Newsflash – Labour Court (Luxembourg), 17 February 2026

It is possible to combine, within the same company, (i) a corporate mandate as manager or (delegated) director and (ii) an employment contract, provided that the latter is genuine and not merely a sham designed to circumvent the public policy rule of ad nutum revocability of corporate mandates or to benefit from a more favourable tax regime.

In addition to the absence of fraud, the Court identified three key conditions for the employment contract to be considered genuine. Under the employment contract, the manager or director must:

• (i) perform technical duties that are clearly distinct and separable from their corporate mandate;
• (ii) carry out these duties within a relationship of subordination, meaning under the authority and ongoing supervision of the company or its board of managers/directors, which must be able to exercise the powers characteristic of subordination (the broader the managerial powers granted under the corporate mandate, the less scope there is for subordination); and
• (iii) receive remuneration that is separate from that attached to the corporate mandate.

In the event of a dispute, the burden of proof lies with the party invoking the existence of the employment contract. However, where such a contract exists, the party challenging it must demonstrate that it is fictitious.

To assess whether these conditions are met, the Court examines both the employment contract (if any) and the specific factual circumstances of the case. In this instance, the Court found that:

• neither the employment contract nor its amendments, nor any supporting documents, made it possible to determine the actual duties performed under the alleged salaried role;
• the corporate mandates and signing powers showed that the director held extensive management powers, excluding any legal relationship of subordination. The director was responsible for the day-to-day management of the company, “a role difficult to distinguish from any alleged salaried function”, and could bind the company either by sole signature or jointly with another director—“a power scarcely compatible with employee status”;
• in the absence of (i) distinct technical functions and (ii) subordination, the payment of a monthly salary, registration with the social security system as an employee, the issuance of payslips and a certificate of employment at the end of the contract were not sufficient.

Key takeaways:

• It is possible to be both an employee and a manager or director of a company, provided the employment contract is genuine, which mainly requires duties distinct from the corporate mandate and carried out under a relationship of subordination;
• Simply entering into an employment contract and registering with the social security system as an employee is not sufficient: the actual circumstances must demonstrate compliance with these conditions.