Facts

Parties to the proceedings: The Unia unemployment fund (appellant) and the insured person (respondent, represented by an attorney). Also involved are the Cantonal Insurance Court of St. Gallen (lower court) and the State Secretariat for Economic Affairs (SECO), which waived the right to submit a response.

Facts: From 15 November 2013, the insured person was a shareholder and managing director with sole signing authority of [B. GmbH] (one-man GmbH) and was simultaneously employed as a foreman (plasterer). The company was dissolved through bankruptcy. On 6 March 2017, the insured person registered with the AOO for job placement. In the employer certificate dated 26 April 2017, he stated that the employment relationship lasted until 30 December 2016 and that his last monthly wage was CHF 5,000 net.

Administrative proceedings: By decision of 26 July 2017, Unia denied the claim to unemployment benefits, on the ground that the insured person had held a position similar to that of an employer and that an actual receipt of wages during the benefit assessment period could not be proven with predominant probability. By objection decision of 21 December 2017, it confirmed this decision. By interlocutory decision of 16 October 2017, it also rejected the request for free legal aid for the objection proceedings.

Lower court: The Cantonal Insurance Court of St. Gallen joined the appeals, annulled the objection decision, set the insured earnings at CHF 3,000 per month, annulled the interlocutory decision of 16 October 2017, and held that the insured person was entitled to an unreduced party compensation for the objection proceedings. The matter was remanded to Unia for the determination of the compensation.

Requests before the Federal Supreme Court: Unia requests that the lower court's decision be set aside and the objection decision be confirmed; in the alternative, remand to itself, and in the further alternative, remand to the lower court. The lower court requests that the appeal be dismissed.

Subject matter of the dispute: (1) Whether the lower court violated federal law by affirming contribution-liable employment for 2016 and setting the insured earnings at CHF 3,000; (2) whether the insured person was rightly granted free legal representation in the objection proceedings.

Considerations

Admissibility: The Federal Supreme Court examines the admissibility requirements freely. A remand decision is in principle considered an interlocutory decision (Art. 92 f. FSCA). However, if the lower instance has no decision-making discretion and the remand serves only the computational implementation, such as the determination of the amount of party compensation, it is substantively a final decision within the meaning of Art. 90 FSCA. The appeal is therefore admissible.

Scope of review and standard of proof: The Federal Supreme Court applies the law of its own motion (Art. 106 para. 1 FSCA) and is not bound by the parties' reasoning. The lower court's findings of fact may only be corrected in cases of manifest error (arbitrariness) (Art. 105 para. 2 FSCA). Arbitrariness exists where evidence is manifestly misjudged in its meaning and scope, an important piece of evidence is disregarded without objective reason, or untenable conclusions are drawn.

Contribution period and proof of wage payment: The contribution period requires sufficiently verifiable contribution-liable employment of at least twelve months within the qualifying period (Art. 8 para. 1 lit. e and Art. 13 para. 1 UIA). Proof of actual wage payment is not an independent requirement for entitlement, but it is a significant indication. Uncertainties regarding the amount of wages are to the detriment of the insured person; they may lead to denial of the claim if the insured earnings cannot be reliably determined (Art. 23 para. 1 UIA in conjunction with Art. 40 UIO). In the case of a one-man GmbH, particularly strict evidentiary requirements apply; transactions and wage payments between the company and the shareholder must be clearly documented and unambiguously treated in the accounts. Employer certificates and wage statements constitute only indications.

Assessment by the lower court: The lower court affirmed the contribution period based on the operational activity of the GmbH and revenue of CHF 257,150.80 as well as the insured person's participation in the work. The Federal Supreme Court finds that the appellant's assertion that the insured person was merely a straw man constitutes a possible novum (Art. 99 para. 1 FSCA) and in any event does not make the participation appear manifestly incorrect. The lower court, on correct and undisputed grounds, found no proof of the claimed cash withdrawals of CHF 60,000 net, since there are discrepancies with the income statement and tax assessment, the booking is merely of an accounting nature, no regular wage payments of CHF 5,000 were made, and irregular cash withdrawals may also serve other purposes. The accounting records are summary and were not relied upon as evidence by the lower court.

Arbitrariness in the estimation: The lower court attributed account movements of approximately CHF 36,000 to living expenses by treating cash withdrawals up to CHF 1,000 as always private. The Federal Supreme Court considers this assumption arbitrary: the lower court did not explain why the threshold should lie at CHF 1,000, and its assessment was internally contradictory, since it simultaneously classified individual items as possibly business-related. Nor had the insured person claimed that the small withdrawals were used for living expenses. Neither the accounting records nor the account statement permit clear conclusions as to the private or business nature of the expenditures.

Result regarding the claim: The insured earnings set by the lower court at CHF 3,000 are manifestly incorrect. An…