Luxembourg is not the most expensive country for severance pay but, in most situations, it leads pack. Especially in the case of dismissals not motivated by the employer.
This is in any case what emerges from a study published by the consulting firm Deloitte, which compared the systems in force in 45 countries. In cases where the notice is motivated for economic reasons or linked to the employee himself, the Grand Duchy is in ninth place. But in cases of dismissal without cause, Luxembourg climbs to fourth place, behind Italy, Sweden and Slovakia.
That said, the country's ranking position increases with age and seniority. If we take, as Deloitte did, the case of a 30-year-old employee with 4 years of seniority (gross annual salary of €30,000), Luxembourg is in the middle of the ranking (22nd in the case of justified dismissal). The average cost will be around €7,500.
But when the study considered a 49-year-old worker with 11 years of seniority and a gross annual salary of €120,000, the allowance will instead be around €100,000. This puts Luxembourg in seventh position in the Deloitte survey.
Luxembourg remains, however, far behind Italy, which explodes all tariffs with an average of nearly €450,000 for similar conditions (the 49-year-old scenario). But the legislation almost excludes the possibility of dismissal, which is also a major obstacle when it comes to dealing with staff on permanent fixed contracts.