Unemployment does not have to be reason to despair, because the financial consequences can be mitigated by unemployment insurance (“ALV”). For this reason it is important to register in person at the Labour Market Services (Arbeitsmarkt Services – “AMS”) information desk, as soon as it becomes apparent that the place of employment is at risk, although at the latest during the notice period. This also applies to those who have completed an apprenticeship, but who are then unable to find a job, or to apprentices who break off their apprenticeship.
ALV is funded by employers’ and employees’ contributions; it aims to ensure that unemployed persons are provided with reasonable alternative income in the form of daily benefits. AMS also offers support of various kinds, such as for example providing internships or training or further training courses to promote self-employment. With the exception of the self-employed, all employees have obligatory insurance against unemployment in Liechtenstein. ALV covers the following fields:
- Unemployment benefit (“ALE”)
- ALE is one of the benefits provided by ALV. It provides substitute payments if insured persons lose their jobs. This entitlement is dependent on various preconditions, however, which ALV checks on a case-by-case basis.
- Compensation for short-time working
- Insolvency compensation
- U-forms (proof of insurance & employment periods for EU, EFTA, CH)
- Employees who return to their home country (EU or EFTA) after having worked in Liechtenstein must submit requests for unemployment benefit in their country of domicile, and not in the country in which they were most recently employed. Once the Liechtenstein employer has comprehensively completed the employer certificate, ALV completes the form PD U1 (German only). This provides the unemployment agency of the country of domicile with confirmation about the insurance and employment periods in Liechtenstein.
Entitlement to claim
ALV checks all criteria on a case-by-case basis, in order to ascertain the entitlement to claim unemployment benefit by an employee who is covered by unemployment insurance:
- whether unemployment exists wholly or in part;
- the necessary contribution period is fulfilled or if an exemption exists;
- the obligatory school period has been completed, but the minimum age for obligatory OASI contributions has not yet been reached;
- the place of residence of the employees is in Liechtenstein
- the insured person does not draw a retirement benefit pursuant to the AHVG;
- the work shortfall is attributable;
- the employee is capable of being placed with a new employer, that is to say he is able and entitled to take up a reasonable position of employment or to take part in AMS training and further training measures;
- all obligations and control regulations have been fulfilled.
An entitlement to ALE exists only for those days in which all entitlement conditions are fulfilled. If the insured person, for example, cannot be placed with a new employer for a specific period of time because he is in gainful employment, ill or on holiday, the entitlement to make a claim is limited. Insured persons who become unemployed for reasons for which they are themselves responsible, or who fail to meet their obligations, are not entitled to make a claim or shall lose their entitlement.
The entitlement to unemployment benefits commences usually after a waiting period of at least five days. In the case of employees who do not have children who they support (up to the age of 25), the waiting period is between 10 and 20 days, depending on their insured earnings. In the case of employees who are exempted from contribution obligations, a special waiting period of up to twelve months exists.
Entitlement to the full daily benefit amounts to 80% of insured earnings. A daily benefit amounting to 70% of insured earnings is paid to insured persons who:
- do not have children who they are responsible for supporting;
- do reach a full daily benefit of more than CHF 140.00
- do not draw disability benefit with a disability degree of at least 40%.
In this conjunction, the maximum number of daily benefits is based on the age of the insured person and on the contribution period. Five daily benefit payments are calculated per week. Payment is performed monthly, retrospectively as at the 10th day of a month, by means of bank transfer, insofar as the insured person presented the monthly control card as well as all necessary documents and records properly and in good time. Because of the different number of Saturdays and Sundays, the number of daily payments varies from month to month.
In the event of illness, pregnancy or accident, the insured person must submit a medical certificate within the first week in order to demonstrate that he is unable to work. This will enable the entitlement to daily benefits to be verified. If this report is not made within the necessary deadline, the entitlement shall lapse for the period before the report was made.
Unemployment benefit constitutes taxable income. Because it is therefore subject to income tax, ALV deducts this tax from the ALE and transfers it directly to the tax administration. Because daily benefits are deemed to constitute a salary, ALV also directly forwards the respective contributions to the OASI/Disability Insurance/Family Compensation Fund. It transfers these sums to the social insurance schemes together with the employer component, which is covered ALV, in order to avoid gaps in the pension career of the insured person.
ALV is not obliged to make contributions during the entitlement to daily payments, although the risk component (death and disability) of the occupational pension scheme remains active. For this purpose, ALV once again deducts the insured person’s contribution component from the ALE, and forwards this directly to the pension insurer together with the employer component, which it covers.
All individuals who are entitled to make claims receive an annual overview of the unemployment benefit drawn as well as deducted social security contributions and paid taxes. This is intended for their tax return.
Rights and obligations during unemployment
As soon as an insured person is threatened by unemployment, he is required to fulfil certain obligations. If he fails to do this, or if he disregards instructions issued by the Office of Economic Affairs, the ability to be placed with a new employer may not be recognised and the eligibility to claim benefits may lapse.
On the basis of their duty of cooperation, individuals who are entitled to make claims must truthfully provide AMS with all information that is required to assess the entitlement and level of the unemployment benefit. Changes in personal or economic circumstances that could affect the benefit entitlement must be reported without being prompted during the course of the unemployment. All documents must be completed comprehensively and must be submitted in good time to the respective departments. Within the context of the obligatory supervision, the insured person must attend consultancy and job placement meetings with the personnel advisor to whom he has been allocated. If he is unable to attend, he must cancel and reschedule his appointment in advance. The personnel advisor may also oblige the insured person to take part in so-called labour market measures in the form of employment programmes or training and further training courses. These measures are designed to improve the knowledge and abilities of the job-seeker, or to help him to master the unemployment situation more effectively. As daily benefits are considered compensation for intensive job-seeking, insured persons are also expected to seek a new position of employment actively himself. These personal efforts to find employment must be documented in writing also during the notice period.
While receiving unemployment benefits, insured persons must in principle accept all reasonable work. The reasons for unacceptability are interpreted very strictly in the case law and are listed in § 19 of the Unemployment Insurance Act (German only).
All income that an unemployed insured person earns from self-employed work or a position of employment is deemed to constitute so-called interim earnings. If these interim earnings correspond to the normal professional or local conditions, and if these are nevertheless lower than the unemployment benefits, then ALV may cover this difference. An activity that generates interim earnings is advantageous in every case for the job-seeker:
- The activity that generates interim earnings is attributable to the contribution time and to the insured earnings
- Fewer daily benefits are deducted from the insured person each month.
- The daily allowance will be improved, since the wage from the intermediate earnings and the compensation payment are always higher than the unemployment benefits.
- It is always easier to apply for a new position of employment from an existing position of employment.
Statutory basis (German only)
General Civil Code (Allgemeines bürgerliches Gesetzbuch (ABGB)) (§ 1173a Art. 59a et seq. ABGB)
Unemployment Insurance Act (Arbeitslosenversicherungsgesetz (ALVG) of 24 November 2010
Unemployment Insurance Ordinance (Arbeitslosenversicherungsverordnung (ALVV)) of 14 December 2010