Hiring Talent And Managing Payroll In Liechtenstein

Agreements

• There is no statutory requirement in Liechtenstein that agreements have to be in writing it can be oral also.
• It is a common practice is to have a written agreement. The language of the contract/agreement should be German.
• A written agreement usually includes:-

  • Personal details of the employer and the employee- name, residence, office address.
  • Date of commencement of employment.
  • Details of employment type- full-time, part-time, consultant.
  • Working hours, breaks, overtime details.
  • Workplace information- the type of everyday work, and performance expected from employees.
  • Functional title/rank of the employee.
  • Wages, including details of payroll cycle, gratuities, and expenses.
  • Terms of termination, notice period, and severance pay.
  • Holidays- annual day-offs, sick leaves, and maternity leave.
  • Details of social benefits-contributions, eligibility.
  • Details of health insurance- kind of insurance will be accepted.

Onboarding Process

• Once the written agreement is drafted between the employer and the employee, it usually takes 2-5 days for the onboarding process to complete.
• Ideally, the onboarding process should include:

  • Details that your new employee should know about the company culture and brand.
  • How the manager and HR can help the new joinee, and how the colleagues can make the new employee feel comfortable in a new environment.
  • Goals that you have set for the new employee.
  • How and through which process their performance will be assessed.

Minimum Wage

Payroll Cycle

Annual Bonus

Health Benefits

• The Federal office of Public health monitors the healthcare system in Liechtenstein. Although it outsources some part of the health insurance as its a small country with only one Hospital.
• Each resident above the age of 16 years is constitutionally guaranteed to the health care system.
• Health insurance in Liechtenstein is either provided by private insurance, employers, or government health insurance.
• Each resident must register individually with their choice of the insurance provider and make contributions as per their requirement.

Working hours and overtime

• Work hours: There is a statutory requirement of 45 hours of work per week in Liechtenstein from Monday to Friday. Employees are not required to work the night shift, from 11 PM to 6 AM. If the employers want their employees to work during the night shift, then they would require authorized permission from the office of Economic affairs.
• Break: If employees have worked for 7 hours a day, then they are entitled to 30 minutes of break, and if they are working for more than 8 hours, then they are entitled to 1 hour of break. It is a general practice to give a 1-hour break.
• Overtime: Overtime is allowed only in extraordinary circumstances- not more than 48 hours a week. Also, employees cannot work overtime for more than 2 hours a day. In overtime cases, the employee is paid 25% extra of their hourly wage.

Social Security

Taxes for Employees

• The employees also have to contribute to various funds:

  • 4.7% for old age, survivors' fund, and disability insurance.
  • 0.5% as unemployment insurance.
• The individual income tax for employees is quite complicated. It is determined based on the employee's dependents and marital status.

  It can be understood with the help of a table

  National Tax Rate	Single Person's Income (CHF)	Single Parent's Income (CHF)	Married Couple's Income(CHF)
  1% upto	20,000	30,000	40,000
  3% upto	40,000	60,000	80,000
  4% upto	70,000	105,000	140,000
  5% upto	100,000	150,000	200,000
  6% upto	130,000	195,000	260,000
  6.5% upto	160,000	240,000	320,000
  7% upto	200,000	300,000	400,000
  8% upto	200,000	300,000	400,000

Termination

Severance Pay

• There is no legal obligation on the employer to pay any severance pay to the employee.
• Nevertheless, most organizations mention the conditions of severance pay in their employment contract.

Employees or Contractors

• In Liechtenstein, the differentiation between the employee and contractor is clearly exhibited through the 'statement of work' (SOW) contract.
• It should be mentioned in the SOW whether the organization is hiring a contractor or an employee.
• Liechtenstein's labor laws are on the lines of EU rules and regulations.
• EU rules state that any misclassification of an employee or contractor invites serious penalties. And it is the companies that have to pay the fine.

Final Words