Controversy trails Employers Union’s Push for 55-Day Telework Allowance for Cross-Border Workers

Luxembourg’s main employers’ group has called for a major change to the country’s teleworking rules, proposing that cross-border workers be allowed to work from home up to 55 days a year without triggering new tax or social security obligations in their home countries.

The Union des Entreprises Luxembourgeoises (UEL) says the increase is necessary to help firms retain and attract skilled workers who live in neighbouring France, Belgium and Germany. The group argues that the current limits on telework make it difficult for employers to offer flexibility to their staff, who make up nearly half of Luxembourg’s workforce.

Under existing bilateral arrangements, cross-border workers can work remotely only a limited number of days before their income becomes taxable in their country of residence, or their social security affiliation changes. The current thresholds – often around 34 days – were relaxed during the Covid pandemic but later reinstated, leaving many businesses and workers frustrated by the return to stricter rules.

The employers’ association says allowing up to 55 days of telework would strike a fair balance between modern workplace flexibility and the need to keep the country’s labour market competitive. “Without a reasonable teleworking allowance, Luxembourg risks losing talent to other job markets that offer more flexibility,” the UEL said in its statement.

The proposal, however, has sparked debate over fairness and cost. Critics question why the Grand Duchy should accommodate workers who live outside its borders but benefit from its higher wages and living standards. Many of these commuters, known as frontier workers, cross into Luxembourg daily for better opportunities than they can find at home.

Some argue that by pushing for more telework days, Luxembourg employers are effectively seeking to extend the country’s labour benefits to non-residents without equivalent tax contributions to their home countries. Others fear that the change could strain diplomatic relations if neighbouring states feel their own tax revenues are being eroded.

Supporters counter that cross-border workers are already central to Luxembourg’s economy, filling critical roles in banking, healthcare, construction and transport. They note that most of these workers pay income tax in Luxembourg and contribute to the country’s growth, even if they spend their evenings across the border.

Raising the telework limit, they say, is not a subsidy but a practical response to the modern workplace. “It’s about removing outdated barriers,” said one business representative. “Teleworking is not going away and Luxembourg must stay competitive.”

The government has not yet responded to the UEL’s proposal, but any change would require fresh negotiations with France, Belgium and Germany, whose agreements with Luxembourg govern the taxation and social security rights of cross-border staff.

The issue cuts to the heart of Luxembourg’s economic model – that depends heavily on a workforce drawn from beyond its borders. As debates continue, the question remains whether the country can keep its open labour system while ensuring fairness for both its citizens and the tens of thousands who cross its borders each day to earn a living.