Short-time work compensation (KAE)
Unemployment insurance (ALV) is a bureau of the Labor Division within the Office of Economic Affairs (AVW).
Short-time allowance (KAE) is a benefit type of the ALV, which serves to prevent unemployment and to preserve jobs. The KAE supports companies to bridge temporary economically induced work absences.
Loss of working hours that occur in a company as a result of being directly or indirectly affected by the newly imposed or impending US tariffs are generally considered to be outside the normal operating risk.
The new and impending US tariffs are recognized as grounds for an entitlement to short-time working compensation, provided that companies are directly or indirectly affected by them and all other statutory eligibility requirements under Art. 39 et seq. Unemployment Insurance Act are met. The regulation applies until revoked for applications for short-time work from April 1, 2025.
When applying for short-time work in advance, the applicant company must explain how the US tariffs will specifically affect the order situation of the company or the respective operating department and why the loss of work could not be avoided. A general reference to the new US tariffs alone is not sufficient justification for receiving short-time working compensation.
Short-time work requires an eligible work shortfall. A work shortfall is considered eligible if it is attributable to economic reasons and is unavoidable. Under a provisional exemption, not only cyclical but now also structural work stoppages are recognized as grounds for entitlement to short-time work compensation, provided that all other statutory eligibility requirements under Art. 39 et seq. of the Unemployment Insurance Act are met. This provision applies until further notice to applications for short-time work submitted on or after May 1, 2026.
When applying for short-time work, the applicant company must explain how the economic i.e., cyclical and/or structural reasons specifically affect the order situation of the business or the relevant business unit and why the loss of work could not be avoided. A general reference alone is not sufficient justification for receiving short-time work compensation.
A properly submitted application is a prerequisite for the approval and subsequent payment of short-time work compensation. The application for short-time work must be submitted in writing, along with the attachments listed on the form, at least seven working days before the start of short-time work, either by mail, by email to kae.alv@llv.li, or via the secure data transmission form. The date of the postmark or the date of receipt of the email is decisive for meeting the application deadline.
Extension of short-time work
The application must be renewed if the short-time work lasts longer than three months.
For requests to extend short-time work starting in May 2026, simplified application and documentation requirements will apply under unchanged circumstances. In these cases, when submitting an extension application, companies may refer to documents already submitted, provided that the initial circumstances have not changed significantly since the last application and no more than three months have elapsed between the end of the most recently approved billing period and the requested start date of the extension. In addition, only the consent of the employees newly affected by the extension is required.
This regulation is valid for a limited period from May 1, 2026, to March 31, 2027.
Important information for owners of sole proprietorships or business managers/boards of directors
The law excludes persons in employer-like positions such as business owners, partners, managing directors, and members of the board of directors as well as their spouses who work for the company from eligibility for short-time work compensation (Art. 39, para. 3, let. c, ALVG). Please submit a notification of short-time work only if employees are affected.
Forms and Information
Registration Checklist
- Signed Short-Time Work Registration Form (including additional documents)
- Signed Employee Consent Form
Entitlement to short-time work compensation must be claimed no later than three months after the end of each accounting period by submitting the completed compensation form. After this three-month period has expired, any entitlement to short-time work compensation for the respective accounting period is forfeited. The date of receipt of the email by the Office for Economic Affairs is decisive for compliance with the deadline. Together with the settlement form, the time sheets of the employees affected by short-time work and their pay slips for the relevant control period must be submitted.
The maximum benefit period for short-time work compensation is generally 18 months within a two-year reference period.
Starting in May 2026, the maximum allowable benefit period for short-time work compensation will, as an exception, be 24 pay periods within a two-year reference period.
After continuous receipt of benefits for the maximum benefit period, a six-month waiting period applies before a new two-year period begins.
This exception applies for a limited period from May 1, 2026, to March 31, 2027.
Billing
The Excel accounting form is available in two versions: with macros or without macros. The Office for Economic Affairs expressly points out that when using the version without macros, no rows or columns may be changed. The desired file must be downloaded, saved, and transmitted in the correct format so that it can be calculated and checked correctly.
The accounting period is one calendar month. Accordingly, the information on the “Recording lost working hours” page always refers to the entire accounting month. A separate accounting form must be completed for each calendar month and for each company or company department.
Forms and information
Checklist billing
- Approval has been granted (billing possible from this date)
- Billing form (download, save and submit electronically)
- Submit time sheets
- Submit payroll statements
The FAQs are not legally binding. They merely serve to summarize frequently asked questions.
We can only provide you with binding information after all the necessary documents have been submitted and our case-by-case review has been completed.
With short-time compensation, unemployment insurance covers part of the wage costs over a certain period of time. This is intended to prevent layoffs in the event of short-term and unavoidable work stoppages.
Unlike unemployment compensation, benefits are paid to the employer. However, each employee has the right to refuse short-time compensation. The employer must continue to pay these employees their full wages. For the employees, however, there is then an increased risk of receiving notice of termination.
The reduction in working hours must be temporary and serve to preserve the jobs affected. In addition, the loss of work must be unavoidable; thus, the company must prove that it has taken all appropriate measures to minimize the damage. The loss of work can either be caused by economic factors or be due to other circumstances that cannot be avoided by the company. Regardless of the exact nature of the work stoppage, it must always be an extraordinary situation (i.e. it must not be part of the normal operational risks). The affected employees must have agreed to the reduction in working hours. Further information can be found in the Guidance Pre-notification and Guidance Settlement Form.
A loss of working hours cannot be taken into account if it is caused by operational organizational measures (such as cleaning, repair or maintenance work) and is attributable to other usual and recurring interruptions to operations. Work loss caused by circumstances that are part of the normal operating risk or by seasonal fluctuations in employment is also not chargeable. The work loss may not fall on holidays or result from company vacations. In addition, the employer may not claim it exclusively for a few days immediately before or after holidays or company vacations. The loss of work may not be claimed for persons who are not entitled to short-time work compensation.
No; the temporary support measures related to coronavirus ended as of June 30, 2022.
In principle, all contributory employees who are in a non-terminated employment relationship, have not yet reached the AHV retirement age and are employed for an indefinite period at a fixed workload are eligible.
No entitlement has persons who:
- are in an apprenticeship relationship;
- are in the service of an organization for temporary work;
- in an employment relationship for a definite period;
- already receive an AHV pension or have reached the ordinary retirement age;
- in their capacity as shareholders, as financially involved in the business or as members of a supreme operational decision-making body can determine or significantly influence the decisions of the employer, as well as their collaborating spouses;
- are in a terminated employment relationship.
Yes, provided that all requirements are met. The same eligibility requirements apply to hourly-paid employees as to monthly-paid employees. In principle, there is only an entitlement to short-time compensation if there is a contractually agreed working time or if, in an employment contract on call, the workload shows only minor fluctuations and thus proof of the chargeable loss of working hours can be provided.
In principle, there is no entitlement to short-time work if the loss of working hours cannot be determined due to a lack of fixed working hours.
For employment relationships that over a longer period of time (at least 6 months), show only minor fluctuations, claims for compensation can be made if necessary.
Short-time compensation can only be claimed for persons who are in an employment relationship that has not been terminated, since short-time work should serve to preserve jobs.
In the event of a plant closure, the employee is entitled to KAE until the plant closure has been decided, e.g. by the Board of Directors or the Executive Board.
As soon as bankruptcy must be assumed, the loss of work for the employees can no longer be considered temporary and the short-time compensation no longer serves to preserve the jobs. From this point on, therefore, the entitlement to short-time work compensation ceases.
The employer is obliged to advance the short-time compensation and to pay the affected employees 80% of the chargeable loss of earnings on the ordinary payday. The short-time compensation corresponds to 60% of the actually proven loss of earnings.
During short-time work, the employer shall pay the full statutory and contractually agreed social security contributions corresponding to normal working hours. He is entitled to deduct the employees' full contribution shares from their wages, unless otherwise agreed.
The employer is obliged to keep the originals of all forms and documents relevant to the registration and settlement of bad weather compensation for five years and to submit them to the Office of National Economy (AVW) upon request. The AVW is entitled to carry out or have carried out an inspection at the employer's business at any time within the retention period.