Third indexation in 2023: Compensation planned by the Luxembourg State to help employers

Luxembourg

In a nutshell, it is planned that the Luxembourg State will cover part of the contributions paid by employers to the Mutualité des Employeurs ("MDE"), to ensure that the increase in salaries due to the September 2023 indexation is not borne by employers.

From 1 January 2024, the contribution rates for the 4 MDE classes will be reduced by the amount to be offset. The reduction in rates will mean that affiliated employers will pay less in contributions due to MDE, while remaining protected against the same risks. The difference will be covered by the State.

Class 3 and 4 will be fully offset in 2024, while class 1 and 2 will be offset in 2025 and possibly 2026.

In practical terms, it means that:

  • From September 2023 to the end of 2023: Employers will normally pay their contributions to MDE;
  • At the end of 2023: MDE will send employers detailed information on the reduced rate that will apply to them in 2024;
  • As of 1st January 2024: Employers will pay their contributions at this reduced rate, until the amount paid to cover the September 2023 salary increase has been offset.