Navigating employment termination in Liechtenstein requires a thorough understanding of local labor laws to ensure compliance and avoid potential legal challenges. Both employers and employees are subject to specific regulations governing the process, from providing adequate notice to calculating severance pay and adhering to procedural requirements. Understanding these rules is crucial for managing workforce changes effectively and fairly within the Principality.
The legal framework in Liechtenstein provides clear guidelines on how employment relationships can be dissolved, aiming to protect both parties. Whether a termination is initiated by the employer or the employee, or occurs due to specific circumstances, adherence to the stipulated procedures and entitlements is mandatory. This includes understanding the different types of termination, the required notice periods based on tenure, and the conditions under which severance pay is applicable.
Notice Period Requirements
The required notice period for terminating an employment contract in Liechtenstein depends primarily on the duration of the employee's service with the company. These periods are legally mandated minimums, and individual employment contracts or collective bargaining agreements may stipulate longer periods.
| Length of Service | Minimum Notice Period |
|---|---|
| During probation period | 7 days |
| Up to 1 year | 1 month |
| From 1 to 5 years | 2 months |
| From 5 to 10 years | 3 months |
| From 10 to 15 years | 4 months |
| From 15 to 20 years | 5 months |
| More than 20 years | 6 months |
Notice periods typically begin on the first day of the month following the month in which notice is given and end on the last day of a month. Termination during the probation period is subject to a shorter notice period, allowing either party to end the contract quickly.
Severance Pay
Employees in Liechtenstein are generally entitled to severance pay upon termination by the employer after a certain period of service. Severance pay is calculated based on the employee's length of service and their final salary.
Eligibility for severance pay typically begins after three years of service with the same employer. The calculation is based on the average salary earned during the last year of employment.
| Length of Service | Minimum Severance Pay Entitlement |
|---|---|
| From 3 to 5 years | 2 months' salary |
| From 5 to 8 years | 3 months' salary |
| From 8 to 10 years | 4 months' salary |
| From 10 to 12 years | 5 months' salary |
| From 12 to 15 years | 6 months' salary |
| From 15 to 20 years | 8 months' salary |
| From 20 to 25 years | 10 months' salary |
| More than 25 years | 12 months' salary |
Severance pay may not be applicable in cases of summary dismissal for just cause or if the employee terminates the contract themselves (unless the employer provided just cause for the employee's termination). Specific conditions and exceptions may apply, particularly concerning retirement or the employee's death.
Grounds for Termination
Employment contracts in Liechtenstein can be terminated on various grounds, broadly categorized as termination with cause (summary dismissal) and termination without cause (ordinary termination).
Termination Without Cause (Ordinary Termination)
This is the standard form of termination where the employment relationship is ended by either the employer or the employee by providing the required notice. No specific reason needs to be stated in the notice itself, although the termination must not be considered unfair or abusive.
Termination With Cause (Summary Dismissal)
Summary dismissal allows for immediate termination of the employment contract without adhering to the standard notice period. This is only permissible in cases where there is just cause. Just cause is defined as a serious reason that makes the continuation of the employment relationship unreasonable for the terminating party. Examples might include gross misconduct, serious breach of contract, or criminal acts committed by the employee in connection with their employment. The reason must be significant enough to justify immediate termination.
Procedural Requirements for Lawful Termination
To ensure a termination is lawful, employers must follow specific procedural steps. Failure to adhere to these requirements can render a termination invalid or lead to claims for unfair dismissal.
- Written Notice: Termination notice must be given in writing.
- Clarity: The notice should clearly state the intention to terminate the employment relationship and the effective date, taking into account the applicable notice period.
- Delivery: The notice must be properly delivered to the other party.
- Consultation (in some cases): While not a universal requirement for all terminations, specific situations, such as collective redundancies, may require consultation with employee representatives or adherence to specific social plan obligations.
- Reason (for summary dismissal): In cases of summary dismissal, the just cause must be communicated to the employee immediately or very shortly after the decision to terminate.
Common pitfalls include failing to provide written notice, miscalculating the notice period, or attempting summary dismissal without sufficient just cause.
Employee Protections Against Wrongful Dismissal
Liechtenstein law provides employees with protection against unfair or abusive dismissal. A termination, even if notice periods are respected, can be challenged if it is deemed unfair.
Grounds for considering a dismissal unfair may include termination based on:
- Membership or non-membership in a union.
- Military service obligations.
- Exercising constitutional rights.
- Assertion of legal claims against the employer (unless abusive).
- Pregnancy or maternity.
- Illness or accident (unless the resulting incapacity significantly impairs the employment relationship).
- Age, gender, origin, religion, sexual orientation, etc. (discrimination).
If an employee believes their dismissal was unfair, they can challenge it, typically within a short timeframe after receiving the notice. If a court finds a dismissal to be unfair, it may order the employer to pay compensation to the employee. The amount of compensation is determined by the court, taking into account the circumstances, but is generally capped at a certain number of months' salary (often up to 6 months, but can be higher in specific cases like discrimination). Reinstatement is rarely ordered by the courts in Liechtenstein.
