Employer of Record Guide in 

Liechtenstein

Vacation Leave

• Minimum Entitlement: 20 working days per year (4 weeks)
• Enhanced Entitlement: 25 working days for employees over 50 years old
• Accrual: Vacation days accrue monthly (1.67 days per month for standard entitlement)
• Carryover: Unused vacation must typically be taken within the following year
• Payout: Unused vacation must be paid out upon termination

Sick Leave

• Paid Sick Leave: Full salary continuation for limited period based on length of service:
  • 1st year: 3 weeks
  • 2nd-4th year: 1 month
  • 5th-9th year: 2 months
  • 10th-14th year: 3 months
  • 15+ years: 4 months
• Medical Certificate: Required for absences longer than 3 days
• Continued Pay: Employer pays full salary during sick leave period

Maternity Leave

• Duration: 20 weeks total (8 weeks before birth, 12 weeks after)
• Compensation: 80% of average salary paid by social insurance
• Job Protection: Position must be held open during leave
• Flexibility: Timing of pre-birth leave can be adjusted with medical approval

Parental Leave

• Paternity Leave: 4 weeks for fathers (can be taken within 6 months of birth)
• Parental Leave: Additional unpaid leave available by agreement
• Adoption Leave: Same entitlements apply for adoptive parents
• Compensation: Paternity leave compensated at 80% of salary

Other Statutory Leave

• Bereavement Leave: 1-3 days depending on relationship to deceased
• Marriage Leave: 1-2 days for employee's own marriage
• Military Service: Paid leave for mandatory military service
• Civic Duties: Time off for jury duty, voting, and other civic obligations

Summary

Termination Types

Termination With Cause (Extraordinary Termination):

• Immediate termination without notice
• Requires serious breach of contract or misconduct
• Examples: theft, fraud, serious insubordination, breach of confidentiality

Termination Without Cause (Ordinary Termination):

• Standard termination process requiring notice period
• No specific reason required beyond business needs
• Must comply with notice period requirements

Notice Period Requirements

Notice periods are based on length of service and when termination occurs:

During Probationary Period (first month):

• 7 days' notice

After Probationary Period:

Note: Notice must be given to terminate at the end of a calendar month.

Severance Pay

• No Statutory Severance: Liechtenstein law does not require severance payments
• Contractual Severance: May be specified in employment contracts or collective agreements
• Long-Service Gratification: Some employers provide voluntary payments for long-serving employees

Final Pay Requirements

• Timing: Final salary and accrued benefits must be paid by the next regular payday
• Components: Must include:
  • Outstanding salary
  • Accrued vacation pay
  • Any contractual bonuses or benefits
  • Proportional 13th month salary

Probationary Periods

• Standard Duration: 1 month
• Extended Period: Up to 3 months by mutual agreement
• Termination Rights: Either party may terminate with 7 days' notice during probation

Protected Employees

Certain employees have enhanced protection against termination:

• Pregnant employees and new mothers (until 16 weeks after birth)
• Employees on military service
• Employee representatives
• Employees on sick leave (limited protection)

National Public Holidays

Liechtenstein observes the following public holidays:

Holiday Pay Rules

• Paid Time Off: All public holidays are paid days off for employees
• Work on Holidays: If required to work, employees receive:
  • 200% of regular pay, or
  • Regular pay plus compensatory time off
• Holiday During Vacation: If a public holiday falls during vacation, an additional vacation day is granted

Regional Variations

• Municipal Holidays: Some municipalities may observe additional local holidays
• Religious Observances: Catholic holidays are widely observed given the country's religious heritage
• Business Practices: Many businesses close early on Christmas Eve and New Year's Eve

Required Documents for Employment

Employment Contract Requirements:

• Written contract mandatory for all employees
• Must include: job description, salary, working hours, vacation entitlement, notice periods
• Language: German (official language) or other language by agreement

Employee Documentation:

• Identity Documents: Valid passport or national ID
• Work Permit: Required for non-EEA nationals
• Social Security Registration: Automatic upon employment commencement
• Tax Registration: Handled through employer
• Bank Account: For salary payments (preferably in Liechtenstein or Switzerland)

Work Authorization

EEA/Swiss Citizens:

• No work permit required
• Must register residence if staying longer than 3 months

Non-EEA Citizens:

• Work permit required before employment
• Residence permit also required
• Quota system applies (limited permits available annually)
• Employer must demonstrate no suitable EEA candidate available

Language Requirements

• Official Language: German
• Business Language: German is standard, English increasingly common in international companies
• Contract Language: Typically German, but other languages acceptable with proper translation

Social Security Registration

• Automatic Enrollment: Employer registers employee with social security system
• AHV Number: Assigned upon first employment in Liechtenstein
• Coverage: Includes pension, disability, unemployment, and family allowances

Data Protection Compliance

• GDPR Application: EU GDPR applies in Liechtenstein
• Employee Consent: Required for data processing beyond employment necessity
• Data Security: Employers must implement appropriate security measures
• Privacy Rights: Employees have rights to access, correct, and delete personal data

Probationary Period Setup

• Standard Period: 1 month
• Contract Specification: Must be clearly stated in employment contract
• Evaluation Process: Regular feedback and assessment recommended
• Termination Rights: 7 days' notice required from either party

Onboarding Timeline

Worker Classification: Employee vs. Contractor

Employee Characteristics:

• Subject to employer's instructions and control
• Integrated into company organisation
• Regular working hours and location
• Entitled to social security benefits
• Protected by employment law

Independent Contractor Characteristics:

• Works independently with own business structure
• Provides services to multiple clients
• Bears own business risks
• Responsible for own social security contributions
• Not protected by employment law

Misclassification Risks:

• Retroactive social security contributions
• Tax penalties
• Employment law protections may apply retroactively

Collective Bargaining

• Coverage: Approximately 30% of workforce covered by collective agreements
• Sectors: Common in construction, manufacturing, and public services
• Negotiation: Between employer associations and trade unions
• Binding Nature: Collective agreements override individual contract terms where more favourable to employees

Cultural Workplace Norms

Communication Style:

• Direct but polite communication expected
• Punctuality highly valued
• Formal address (Sie) common in professional settings

Work-Life Balance:

• Strong emphasis on personal time
• Long lunch breaks common (1-2 hours)
• Limited evening and weekend work expectations

Hierarchy:

• Relatively flat organisational structures
• Consensus-building approach to decision making
• Respect for expertise and experience

Remote Work Considerations

Legal Framework:

• No specific remote work legislation
• Governed by general employment law principles
• Health and safety obligations apply to home offices

Practical Considerations:

• Equipment provision typically employer responsibility
• Data protection requirements apply to home working
• Cross-border remote work may create tax complications
• Working time regulations still apply

Documentation Requirements:

• Remote work arrangements should be documented in writing
• Clear policies on availability, communication, and performance measurement
• Regular review and adjustment of remote work arrangements

What Borderless AI Handles

When you hire through Borderless AI in Liechtenstein, we manage:

• Employment Contracts: Compliant German-language contracts
• Payroll Processing: Monthly salary payments and social security contributions
• Tax Compliance: Income tax withholding and reporting
• Social Security: Registration and ongoing contributions
• Work Permits: Assistance with non-EEA work authorization
• Local Representation: Acting as local employer of record
• Compliance Monitoring: Ongoing adherence to employment law changes