Increase in the minimum social wage (+2.8%) as of 1 January 2021

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Date:
21 Dec 2020

Newsflash

By:
Dorothée David

The law of 15 December 2020 modifying article L. 222-9 of the Labour Code was published in Mémorial A no. 1025 on 18 December 2020, and will come into force on 1 January 2021.

The Law provides that the new monthly rate of the minimum social wage for a non-qualified employee paid monthly will be 263.78 Euros as of 1 January 2021 with the index value of 100 weighted for the cost of living as of 1 January 1948.

This means that, as of 1 January 2021, the new monthly minimum social wage amounts as well as the different applicable legal thresholds and limits will be as follows:

As of 1 January 2021 (gross amounts, index 834.76)

Minimum social wage (Salaire Social Minimum mensuel, SSM)

(art. L. 222-9 & L. 223-1 of the Labour Code)

 

2,201.93.- EUR (non-qualified employee)

2,642.32.-EUR (qualified employee)

1,761.54.-EUR (employee aged between 17 and 18)

1,651.45.-EUR (employee aged between 15 and 17)

 

 

  • Agreed compensation
  • Damages and interest for unfair dismissal set by the labour court,
  • Voluntary compensation in the event of resignation or termination by mutual agreement (art. 115 point 9 of the L.I.R.Luxembourg’s income tax law)

 

 

Automatically exempt from tax up to:

 

26,423.16.- EUR

(12 x the SSM)

 

 

Starting minimum monthly wage required to apply a Trial period of 7 to 12 months

(art. L.121-5 (2) of the Labour Code)

 

 

4,474.31.- EUR

(no change)

 

Minimum gross annual salary required at the end of the contract to apply a Non-competition clause after the end of the contract

(art. L.125-8 (3) of the Labour Code)

 

over 56,906.17.- EUR

(no change)

 

Furthermore, the Law of 15 December 2020[1] provides that the guaranteed minimum income ( “revenu d’inclusion sociale”, REVIS) and the income for those with severe disabilities ( “revenu pour personnes gravement handicapées”, RPGH) will also be increased by 2.8% as of 1 January 2021.

 

[1] Law of 15 December 2020 modifying: 1° the modified law of 12 September 2003 on people with disabilities; 2° the modified law of 28 July 2018 on guaranteed minimum income, published in Mémorial A no. 1004 of 16 December 2020.