Legal and practical considerations on the national employment scheme for third country nationals and their family members willing to work in Luxembourg
1. Understanding some Immigration data at Luxembourg level
Immigration in Luxembourg has continuously been increasing, both in number and in diversification, over the past decade, with a constant increased number of non-EU nationals migrating to Luxembourg.
United States nationals constantly occupied the second position in the top three countries of citizenship of third-country nationals (both men and women) who received a first residence title between 2016 and 2021 (except for 2017 where it was occupying the third place). There is hence a stringent reality of US nationals’ immigration in Luxembourg.
At the same time, the shrinking working-age population underlines the need for European countries and their labour market to rely on all of its strengths, talents and diversity. Bringing more people from different backgrounds into employment could contribute to further increasing the employment rate. The employment rate in Luxembourg of non-EU nationals is 9.6 percentage points lower than for those born within the EU and is particularly low among women.
Having a larger and more inclusive labour market means combating all forms of discrimination, based on sex, racial or ethnic origin, religion or belief, disability, age or sexual orientation. Social economy actors and enterprises usually play an important role in fostering a more inclusive labour market, to the benefit of workers and local communities.
2. What is the scope of national reserved matters versus EU competence regarding cross-border employment
The European Union (“EU”) is in charge of:
- entry, residence and integration in the territory of the EU State Members.
Luxembourg is in charge of:
- the access to work market for third country nationals.
The Lisbon Treaty (13/12/2007) clarifies the split of competences between the EU and its Member States as follows (cf: article 79(5) TFUE): “This Article [article 79(5)] shall not affect the right of Member States to determine the volumes of entry of third-country nationals from third countries into their territory for the purpose of seeking paid employment or self-employment”.
On that basis, the UE is competent for entry into, legal residence and integration in a Member State. On the other hand, each Member States retains the right to determine the conditions of admission of people coming from third countries to seek work.
With respect to the immigration policy, Luxembourg has a single law governing the matter, dated 29 August 2008 and multiples implementing regulations aiming at precising certain practical conditions and updating the same from time to time.
3. Who needs to have a work permit for employment in Luxembourg?
Is concerned by the obligation to obtain a work permit to be able to work in Luxembourg any third-country national (i.e. who is not a citizen of the European Union or who does not enjoy the EU right to free movement as a national of an EEA country or of Switzerland):
- willing to settle and work in Luxembourg,
- legally residing in Luxembourg and now willing to work in Luxembourg (as an employee or self-employed) or
- legally residing in Luxembourg and willing to work in Luxembourg in an area or a position for which he/she is not authorized to do so yet.
For the avoidance of doubt, such category encompasses:
- third country nationals being family members of a third country national, within the framework of the so-called “regroupement familial”,
- as well as third country nationals residing in another EU country (at the date of application for a residence and work permit).
Article 3 (c) of the Immigration Law defines third country nationals as any person who is not a citizen of the European Union or who does not enjoy the EU right to free movement of persons and immigration.
- Third country nationals do not enjoy the freedom of movement in Luxembourg and need a residence permit (not a work permit) before entering in Luxembourg.
- Third country nationals need a work permit before starting a working activity (a substantial activity versus an occasional and marginal working activity) in Luxembourg – unless they are family members of an EU citizen.
Certain exemptions to the requirement for a work permit exist provided the concerned persons stay for a maximum three-month duration:
- individuals on business trips (such as travel to visit business partners, to explore and develop professional contacts, to negotiate and conclude contracts, to participate in fairs, shows and exhibitions as well as to take part in meetings of the board of directors and general meetings of the company);
- business meetings (for stays shorter than three months);
- intra-group provision of services excluding subcontracting (for stays shorter than three months);
- family members of an EU national who works in Luxembourg;
- intra-corporate transfer (subject to the condition that the non-EU employee holds an ICT residence permit in another member state);
- posting (subject to conditions);
- UK nationals and members of their family falling within the scope of the Withdrawal Agreement (in particular, those who arrived in Luxembourg before 1 January 2021 can freely access the labour market).
When can third-country nationals apply for a permanent resident permit?
After a regular and uninterrupted stay of five years in Luxembourg, a third-country national (being a family member or not) may acquire the status of long-term resident, subject to certain conditions. In this case, the third-country national obtains a ‘EU – long-term residence permit’ valid for a period of five years and renewable automatically on request.
The specific case of blue cards
Work permits are a category of residence permit and, as such, are granted on the basis of the right of a person to reside on the Luxembourg territory (employing a third-country national who is not legally residing in Luxembourg is criminally sanctioned).
A third country national can access the Luxembourg labour market by applying for a work permit corresponding to its specific status, including blue cards issued to highly qualified workers (annual remuneration of at least EUR 78,336, or EUR 62,668.80 for specific professions; employment contract of at least one year and high-level qualifications).
Blue cards are initially granted for a 4-year duration, to be further extended to 4 years upon demand. During the first 2 years, their holder has an access to the Luxembourg labour market limited to the scope of work defined in his or her employment agreement, unless otherwise specifically authorized.
4. Why do some people need to have work permits to set up a company in Luxembourg?
Such obligation to apply for a work permit encompasses any commercial and regulated activity, as well as liberal professions and craft professions. In the specific case of setting-up of business for which a business license (“autorisation d’établissement”) is required (versus other specifically regulated activity such as performing fund management), the holder of the business license shall be the applicant for the work permit.
The work permit will be a resident permit for independent worker, granted for an initial 3-year duration, renewable for successive 3-year periods.
The applicants need to demonstrate:
- to have sufficient qualifications (both academic and professional), as well as, regarding activities for which a business license is required professional integrity, business offices in Luxembourg, being effectively in charge of the permanent management of the business with a sufficient physical presence in Luxembourg, being compliant with tax obligations;
- having sufficient financial resources to sustain the contemplated activity;
- the contemplated activity shall have an economic purpose in line with Luxembourg’s economic interests (e.g. sustainable project, creating jobs, innovative activity).
The performance of certain activities (e.g. lawyers, doctors, independent auditors) is governed by additional specific rules of access to such activities. Both legal and regulatory corpus are applicable in such a case and should not conflict.
What about start-ups?
Luxembourg does not have a specific startup scheme in place, so that third-country nationals are admitted through admission channels (i.e. long-term visas and residence permits) for self-employment and business activities and/or investor permits. The applicant needs to demonstrate an added economic value of the business for the Member State, and qualifications and diplomas, as well as professional business experience of the start-up founder, are considered.
Employees of start-ups need to fulfil the normal conditions for a salaried worker, for example, holding the necessary professional qualifications required for the job, pass the labour market test and propose an activity serving the national interests.
5. What is the labor market test?
There are no quotas applying to the employment of third-country nationals in Luxembourg, but Luxembourg applies a labour market test resulting in the requirement to check whether the vacant position (for which the third-country national filed a work permit application) can be filled by a person available on the national or European labour market.
In practice an employer may only request a certificate from the Director of the Employment Development Agency (ADEM) allowing him to conclude an employment contract with a third-country national if, after having declared a vacancy to the ADEM, he/she/it is not offered a suitable candidate on the local labour market within 3 weeks.
Such test market procedure takes 4 weeks:
- a 3-week period for the ADEM to notify the employer of the existence or not of unemployed persons fitting the position, following the declaration of employment vacancy received from the employer, followed by
- a 5-business day period for the ADEM to issue a certificate to the employer allowing him to fill in the position with the employee of his choice.
6. How long does it take to get a work permit in Luxembourg?
Following the application for a work permit, the Ministry of Foreign and European Affairs is legally bound to respond within 4 months. Such deadline is suspended in the event of a request for complementary information from the Ministry.
In practice and depending on the category of work permission requested, the time required for the Ministry of Foreign and European Affairs to process a work permit application may vary from three to four months maximum. For an ‘employee’ work permission, a certificate from the Employment Administration needs to be submitted at the start of the procedure.
Sufficient preparation time should therefore be factored into employment plans.
7. Are there special considerations for accompanying spouses, partners or family members who have already established residence status?
As a reminder, family reunion with a third country national sponsor residing in Luxembourg is possible after a 1-year period of residence by the sponsor, such lag time allowing public authorities to verify that, inter alia:
- the sponsor has sufficient financial resources and appropriate housing to support the entire family without having to rely on public assistance,
- the sponsor has health insurance coverage,
iii. the existence of family ties,
- no family member presents a danger to public order, public safety or public health.
In 2021, a total of 2,606 temporary residence permits were issued in the context of family reunification of third country nationals. 30% of which were delivered to family members of a blue card holder. The same year, 5,5% of the family members of a third country sponsor holding a work permit were US nationals.
The residence permit is initially granted for a 1-year period, renewable upon demand for a maximum duration corresponding to the duration of the sponsor’s permit.
Family members of blue cards holders enjoy (i) a reduced 6-month period for obtention of the residence permit and (ii) a duration of their permit equal to the duration of the sponsor’s blue card.
Under the current state of Luxembourg law, family members of third country nationals already residing legally in Luxembourg must wait for a work permit to be issued before starting working.
This may be explained by the fact that in 2008 when the Immigration Law was drawn up, Luxembourg labor market was dramatically different and Luxembourg chose at that time to apply the European and national preference.
Having successfully passed the phase of obtention of a residence permit is an important step, as it takes time (several months), given that the application for a residence permit has to be done from the third country of residence (except for family members of blue card holders) and as the residence permit grants immediately access to education and guidance, training.
WHAT DO THE FIGURES TELL US ABOUT WOMEN?
It was estimated in 2021 that 59,8% of all third-country national women work in highly qualified sectors of employment, while 40,2% work in less qualified sectors, and that the most common employment sectors for female EU migrants require medium to high skilled workers.
The number of third-country national women in Luxembourg has increased steadily over the last years, representing 8,1% of the total female population in 2020. Most first residence titles issued to third country national women were based on family reasons. Depending on the reasons for immigration, the most common countries of origin were India, the U.S.A., and China (to pursue remunerated activities), as well as Syria, Eritrea, the Philippines and Brazil. These women, irrespective of their level of qualifications (they are a diverse population), experience several practical challenges, such as a higher exposure to overcrowded housing, lower household income, lower activity rates, and higher unemployment rates, than Luxembourgish women for instance.
Regarding the question of the integration of migrant women in Luxembourg, it has to be noted that Luxembourg follows a mainstream approach regarding integration. According to the Law of 16 December 2008 on the integration of foreigners in the Grand Duchy of Luxembourg (the “Integration law”), integration is a two-way process that includes both the foreigner and the Luxembourgish society, the former having to demonstrate his or her willingness to participate in a lasting way in the life of the host society, the latter having to encourage and facilitate this process. As a result of this mainstream approach, Luxembourg foreigners’ integration policy encompasses all non-Luxembourgish nationals (EU citizens and third-country nationals alike), irrespective of their gender and do not specifically target women. According to the Department of Integration, migrant women are not a prioritized group specifically targeted by integration policies. While the Government may provide funding for projects that address the particular needs of migrant women, the overall goal of the Department of Integration remains to encourage social diversity, togetherness and thus not to develop policies and measures that tend to isolate one group from another.
Another present consideration (mentioned above) is the shrinking working-age population, which underlines the need for Europe and its labour market to draw on all of its strengths, talents and diversity. Boosting the employment rate of women could, from that perspective, be of critical importance. The employment gap between women and men stood at 12% in 2019. This is even more pronounced when taking into account the significant difference in the uptake of part-time work between men and women. In 2019, around 3 out of 10 employed women were working part-time, almost four times the figure for men. Such situations may have been felt even more acutely during the pandemic where the care of the elderly, persons with disabilities or children has had to be organised privately and has largely fallen upon women. A lack of adequate formal long-term care services, of flexible working opportunities and of incentives for second earners in some Member States all play a part in accentuating this issue. At the heart of this lies the challenge of reconciling work and family life. In 2019, the employment rate for women with children less than 6 years old was almost 14 percentage points lower than for those without children. Women still also receive lower pay for their work than men, with the gender pay gap currently at 14.8%.
These are however not challenges that fall into the scope of the Immigration Law. To achieve this task, the Integration Law defines a number of integration policies and measures, such as the National Action Plan on Integration (NAP Integration), the Welcome and Integration Contract (CAI) and the financial subsidies available to municipalities and organisations that plan to establish and implement integration measures. Furthermore, the Integration Law provides the legal framework for the inter-ministerial committee on Integration, the National Council for Foreigners (CNE), and the municipal consultative commissions on integration (CCCI).
The Luxembourg market has evolved and the country seems to lack workforces and talents in various areas. In this context, the Luxembourg government is working on a bill of law aiming at simplifying the administrative steps that family members of third country nationals holding a residence permit on the basis of family reunification would need to perform to work in Luxembourg, on an employee or independent basis. Such proposed bill of law aims at aligning the status of family members holding a residence permit and joining a third country national on the status of third country nationals holding a residence permit as family member of an EU citizen, by allowing the former to work without applying for a work permit (hence without application of the labour market test).
Such a draft of bill of law still has to be approved by the government council (“Conseil de gouvernement”), and will need to follow the legislative process so that revisions thereto cannot be excluded.
For more information or assistance on these topics, you may reach out our team of legal experts at Brouxel & Rabia, Luxembourg law firm by sending an email at firstname.lastname@example.org
Estelle Nzoungou Samia RABIA
Senior Associate Partner
 Based on the European Migration Network Second Study published in 2021 dedicated to the “Integration of migrant women in Luxembourg: policies and measures”.
 Law of 29 August 2008 on free movement of persons and immigration (the “Immigration Law”).
 See supra, European Migration Network Second Study.
 We have not review the said draft bill of law, which is not publicly available.