Are you entitled to unemployment benefits when self-employed?

As a self-employed, you may claim full employment benefits to compensate for the loss of your main or only source of income. (Photo : ING Luxembourg)

As a self-employed, you may claim full employment benefits to compensate for the loss of your main or only source of income. (Photo : ING Luxembourg)

It is not always easy to continue your professional activities as a self-employed person in the current economic situation. What happens if you have to stop your activities? Can you receive unemployment benefits in Luxembourg? Yes, you can, provided that you meet certain conditions.

As a self-employed, you may claim full employment benefits to compensate for the loss of your main or only source of income in case of involuntary cessation of your professional activities. That means that you had to stop working as self-employed because of economic and financial difficulties, due to the actions of a third party, for reasons of force majeure or medical causes. If you have a temporary incapacity of work (sick leave) during the cessation of your activity, you will not receive unemployment benefits immediately. Instead, you will be paid sickness benefits until your incapacity for work ends. In case of sickness or maternity during the benefit period, the right to unemployment benefits is unaffected.  

What are the other conditions?

You also have a lot of other conditions to meet to be entitled to unemployment benefits:

1.    You must reside in Luxembourg at the time of cessation of activities and be aged between 16 and 64.

2.    You must be fit for work, available on the job market and ready to accept any appropriate job (according to pay, physical and mental fitness, daily commute, family situation, working conditions, etc.).

3.    You must have been affiliated for at least two years with the social security institutions in Luxembourg as an employee or self-employed.

4.    You must have worked as self-employed for at least six months before filling a claim for unemployment benefits.

5.    You must be registered as a jobseeker with the National Employment Agency (Agence pour le développement de l’emploi or ADEM) and apply for full unemployment benefits.

How to proceed?

In the context of the COVID-19 crisis, the procedure for registration and application for unemployment benefits has been simplified. You can now register online on ADEM’s website (in English). Once registered as a jobseeker with the ADEM, you will receive, by post or e-mail, a formal invitation for a telephone or face-to-face interview with an ADEM agent within two weeks. If you have selected the telephone interview on your online form, you must be ready to answer the telephone call during the time mentioned in the invitation.

Depending on your situation, you will need to submit several documents. The most important are the following:

-       a detailed letter explaining the reasons for stopping your professional activities and indicating the business nature, name and address;

-       a document proving the complete cancellation of the authorization of trade/business permit or the ministerial approval;

-       proof of disaffiliation with the Joint Social Security Centre (Centre commun de la sécurité sociale ou CCSS);

-       a copy of the constitutional documents/statutes (including the last amendments);

-       a balance sheet of the previous financial years;

-       a certificate from the CCSS with the contributions paid during the last two years;

-       an income certificate from the CCSS for the last two years;

-       a CCSS account statement/annual adjustment for the previous year.  

What is the maximum amount and how long?

In case of admission to full unemployment benefits, there are two options:

1.    If you have met your obligations to pay social contributions, you are entitled to a benefit corresponding at 80% (or 85% if you have one or more dependent children) of the income used, for the past two financial years, as the contribution base to the pension fund. The monthly amount of the benefit cannot be higher than 2,5 times the social minimum wage (2,5 x EUR 2,708.35 gross as of 1 October 2021 = EUR 6,770.87 gross).

2.    If you have not fulfilled this obligation, you will only receive 80% (or 85% if you have one or more dependent children) of the social minimum wage for unskilled workers (80% or 85 % of EUR 2,708.35 gross as of 1 October 2021, i.e. EUR 2,166.68 or EUR 2,302,1 gross).

In principle, the duration of your compensation is 12 months maximum. However, it is possible to obtain an extension under certain conditions. For instance, if you are more than 50 years and have worked for 20, 25 or 30 years, your unemployment benefit entitlement period will be extended by 6, 9 or 12 months.

What about partial unemployment benefits?

Unfortunately, the partial unemployment benefits regime does not apply to the self-employed.

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