#Legislative History

N. 1 Art. 114 Cst. traces back to Art. 34novies aaCst. (1976), which formed the constitutional basis for the Unemployment Insurance Act (UIA) of 25 June 1982. The original constitutional provision was adopted on 13 June 1976 with 68.3% of votes in favour (BBl 1975 II 2147). The total revision of the Federal Constitution in 1999 largely adopted the substance of the old article unchanged, but added in para. 5 the explicit authority for unemployment assistance (BBl 1997 I 389).

N. 2 The creation of compulsory unemployment insurance was a response to the economic crisis of the 1970s. Previously, only voluntary cantonal funds and trade union insurance institutions existed. The constitutional article created for the first time comprehensive federal authority for a nationwide compulsory system.

#Systematic Classification

N. 3 Art. 114 Cst. belongs to the federal social insurance authorities (Art. 111–114 Cst.). The provision is closely connected with:

• → Art. 41 para. 1 lit. d Cst. (social objective of securing subsistence in case of unemployment)
• → Art. 110 Cst. (work and vocational education)
• ↔ Art. 113 Cst. (occupational pension provision): coordination in the insurance of unemployed persons
• → Art. 115 Cst. (assistance to persons in need): subsidiary social assistance after exhaustion of benefits

N. 4 Unlike social objectives, Art. 114 Cst. establishes comprehensive legislative authority with a constitutional mandate. The Confederation must enact regulations, not merely may.

#Content of the Provision

#Legislative Authority (para. 1)

N. 5 Para. 1 grants the Confederation comprehensive legislative authority for unemployment insurance. This authority is mandatory («shall enact») and exclusive — cantonal regulations are only permissible within the framework of federal law. The authority encompasses all aspects of insurance: personal and material scope, benefits, financing, organisation and implementation.

#Constitutional Principles (para. 2)

N. 6 Appropriate compensation for loss of earnings (lit. a): The term «appropriate» gives the legislator discretion. According to Cardinaux, a replacement rate between 60% and 80% appears constitutionally compliant. The UIA provides for 70% or 80% (with children or low income). BGE 129 V 105 clarified that only compensation for normal employee activity is owed, not for overemployment.

N. 7 Prevention and combating (lit. a): The insurance has not only a passive replacement function, but also an active integration function. This legitimises the labour market measures (LMM) according to Art. 59ff. UIA. The preventive component is equivalent to the compensation function (Leu, Arbeitsmarktliche Massnahmen, p. 42).

N. 8 Compulsory insurance for employees (lit. b): Compulsory insurance covers all employed persons. Exceptions are constitutionally permissible («may provide») and concern, for example, members of boards of directors or family members working in the business (Art. 2 para. 2 UIA). The compulsory nature was confirmed in BGE 129 V 105 as a central structural principle.

N. 9 Voluntary insurance for self-employed persons (lit. c): The Constitution requires the possibility for self-employed persons to join. The UIA has not implemented this option to date — a constitutional omission (Nussbaumer, Arbeitslosenversicherung, N. 2173).

#Financing (para. 3 and 4)

N. 10 Contribution financing (para. 3): The equal division between employees and employers is constitutionally mandatory. The UIA implements this with 1.1% each of insured earnings up to the wage ceiling. Deviations are only permissible for higher incomes (solidarity contribution).

N. 11 Extraordinary circumstances (para. 4): The Confederation and cantons must provide financial benefits in extraordinary circumstances. According to Cardinaux, the poor financial situation of the insurance alone does not suffice; external factors such as economic crises or pandemics are required. The COVID-19 crisis of 2020/21 clearly met this requirement.

#Unemployment Assistance (para. 5)

N. 12 The authority for unemployment assistance is optional («may»). It was used for the first time with the Bridging Benefits Act (BBA). According to Cardinaux, federal action is justified when the cantons are overwhelmed with supporting those who have exhausted their benefits. BGE 149 V 136 and BGE 150 V 198 have qualified bridging benefits as early retirement benefits.

#Legal Consequences

N. 13 From Art. 114 Cst. follows:

1. Legislative duty: The Confederation must establish unemployment insurance
2. Design requirements: Appropriate compensation for loss of earnings, active measures, employee compulsory insurance
3. Financing rules: Equal contribution sharing, subsidiary state financing
4. Justiciability: The principles are directly applicable in reviewing UIA provisions

N. 14 The cantons have enforcement tasks (Art. 85 UIA), but no independent regulatory authority. They operate the regional employment centres (RAV) and the cantonal offices.

#Controversies

N. 15 Level of appropriate compensation for loss of earnings: Cardinaux considers 60–80% constitutionally compliant. Mahon advocated for at least 70% as a lower limit (Journée 1996, p. 45). Gerhards sees the graduation according to family obligations as a socio-politically necessary differentiation (Kommentar AVIG, Vol. I, p. 234).

N. 16 Scope of compulsory insurance: The exceptions from compulsory insurance are disputed. Rubin criticises the broad exception for members of boards of directors as contrary to the system (Commentaire, Art. 2 N. 15). Nussbaumer justifies it with the lack of employee status (Arbeitslosenversicherung, N. 2156).

N. 17 Missing self-employed insurance: The non-introduction of voluntary insurance for self-employed persons is assessed differently. Locher/Gächter see this as unconstitutionality by omission (Grundriss, § 8 N. 45). Cardinaux puts this in perspective: The Constitution only obligates the creation of the possibility, not attractive design.

#Practice Notes

N. 18 In interpreting the UIA, constitutional requirements must always be referred to. In particular, the appropriateness of compensation for loss of earnings offers argumentative scope in cases of hardship.

N. 19 The missing self-employed insurance can be problematic in status changes. Sham self-employment must be carefully examined as it endangers insurance protection.

N. 20 Bridging benefits under the BBA are subject to different rules than unemployment compensation. The qualification as early retirement benefits (BGE 149 V 136) excludes the crediting of foreign insurance periods — an important point in cross-border cases.

N. 21 In extraordinary economic situations, the activation of Art. 114 para. 4 Cst. should be examined early. The COVID-19 measures showed the importance of this safety net clause for system stability.

#Constitutional Foundations of Unemployment Insurance

#Federal Legislative Competence

BGE 110 V 252 of 25 September 1984
Consolidation of federal competence for unemployment insurance.
This decision confirmed the comprehensive legislative competence of the Confederation in the field of unemployment insurance under Art. 114 Cst.

"Unemployment insurance is a social insurance for which the Confederation has legislative competence under Art. 34quinquies [now Art. 114] of the old Constitution. This competence extends to all essential aspects of the insurance."

#Compulsory Nature of the Insurance

BGE 129 V 105 of 1 January 2002 (BGE 129 V 105 para. 2)
Specification of the constitutional principle of appropriate earnings replacement.
The decision concretises the constitutional requirement of appropriate earnings replacement in determining insured earnings.

"Unemployment insurance shall, according to Art. 114 para. 2 lit. a Cst., provide appropriate earnings replacement and only offer insurance coverage for normal customary employment activities. Therefore, it shall not provide compensation for loss of earnings resulting from the loss of overemployment."

#Constitutional Review of Ordinance Provisions

BGE 126 V 48 of 1 January 1997 (BGE 126 V 48 para. 3)
Fundamental decision on the constitutional review of dependent ordinances in unemployment insurance law.
The Federal Supreme Court found that Art. 79 para. 1quater OASI Ordinance was unlawful and unconstitutional insofar as it should be applied by analogy to unemployment insurance.

"Art. 79 para. 1quater OASI Ordinance is unlawful and unconstitutional. The new Federal Constitution applies in the context of reviewing dependent ordinance law to pending proceedings even when the contested decision was rendered before 1 January 2000."

#Bridging Benefits for Older Unemployed Persons (Art. 114 para. 5 Cst.)

#Constitutional Foundation

BGE 149 V 136 of 25 May 2023 (BGE 149 V 136 para. 4.1)
Landmark decision on the constitutional classification of bridging benefits under Art. 114 para. 5 Cst.
Bridging benefits are to be qualified as early retirement benefits, whereby foreign insurance periods are not creditable.

"Bridging benefits under the Bridging Benefits Act aim to improve the social security of older persons whose unemployment benefits have expired, as a complement to Confederation measures to promote employment of older workers. They are to be qualified as early retirement benefits within the meaning of EU Regulation No 883/2004."

BGE 150 V 198 of 1 July 2021 (BGE 150 V 198 para. 7.2.3.5)
Specification of the application of supplementary benefits case law to bridging benefits.
The Federal Supreme Court clarified that supplementary benefits case law is generally transferable to bridging benefits.

"In view of the legislature's clear intention to adopt the supplementary benefits system as far as possible, the case law developed in this context can generally be used to interpret the provisions on bridging benefits."

#Waiver of Assets and Quasi-Retroactive Effect

Federal Supreme Court 8C_110/2024 of 25 November 2024 (8C_110/2024 para. 5.7 and para. 6.6)
Current leading decision on the temporal application of waiver provisions for bridging benefits.
The Federal Supreme Court confirmed that asset waivers made before the Bridging Benefits Act entered into force are to be considered in the sense of a quasi-retroactive effect.

"Consideration of waiver acts within the meaning of Art. 13 para. 2 Bridging Benefits Act that occurred before the Bridging Benefits Act entered into force on 1 July 2021 in the context of entitlement examination from 1 July 2021 does not constitute fundamentally inadmissible true retroactive effect. The Bridging Benefits Act applies only to the period after its entry into force."

"As an interpretive result, when examining the asset threshold in the sense of a quasi-retroactive effect, assets must also be counted on which the person concerned waived before the Bridging Benefits Act entered into force on 1 July 2021."

#Coordination with Other Social Insurances

#Accident Insurance for Unemployed Persons

BGE 127 V 458 of 27 December 2001 (BGE 127 V 458 para. 3)
Landmark decision on accident insurance for unemployed persons under AUIA.
The decision regulates the demarcation of competence in cases of double insurance between UIA continued coverage and AUIA insurance coverage.

"For an unemployed person, there is double insurance for non-occupational accidents if they have an accident after the start of insurance coverage according to Art. 3 para. 1 AUIA, but before the end of the continued coverage period according to Art. 3 para. 2 UIA. In this case, SUVA is exclusively responsible for providing insurance benefits."

#Occupational Pension Scheme

BGE 139 V 579 of 12 November 2013 (BGE 139 V 579 para. 5)
Decision on compulsory occupational pension scheme for unemployed persons.
Specification of insurance coverage for disability after registration for unemployment but before receiving daily allowances.

"The insured person who becomes disabled after registration with unemployment insurance but before receiving daily allowances is entitled to disability benefits under the OPS if they met the requirements for receiving unemployment daily allowances at the time of the onset of incapacity for work."

#International Aspects

BGE 149 V 136 of 25 May 2023 (BGE 149 V 136 para. 9.6 and para. 9.7)
Decision on crediting foreign insurance periods for bridging benefits.
The Federal Supreme Court qualified bridging benefits as early retirement benefits within the meaning of EU coordination law.

"Benefits under the Bridging Benefits Act are to be qualified as early retirement benefits within the meaning of Art. 1 lit. x and Art. 3 para. 1 lit. i of Regulation (EC) No 883/2004, which has the consequence that foreign insurance periods are not creditable for calculating the minimum insurance period of 20 years."