Early retirement for company restructuring

This page was last modified on 08-03-2018

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Businesses encountering economic difficulties or structural problems may, subject to certain conditions, apply for early retirement for company restructuring (préretraite-ajustement) on behalf of their employees and thereby avoid redundancies by reducing their wage bill and their fixed costs.

Early retirement (préretraite) is not to be confused with premature retirement (retraite anticipée). The latter comes under the scope of pension insurance whereas the former, limited to a period of 3 years, constitutes a means of preventing unemployment. Early retirement is therefore considered as insurance years that count toward the old-age pension.

Who is concerned

The following may apply for early retirement for company restructuring on behalf of employees:

  • employers, in the event of:
    • closure of the business;
    • restructuring leading to job losses, insofar as early retirement enables redundancies to be avoided;
    • the transformation of jobs following technological changes;
    • restructuring over a long period in order to adjust the age composition of the workforce by hiring replacements for those who opt for early retirement;
  • trustees, administrators and liquidators for businesses that:



To qualify for early retirement for company restructuring, the employee must:

  • have turned 57 years of age;
  • be eligible to receive an old-age pension or a premature old-age pension at the latest 3 years after taking early retirement.

Exemption from the age condition

Employees may take early retirement on 1 January of the year in which they turn 57 years of age.

Similarly, employees who are over 57 years of age when approved for early retirement may benefit from the scheme for 3 full years, even beyond 60 years of age, if stipulated in the agreement concluded with their employer.

The age condition does not apply to mine workers and technical mine face employees eligible for the premature old-age pension.

How to proceed

Initial application

Businesses wishing to make use of early retirement for company restructuring must send:

The following must be enclosed with the application:

  • a detailed description of the business situation justifying the use of early retirement for company restructuring;
  • a copy of the existing job protection plan, where applicable;
  • a copy of the existing redundancy plan, where applicable;
  • the audited balance sheets for the 3 years prior to submitting the application;
  • the profit and loss accounts;
  • a quarterly balance sheet for the current year;
  • information on job changes over the past 3 years;
  • a calculation of the cost incurred by potential early retirements;
  • a certificate from the National Pension Insurance Fund (Caisse nationale d'assurance-pension - CNAP) setting the date as of which each employee opting for early retirement is entitled to an old-age pension or a premature old-age pension;
  • details of a contact person who can provide additional information on the business's financial situation.

If the application is approved, the employer must cancel the employee's affiliation to the Joint Social Security Centre (Centre commun de la sécurité sociale - CCSS) indicating "early retirement" as the reason for the employee's departure.

Remunerating the employee

The employer must advance the early retirement benefit to the employee.

The monthly early retirement benefit received by the employee is calculated on the basis of the average gross income received during the 3 months immediately preceding early retirement, including bonuses and the 13th month. It is capped at 5 times the social minimum wage.

The benefit is paid for 3 years and is subject to a progressive annual reduction. It amounts to:

  • 85 % of the employee's income for the first 12 months;
  • 80 % of the employee's income for the second 12 months;
  • 75 % of the employee's income for the remainder of the period during which the employee is entitled to the benefit.

The business's rate of contribution

Having analysed the economic and financial situation of the business, the secretariat of the Economic Committee sets the business's rate of contribution to the cost of early retirement.

This rate is then approved by the Government Council (Conseil de Gouvernement).

In principle, it may be between 30 % and 75 % of the total cost, including employers' social security contributions.


The business's rate of contribution may be less than 30 % in the context of the implementation of a job protection plan approved by the Ministry of Labour and Employment.

Reimbursing the business

In principle, the Employment Fund (Fonds pour l’emploi) directly refunds the employer the part of the costs resulting from the payment of the early retirement benefit that it is not responsible for, including the related social security contributions.

In the event that the business ceases trading, the Employment Fund will pay the benefit directly to the employee, at the employee's request.

Renewing the application

Early retirement for company restructuring agreements are generally concluded for a one-year period.

Where necessary, applications must be resubmitted according to the same procedure as for the initial application.

The business's rate of contribution may therefore vary according to changes in its economic, financial and social situation.

Who to contact

26, rue Zithe

Postal box L-2939 Luxembourg
Phone: (+352) 2478 6100
Fax: (+352) 2478 6108
Email info@mte.public.lu

Ministry of the Economy
19-21, boulevard Royal
L-2914 - Luxembourg
Phone: (+352) 247-84329
Fax: (+352) 46 04 48
Email info@cdc.public.lu

26, rue Zithe
L-2939 - Luxembourg
Phone: (+352) 247-86100
Fax: (+352) 247-86108
Email info@mte.public.lu