Why short-time work is a critical tool for SMEs
When orders decline temporarily but the company structure remains necessary, layoffs are not always the most efficient response. In Switzerland, reduced working hours (RHT, or Kurzarbeit) allow SMEs to cut actual hours while maintaining the employment relationship, thanks to compensation paid by the unemployment insurance fund (ILR) under the unemployment insurance scheme.
For business owners, administrative managers and trustees, RHT is not just a labour-market measure: it is a complex financial operation. The employer advances wages and social contributions, submits periodic statements to the unemployment insurance fund and recovers reimbursements with a certain delay. Imprecise management can squeeze liquidity precisely when the company is at its most vulnerable.
This guide explains the legal prerequisites, the procedure via Job-Room and the cantonal office, payroll treatment, accounting under Swiss standards and practical levers for cash flow planning — with references updated for 2026.
Legal requirements and conditions for approval
ILR is not automatic: the cantonal office and the unemployment insurance fund verify on a case-by-case basis that the loss of work is temporary, unavoidable with reasonable measures and not attributable to normal business risk (Art. 31 and 33 UIA).
| Criterion | Requirement | Practical implication |
|---|---|---|
| Minimum loss of hours | At least 10% of scheduled hours in the accounting period | Calculated across the entire workforce, except in recognised sectors of activity |
| Nature of the loss | Temporary and extraordinary | Document cause and effect (e.g. drop in orders, supply chain disruption) |
| Advance notice | At least 10 days before start (3 in exceptional cases) | Via the «Short-time work advance notice» eService on Job-Room to the cantonal office; authorisation normally for up to 3 months |
| Compensation rate | 80% of the calculable loss of earnings (Art. 34 UIA) | Basis: contractual salary for the last pay period before RHT |
| Waiting period | 1 day per accounting period (usually monthly) | Deductible franchise subtracted from the reimbursable amount; cost entirely borne by the employer |
| Maximum duration (2026) | 24 months per two-year framework period (extension until 31.01.2027) | Temporary extension compared with the standard 12 months; maximum 4 periods with loss exceeding 85% |
| Social contributions | Calculated on 100% of normal salary | Reimbursement of the employer's OASI/IV/EO/ALV share on lost hours; occupational pension and other charges largely borne by the company |
| Employee objection | Right to object to RHT | In that case the employer pays full salary without compensation |
SECO procedure and administrative workflow
RHT follows a strict sequence: reversing the steps risks losing the right to reimbursement for entire periods. The cantonal office authorises the advance notice; the unemployment insurance fund reviews the application and the statement.
1. Advance notice on Job-Room
Before reducing hours, the employer must register on Job-Room and submit the digital advance notice to the competent cantonal office at least 10 days before the start (3 days in documented exceptional cases). Registration can take 2–5 working days: plan ahead. The advance notice must describe the causes of the loss of work, measures already taken (reduction of overtime, leave, use of holiday) and the expected impact on hours.
2. Introduction of short-time work
Once the advance notice period has elapsed and cantonal authorisation has been obtained (normally for up to 3 months), the company reduces hours as announced. It is essential to keep an accurate record of actual hours, absences and allocations per employee: this data feeds the monthly statement.
3. Application and periodic statement
For each accounting period (usually monthly), the employer submits the application and statement within three months via the «Short-time work application/statement» eService or Excel form 1042i to the chosen unemployment insurance fund. Deadlines are strict: a late statement may be rejected in full.
4. Review and reimbursement
The fund reviews the documentation, verifies compliance with the 10% threshold and credits the compensation to the company account. Reimbursement covers 80% of the loss of earnings and the employer's OASI/IV/EO/ALV share on lost hours, but not all ancillary costs (e.g. the employer's occupational pension share on lost hours remains largely borne by the company).
Wages, payslips and social contributions
Payroll management during RHT follows rules that often surprise SMEs: the employee receives less on the payslip, but the contribution base remains the full amount.
Calculating net salary on the payslip
The employee receives salary for hours actually worked plus 80% of the loss of earnings on lost hours. Periodic contractual allowances are included in the calculation base, subject to exceptions provided by law.
Example: a worker with a monthly salary of CHF 5'000 and RHT at 50% receives approximately CHF 2'500 (hours worked) + CHF 2'000 (80% of the CHF 2'500 loss) = CHF 4'500 gross, net of the waiting period.
Social contributions at 100%
OASI/IV/EO/ALV, accident insurance, family allowances and occupational pension must be calculated as if the employee had worked full time. The employer may deduct the full employee contribution share from the employee, unless otherwise agreed.
The unemployment insurance fund reimburses the employer for the OASI/IV/EO/ALV employer share on lost hours, but not the entire pension cost. This asymmetry directly affects personnel costs.
Residual cost borne by the company
Even with ILR approved, the company bears 20% of the loss of earnings, the waiting period, the non-reimbursed occupational pension share and fixed personnel costs (administrative expenses, any contractual benefits). For an SME with 10 employees on RHT at 40%, the net monthly cost can easily exceed CHF 8'000–12'000 not covered by compensation.
Accounting in standard bookkeeping
RHT creates a temporary distortion between recorded costs and reimbursements received. Orderly accounting avoids overstatement of results or understatement of liabilities.
Personnel costs: at payroll, gross wages actually paid and social contributions are charged to account 5xx (Salaries and social charges) for the amount due. It is not advisable to reverse the expected compensation in advance: reimbursement is not certain until the fund approves the statement.
Receivable from unemployment insurance fund: upon submission of the approved statement, a receivable is recorded (account 11xx — Receivables from third parties) against a personnel cost adjustment account or an operating income account (account 39xx) for the expected ILR amount. In practice many SMEs use a temporary account «RHT compensation receivable» to keep actual costs and recoveries separate.
Receipt of reimbursement: upon bank credit, the receivable is reversed and cash inflow is recorded. Any differences between the amount booked and the amount actually reimbursed (partial rejections, adjustments) must be adjusted on the personnel account.
| Transaction | Debit account | Credit account |
|---|---|---|
| Payment of wages and contributions | 5700 Salaries / 5720 Social charges | 1020 Bank |
| Recognition of approved ILR | 1170 RHT receivable | 5700 / 3900 Cost adjustment |
| Receipt of ALV fund reimbursement | 1020 Bank | 1170 RHT receivable |
| Non-reimbursed net cost (20% + waiting period) | 5700 Salaries | — (remains as cost) |
With Accountex, it is advisable to create a dedicated cost centre for RHT to monitor in real time the difference between payroll costs incurred and expected reimbursements, facilitating monthly closing and communication with the trustee.
Impact on liquidity and cash flow planning
RHT eases payroll costs compared with zero layoffs, but creates a «liquidity gap» between outflows and reimbursements. An SME with RHT at 30% on a monthly payroll of CHF 80'000 may need to advance CHF 15'000–25'000 per month beyond the normal payroll cycle.
Payroll advance
Wages must be paid on the usual date, regardless of reimbursement. Plan for at least 4–6 weeks of financial advance to cover the application-reimbursement cycle.
Social contributions
OASI and occupational pension must be paid on a full basis. OASI reimbursement arrives with the ILR payment, but occupational pension remains largely an immediate cash cost.
Treasury reserve
Calculate the net monthly requirement (payroll costs − expected ILR − OASI reimbursement) and verify that the credit line or reserve covers at least 3 months of RHT.
Quick requirement simulation
Simplified formula for internal planning:
Net requirement ≈ (Payroll × RHT % × 20%) + (Non-reimbursed occupational pension contributions) + (Waiting period cost) − (Trade receivables recoverable in the period)
Integrate this simulation into the rolling 13-week treasury budget. If the requirement exceeds available reserves, first consider a more limited reduction in hours or a combination with paid holiday and leave.
Common mistakes and best practices
Mistakes to avoid
- ✕ Starting RHT before advance notice or without waiting for deadlines
- ✕ Submitting statements after the deadline or with undocumented hours
- ✕ Calculating social contributions only on actual hours
- ✕ Booking reimbursements before formal approval
- ✕ Underestimating the residual 20% cost and occupational pension
Best practices
- ✓ Designate an internal contact for Job-Room and statements
- ✓ Automate hour tracking with export to form 1042i
- ✓ Agree accounts and monthly adjustments with the trustee
- ✓ Inform employees in writing about hours, pay and the right to object
- ✓ Reassess quarterly whether RHT remains the optimal solution
Operational checklist for SMEs
Before activating short-time work, verify that you have completed all steps:
Feasibility analysis: documented drop in orders, alternative measures exhausted, 10% threshold achievable.
Job-Room registration: active employer account, advance notice sent to the cantonal office at least 10 days in advance with supporting documentation.
Payroll setup: RHT parameters configured, contributions at 100%, payslip simulation communicated to employees.
Treasury plan: reserve or credit sufficient for 3 months of calculated net advance.
Accounting and reporting: temporary accounts activated, RHT cost centre, calendar of monthly statement deadlines.
Short-time work is a powerful tool for navigating difficult cyclical phases without losing skills. With rigorous administrative processes, transparent accounting and active liquidity monitoring, SMEs can maximise the benefit while limiting financial and compliance risks.