D5c5 - How is overtime remunerated?

The working of overtime confers on employees entitlement either to compensatory rest time or to wage increments.

Compensatory rest time

Since the introduction of the “single status”, overtime is:

• either paid for at the rate of one hour and a half of remunerated rest time for each hour of overtime worked;
• or accounted for at the same rate in a “time-savings account” (CET), the arrangements for which may be determined in the applicable collective agreement or in any other agreement between social partners.

Wage increments

The Labour Code provides for only two cases in which overtime attracts payment:

• where for reasons inherent in the organisation of the company, recovery is not possible by offset or by recordal in the accounts at the rate of one hour and a half of rest time for each hour of overtime worked;
• where the employee leaves the company for any reason whatsoever before having recovered the overtime worked.

The increment, in both cases, amounts to 40%.

The 140% is entirely exempt from tax. As regards social security contributions, there is also an exemption, the rate of which may be ascertained on the website of the Joint Social Security Centre (ccss.lu).

Those rules for payment for overtime do not, however, apply to employees with the status of senior executives.