Short-time Work Compensation (Kurzarbeitsentschädigung)
Kurzarbeitsentschädigung is federal and cantonal income support for employees whose Pensum is temporarily reduced because of insufficient work — not workforce cuts. Your canton's unemployment insurance office (RAV/ORP/URC) manages applications. You remain the employer; the scheme tops up lost wages to 80% of normal pay for up to 12 months, renewable in some cantons. You must notify your insurer and file correctly, or you lose reimbursement and face back-payment claims.
Kurzarbeitsentschädigung exists to stabilize employment during economic downturns or temporary market shocks. It is not redundancy; it is a shared safety net where the state, your unemployment insurance fund, and your company each contribute.
It applies when your sector or company faces a genuine, documented shortage of work—not individual performance issues. Approval requires proof that the reduction is temporary and that you have explored alternatives (e.g., flexible scheduling, stock-building).
When You Can Claim It
You can apply when your company's total Pensum drops by at least 10% and the shortfall affects at least one employee. The cause must be external (market collapse, supply chain, pandemic) or structural but temporary (seasonal downturn, client loss).
Your canton's RAV (Regionales Arbeitsvermittlungszentrum) or equivalent body (ORP in Romandy, URC in Ticino) must approve the application before you reduce hours. Once approved, you receive reimbursement for the difference between the employee's old and new wage, up to a canton-specific cap (often 80% of gross pay).
- Minimum duration: typically 1 month; maximum: 12 months (extendable in some cantons)
- Applies to all employees regardless of Pensum—full-time, part-time, apprentices, and managers
- Your contribution: you continue paying employer social charges on the reduced Pensum; the state covers part of the wage loss
- Employees still accrue vacation days and seniority on their original Pensum
- Must be part of a canton-wide or company-wide measure; you cannot cherry-pick individuals
- No claim is possible if you have terminated contracts or are in active recruitment for the same roles
Your Obligations
Notify your unemployment insurance provider in writing as soon as the work shortage appears. Your insurer will direct you to the RAV/ORP/URC. Complete all required documentation: proof of the shortfall (payroll records, client confirmations, order books), your company accounts, and a detailed reduction plan showing Pensum changes per employee.
You must inform affected employees in writing before implementation. Under most cantonal law and GAV rules, this requires notice (typically 30 days); some GAVs impose longer notice or consultation with staff representatives. Ensure your employment contracts and any collective agreement permit temporary Pensum reduction without consent.
- File your application with the RAV/ORP/URC before the reduction takes effect
- Keep detailed timesheets and wage records for the duration of the scheme
- Pay employees their reduced wages on time; the state reimburses you retroactively (lag of 4–8 weeks is normal)
- Do not combine Kurzarbeitsentschädigung with mass redundancies in the same period
- Renew your application if you wish to extend beyond the approved period
- Preserve all documentation for 7 years (revDSG and tax compliance)
The Most Common Mistake
The biggest error is applying retroactively or failing to notify the RAV/ORP/URC before reducing hours. The state will deny reimbursement for any period worked before formal approval. You will then owe employees the difference between the reduced wage you paid and the amount they should have received.
A close second: misclassifying the shortfall as permanent when it is temporary, or continuing the scheme after the stated emergency ends. This triggers audits and demands for repayment of incorrectly claimed funds. Plan your exit strategy from day one and communicate it to your insurer.
- Do not reduce Pensum until written approval arrives; pre-emptive cuts are not reimbursable
- Avoid combining Kurzarbeitsentschädigung with parallel cost-cutting (e.g., unpaid leave, forced vacation accrual)
- Do not assume your insurer will automatically extend approval; reapply in advance
- Never deduct state reimbursement from employee wages; you must pay employees their full entitlement first
- Lack of proof that the shortfall is temporary or external defeats your claim
- Failing to update timesheets weekly invites audits and disqualification
Frequently asked questions
- Do I have to offer Kurzarbeitsentschädigung, or can I make staff redundant instead?
- Kurzarbeitsentschädigung is optional—you are not required to apply. However, if your canton has a collective agreement (GAV) or if you have undertaken to explore alternatives, you may have a moral or contractual obligation to try it before terminating contracts. Consult your employment lawyer and your insurer about what your sector norm expects.
- What if an employee refuses to accept the reduced Pensum?
- If the reduction is imposed unilaterally and not permitted by their employment contract or GAV, they may have grounds to claim constructive dismissal or wage loss. Always check your contracts and any applicable collective agreement before notifying employees. If there is no contractual clause, you may need their written consent or a formal amendment to their contract.
- How long does the approval process take?
- Most cantons process applications within 2–4 weeks if documentation is complete. During emergencies (e.g., 2020 pandemic), some cantons expedited approval to days. Always contact your RAV/ORP/URC directly for canton-specific timelines. Do not implement changes before written approval arrives.
General information for Swiss employers, not legal advice. Have a lawyer confirm anything with legal consequences.