Short-time work in Switzerland: the 24-month window to January 2027 and the rule change on January 1

Since July 24, 2026, the United States has applied an additional tariff of up to 12.5 percent to part of Switzerland's industrial exports. The 15 percent framework agreed in November 2025 was meant to bring planning certainty; demand from the US and Europe has stayed weak nonetheless, and the growth forecasts for 2026 sit below one percent. In manufacturing, among suppliers and in export-related services, short-time work is back on the management agenda.

The Federal Council has responded. At the end of May 2026 it extended the 24-month maximum for short-time work compensation to January 31, 2027. At the same time, a change is scheduled for January 1, 2027, that many companies have not yet noticed: the flextime rule disappears. This article explains what applies to a small business, what the advance notice requires, what short-time work still costs the employer despite the compensation, and where it reaches its limit. If you run a Swiss subsidiary of a foreign group, the same rules apply to your Swiss entity.

The deadlines in 2026 and 2027

By law, the maximum is 12 accounting periods within a two-year framework period. The Federal Council can temporarily extend that to 24. It did so in October 2025 with effect from November 1, 2025, and at the end of May 2026 it prolonged the extension to January 31, 2027. At the end of 2026 it will review whether the economy justifies a further extension.

Two rules depend on that:

• Waiting period. A company that has drawn short-time work compensation for 24 months without interruption must wait six months before a new framework period can open.
• Approval in stages. The cantonal labor office approves short-time work for a maximum of three months at a time. After that, a new advance notice is needed with updated documents, such as the revenue sheet showing how the situation has developed.

What disappears on January 1, 2027

Today, time balances of up to 20 working hours from company flextime schemes do not count as extra hours. They don't have to be worked off before short-time work starts and are not set against the lost hours. That exception is in Art. 46 para. 2 of the Unemployment Insurance Ordinance (AVIV), and the Federal Council repealed it in November 2025 with effect from January 1, 2027. SECO, the State Secretariat for Economic Affairs, cites relief for companies and funds as the reason.

In practice, from January every extra hour accrued in a flextime account is an extra hour. Extra hours worked in the six months before short-time work are deducted from the lost hours. A company that introduces short-time work in spring 2027, with employees carrying an average of 15 extra hours, loses those 15 hours per person in eligible lost time. Anyone considering short-time work for 2027 therefore reduces flextime balances in 2026, while the exception still applies.

The conditions in brief

Short-time work compensation covers a loss of working hours that is economically caused, temporary and unavoidable. A drop in orders because of tariffs, the economic cycle or the exchange rate counts. Seasonal fluctuations, normal business risk and structural problems do not.

Condition	Rule
Scale	at least 10 percent of the target working hours of the company or department per accounting period
Consent	every employee concerned agrees; anyone who declines keeps full salary
Advance notice	at least 10 days before the start, to the cantonal labor office, via eServices or form 10040
Time records	a company time-recording system showing hours worked per day, including extra hours, for each person
Claim	within 3 months of the end of each accounting period, to the chosen unemployment insurance fund; late claims lapse

The accounting period is normally the calendar month. The advance notice goes to the canton where the business is located. If it is not filed via eServices, the form goes by mail or encrypted email.

Excluded from compensation are apprentices, employees whose contract has been terminated, people at the AHV reference age, temporary agency staff and anyone who, as owner, shareholder or member of management, can significantly influence the company's decisions, together with spouses working in the business. In a small business that is often exactly the level that feels the drop in orders most directly.

Time recording is where most claims fail. The fund wants, for every person, the hours worked each day, the hours lost and the extra hours. A spreadsheet reconstructed after the fact is generally not enough. A company without reliable time recording sets it up before filing the advance notice, or no compensation will be paid.

What the employer pays and what the fund refunds

Compensation is 80 percent of the eligible loss of earnings, calculated on the contractual salary including regular allowances and up to an insured salary of CHF 12'350 a month (CHF 148'200 a year). The employer advances the compensation and pays it on the normal payday; the fund refunds it once the claim is processed.

Three items stay with the employer:

1. One waiting day per accounting period. Of the eligible lost hours, the employer carries one full workday per person.
2. Social insurance contributions on 100 percent of the salary. AHV/IV/EO, ALV, accident insurance, family allowances and the occupational pension continue as if full hours had been worked. The employer may deduct the full employee shares from the salary. The unemployment fund refunds the employer's share of AHV/IV/EO and ALV for the lost hours; the employer's share of the pension fund, accident insurance and family allowances stays with the company.
3. The difference up to 100 percent, if the company voluntarily pays employees more than 80 percent of the lost earnings.

Worked example

An employee on CHF 6'000 a month with 160 target hours works 80 hours in a month. Hours lost: 50 percent. Loss of earnings: CHF 3'000.

Item	Amount
Salary for the 80 hours worked	CHF 3'000
80 percent of the lost earnings, paid to the employee	CHF 2'400
Gross salary in the short-time month	CHF 5'400
Waiting day (8 hours at CHF 37.50), not eligible	CHF 300
Refund from the fund: 80 percent of CHF 2'700 eligible loss	CHF 2'160
Employer's salary cost after the refund	CHF 3'240

On top of that come the employer contributions on CHF 6'000, of which the fund refunds the AHV/IV/EO and ALV share on the CHF 2'700 lost. Instead of CHF 6'000 in salary cost, the employer carries around CHF 3'240 that month plus the add-on costs that are not refunded. Across 20 employees and six months, that is the difference between bridging and cutting.

The process in five steps

1. Document the situation. Incoming orders, revenue and capacity utilization over recent months compared with the previous year, with evidence. The cantonal revenue sheet shows the expected format.
2. Inform employees and obtain consent. In writing, per person, with the scale and the expected duration. Consent is a condition, and the conversation sets the mood for the months ahead.
3. File the advance notice. 10 days before the start, via eServices, with an organization chart if several departments are affected. Approval runs for three months.
4. Record time and claim monthly. Hours worked, hours lost and extra hours per person, filed with the fund's forms within three months.
5. Reassess after three months. If the situation has improved, short-time work ends. If it has gotten worse, the question in the next section comes up.

Where short-time work reaches its limit

Short-time work is built for a dip that passes. It preserves jobs, know-how and the ability to deliver the moment demand returns. If demand disappears for good, because a market is lost or a product is replaced, short-time work delays the decision and makes it more expensive: 24 months of waiting days and add-on costs, followed by the layoffs that were needed anyway.

Three questions help. First: is there a specific point at which the orders come back, and a reason to believe it? Second: will the loss of hours outlast the 24 months? Third: does the decline affect a department whose output the company will no longer need?

If two answers point the wrong way, plan the reduction now, and do it properly. Once there are ten or more terminations within 30 days in a business with 21 or more employees, the Swiss rules on mass layoff apply, with consultation before the decision, as our guide to mass layoff in Swiss small businesses sets out. For the people affected, outplacement turns a termination into an orderly transition.

The bottom line

Until January 31, 2027, 24 months of short-time work are available, and from January 1, 2027, every flextime hour counts. File the advance notice properly, keep time records the fund will accept and budget for the waiting day, and a dip can be bridged at a fraction of the salary cost. Recognize that the dip is here to stay, and you save yourself the 24 months and handle the reduction properly.

The advance notice, the monthly claim to the fund and payroll runs with short-time work are part of our payroll service, at published fees. If you are setting up in Switzerland, our page on hiring in Switzerland covers the employer duties that come with a Swiss entity. To find out whether short-time work is the right route for your company, let's talk for 30 minutes: book an intro call.