Unemployment benefits for self-employed in Luxembourg

Can a self-employed person receive unemployment benefits in Luxembourg?

The Luxembourgish government has several rules and regulations in place in order to support self-employed people in need of financial assistance, for example due to their business going bankrupt. Especially after the pandemic, these regulations have been reinforced, in the form of financial aids.

So simply put, yes, self-employed persons can still receive unemployment benefits in Luxembourg, much like full-time employees, but there are some specific conditions and regulations to take into consideration that might vary. In this article we will look into who is concerned, some specific details regarding unemployment benefits such as amount and duration, obligations and a compact step-by-step guide to help you with your application.

Eligibility criteria for unemployment benefits for self-employed persons in Luxembourg

Here is an eligibility point list for newly unemployed self-employed people:

1️⃣ Business Closure

This point needs to be accompanied by an acceptable -involuntary- reason though and that might be:

• Financial issues leading to closure
• Health issues leading to not being able to manage the business
• Legal actions preventing the business from operating as usual
• Other unpreventable issues such as political situations, war, natural disasters, etc.

2️⃣ Social Security

The self-employed person requesting unemployment benefits goes without saying that pays social security contributions to the state of Luxembourg, but this must also be happening for at least 2 years in continuation before applying for benefits.

3️⃣ Duration of self-employment and status

The self-employed person must have had an active business for at least 6 months before closure to be eligible for benefits. Self-employed workers must have carried out the activity as their main occupation and, if they were acting through a company, must have held the majority of the capital. They must not hold shares in any other company at the time of their application.

4️⃣ Age, Residency and health

In order for a self-employed person to be able to seek unemployment benefits, they need to comply with those requirements:

• Age between 16 and 64
• Luxembourgish resident, at least by the time the business closed
• Physically and mentally fit for work
• Willing to accept any suitable job offered, based on education, experience and skills

5️⃣ Unemployment registration

The newly unemployed person needs to register as a jobseeker with the National Employment Agency (ADEM)

Amount and duration of unemployment benefits offered

For self-employed persons the amount they will receive in unemployment benefits, generally speaking, is calculated based on their previous income. The actual calculation can be more complex and is based on declared contributions and income, but here are some points to keep in mind:

• 80% in average of their previous income from the past 2 years
• The minimum they can get is 80% of the minimum wage of an unskilled worker
• The maximum can be up to 2.5 times of minimum wage

The duration of benefits highly depends on every individual application when it comes to self-employed persons, therefore it is determined specifically by the ADEM. 

Obligations to keep receiving your benefits 

Besides looking actively and regularly for a job, you must report this to ADEM and offer them an overview and updates on your job search process. You should also be ready and willing, as mentioned before, to accept any job that they offer you, which -ideally- matches your skills and criteria as well, and/or participate in relevant unemployment orientation courses and career coaching or mentoring.

If you do not comply with these minimum requirements, you are risking getting a penalty or losing your unemployment benefits completely. Some other reasons of this same result could be:

• Reaching the age of 65
• Receiving payments / income from elsewhere than your business or other allowances and benefits
• Reaching the limit of the duration of your benefits

Application process step-by-step

✅ Register as a jobseeker with ADEM

This is the very first mandatory step you should follow and it should be complete within 2 weeks of cessation of activity.

📑 Gather and submit all necessary documents

The main ones would firstly be the unemployment benefits application form and a declaration of income. You should also add to those: 

• ✔️ a letter explaining the reasons of cessation of activity of your business, 
• ✔️ proof of business permit registration and cancellation, 
• ✔️ proof of de-registration from social security contributions,
• ✔️ financial records attesting the reasons of closure.

Depending on the reasons of business closure and specific company details you will probably have to attach those documents to your application as well:

• Constitutional documents including amendments.
• Financial balances of previous financial years.
• CCSS certificate of contributions paid during the past 2 financial years.
• Income CCSS certificate for the past 2 financial years.
• Any financial adjustments of the previous financial year.
• In case the business closed due to health reasons, a recent medical certificate proving that.

If applicable you might want to add:

• Copy of the deed of sale of potential business assets
• Copy of the bankruptcy status
• Copy of the cooperation contract

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Conclusion

It is definitely a relief for self-employed people in Luxembourg to know that they are also eligible for unemployment benefits, even if under specific conditions and requirements. It offers financial safety and stability for those who had to close their business due to unforeseen reasons. On top of that, Luxembourg’s economy can support financial aids so if you are a recently unemployed entrepreneur it is worth looking into those as well, and hopefully you and your business will recover soon.

It is very important to deeply understand the process and make sure to have all the required documentation for your application to ADEM, and all that will help you regain your business or find a new job, maybe even in a different field. Hopefully this article has been a useful guide to get you started.

National Employment Agency (ADEM)

🔹  13A, rue de Bitbourg L-1273 Luxembourg Contact Center for job seekers:
🔹  (+352) 247 88 888
🔹 info@adem.etat.lu
🔹 https://adem.public.lu/en.html

Maison de l’orientation - ADEM

🔹  29, rue Aldringen L-1118 Luxembourg
🔹  (+352) 247 88 888
🔹  info@m-o.lu
🔹  https://adem.public.lu/en/demandeurs-demploi/definir-son-projet-professionnel/sorienter/maison-de-lorientation.html