Short-Time Work in Switzerland: KAE Explained
Short-time work (Kurzarbeit, or KAE – Kurzarbeitsentschädigung) allows Swiss employers to reduce employee working hours temporarily rather than resort to redundancies. The ALV (unemployment insurance) compensates 80% of lost wages for up to 12 months within a 2-year period.
What Is Short-Time Work?
Short-time work is an ALV (unemployment insurance) instrument enabling employers to reduce employee hours or halt work temporarily when facing exceptional economic difficulties beyond their control. The ALV covers 80% of the lost wage for up to 12 months within 2 years (extendable to 18 months in extraordinary circumstances, as during COVID-19). The goal is to prevent layoffs and retain skilled workers.
Eligibility Requirements
Employees on permanent or fixed-term contracts subject to ALV contributions are eligible. Excluded: employees serving notice periods, those who caused the work reduction themselves, and employees working fewer than a certain minimum threshold. The employer must demonstrate an unforeseeable, temporary, and unavoidable work reduction – business decisions like restructuring alone do not qualify.
Benefit Amount and Calculation
KAE covers 80% of the lost insured earnings. Calculation basis: average insured wage over the prior 12 months, capped at CHF 148,200/year (2026). The employer continues to pay normal salary and then claims reimbursement from the ALV. Social security contributions (AHV, ALV, BVG) continue to apply to the full original salary.
Employer Application Process
Employers must notify the cantonal labour market authority (AWA) before introducing short-time work – typically 10 days in advance. A monthly settlement form must be submitted for each billing period. The AWA verifies eligibility; reimbursement is made retroactively.
Frequently Asked Questions
How long can short-time work last in Switzerland?
Up to 12 months within a 2-year period. In exceptional circumstances (declared by the Federal Council), this can extend to 18 months.
Do employees need to agree to short-time work?
The employer can generally impose short-time work unilaterally, but must inform employees. A formal written agreement is recommended for significant reductions. Employees who refuse may face termination risk.
Is the 13th month salary still paid during short-time work?
Yes, the 13th month obligation remains. However, it is calculated on actual hours worked. The KAE does not cover the 13th month component.