll or HR systems.

Paying the statutory salary and providing 26 days of leave may still be insufficient if a collective agreement grants more favourable rights.

Special Leave Is Not the Same as Annual Leave

Luxembourg also provides specific forms of paid leave for personal and family events.

These days should not generally be deducted from ordinary annual leave.

Special leave can apply to situations such as:

birth or adoption;
marriage or civil partnership;
death of certain family members;
urgent family reasons;
providing personal care to qualifying family or household members.

For example, Luxembourg provides 1 day of leave for urgent family reasons in qualifying circumstances and up to 5 days for personal care or assistance for medical reasons to certain family or household members, subject to the relevant rules.

International employers should therefore configure different leave categories instead of recording every absence against the employee’s normal annual balance.

Annual Leave at Termination

When employment ends, unused accrued annual leave becomes a payroll issue.

If the employee has outstanding statutory leave that cannot be taken before termination, the employer must generally pay compensation for the unused entitlement.

For example:

An employee leaves the company with 7 unused accrued leave days.

Those days should be calculated as part of the final settlement rather than simply removed from the HR system.

This applies whether employment ends through resignation or dismissal, subject to the applicable circumstances.

The final payroll process should therefore reconcile:

leave accrued;
leave already taken;
leave remaining;
final salary;
bonuses or other payments where relevant.

Can an Employer Force an Employee to Take Leave During Notice?

Generally, an employer cannot simply require an employee to use all remaining annual leave during the notice period.

An employee may request to take the leave, but the employer may also refuse the request where legitimate staffing needs require the employee to continue working.

Any remaining leave at the end of employment must then generally be compensated financially.

For employers, this means notice-period planning should include both operational staffing and the potential cost of unused leave.

Annual Leave and Total Employment Cost

Annual leave is a paid employment cost.

An employee receiving 26 days of statutory annual leave continues to receive remuneration while not performing ordinary work during those days.

For workforce budgeting, annual leave therefore contributes to the total cost of employing workers even though it does not appear as a separate monthly contribution.

Employers should also consider:

replacement staffing;
overtime required to cover absences;
unused leave provisions;
leave compensation at termination;
additional contractual leave;
collective agreement entitlements.

Companies comparing employment costs between countries should therefore look beyond gross salary.

For more detailed workforce-cost planning, see Employee Benefits in Luxembourg and Minimum Wage in Luxembourg.

Annual Leave and Workforce Planning

Leave administration becomes more difficult as headcount grows.

A company with two employees may manage leave requests manually.

A company with 20, 50 or 100 employees needs more structured systems covering:

leave balances;
approvals;
overlapping requests;
carry-over;
sickness adjustments;
public holidays;
part-time schedules;
termination calculations.

Departments with business-critical roles should also plan minimum staffing levels in advance.

This forms part of broader Workforce Management in Luxembourg.

The objective is to protect employees’ statutory leave rights while maintaining enough operational capacity for the business to function.

Annual Leave When Using an Employer of Record

Companies without their own Luxembourg legal entity can hire employees through an Employer of Record in Luxembourg.

The EOR can provide the local employment infrastructure and support the administration of:

employment contracts;
statutory annual leave;
payroll;
public holidays;
sickness absence;
employee records;
final leave calculations.

However, the client company still manages operational decisions such as approving the timing of leave in coordination with the EOR.

Managers should therefore follow the applicable Luxembourg rules even when employment administration is outsourced.

Using an EOR does not remove annual leave obligations; it provides the local framework through which they can be managed.

Common Annual Leave Mistakes Employers Make

Annual leave problems often arise from routine HR administration rather than complex employment disputes.

Common mistakes include:

providing fewer than 26 statutory working days;
treating public holidays as annual leave;
failing to accrue leave correctly for new employees;
automatically deleting all unused leave at year-end;
failing to restore leave where an employee becomes medically unfit during holiday;
ignoring collective-agreement entitlements;
calculating part-time leave incorrectly;
failing to reconcile unused leave at termination;
using one global leave policy without Luxembourg-specific rules.

Another frequent issue is allowing employees to build very large unused balances without intervention.

Managers should encourage employees to take annual leave regularly and identify persistent unused balances before they become operational or financial problems.

What Employers Should Check

Before onboarding an employee in Luxembourg, HR teams should confirm:

statutory annual leave entitlement;
contractual additional leave;
applicable collective agreement;
working schedule;
part-time calculation where relevant;
first-year accrual;
three-month eligibility rule;
leave approval process;
carry-over policy;
public-holiday treatment;
sickness during annual leave;
termination treatment.

These rules should be reflected consistently across employment contracts, employee handbooks, HR systems and payroll.

How Brain Source International Can Support Employers

Brain Source International helps international companies recruit, employ and manage professionals in Luxembourg.

Support can include:

international recruitment;
executive search;
Employer of Record services;
payroll coordination;
onboarding;
HR administration;
employee benefits;
workforce management;
international HR consulting.

Companies building their Luxembourg workforce can explore our Hire Employees in Luxembourg services.

Businesses without a local entity can use an Employer of Record in Luxembourg to establish the employment infrastructure required to hire local employees.

For related employment requirements, see Employment Law in Luxembourg, Working Hours in Luxembourg, Employee Benefits in Luxembourg and Workforce Management in Luxembourg.

Frequently Asked Questions

How many annual leave days are employees entitled to in Luxembourg?

Employees are generally entitled to at least 26 working days of paid annual leave per year. Collective agreements or employment contracts may provide additional days.

How much leave does an employee accrue each month?

The statutory entitlement accrues at approximately 2.167 days per full month of employment, based on the standard 26-day annual entitlement.

Can a new employee take annual leave immediately?

In principle, newly hired employees generally exercise their accrued statutory leave after completing 3 continuous months with the same employer, although the employer can allow leave earlier.

What happens if an employee gets sick while on holiday?

Certified sickness days are not treated as annual leave. The employee must provide the required medical documentation, and the affected annual leave can be rescheduled.

Can annual leave be carried over?

In specific circumstances, unused leave can be carried into the following year, commonly until 31 March, with further exceptions where leave could not be taken because of circumstances such as continuing sickness or agreed arrangements.

Do part-time employees receive annual leave?

Yes. Part-time employees receive paid annual leave calculated proportionately according to their working schedule.

Are public holidays included in the 26 days?

No. Statutory public holidays are separate from annual leave. Luxembourg has 11 statutory public holidays.

What happens to unused leave when employment ends?

Unused accrued leave that cannot be taken before termination must generally be compensated through the employee’s final settlement.