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Working in Switzerland
Unemployment Benefits in Switzerland: No Need to Panic
Although it’s not the most agreeable of topics, it’s time to talk about unemployment. If you find yourself out of work in Switzerland, there’s no need to panic. You should be covered by unemployment benefits for a while. Our article explains this system, which ensures that you’re never left in the lurch.
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At a Glance:
- It is compulsory for all employees in Switzerland to pay into an unemployment fund: thus you will have enough money to tide you over if you unexpectedly find yourself out of work.
- You won’t only receive unemployment benefits if you have completely lost your job. If you’ve had a significant reduction of hours, you could also be entitled to a little bit of extra help.
- You can expect to receive roughly 70% of your original salary from unemployment benefits, up to a maximum of 10,500 CHF per month.
Although we hope that you will not find yourself in a difficult situation, it is always nice to know that you won’t be at a complete loss — the system provides you with a backup option. The Swiss social security system not only has you covered for retirement, accidents and disability, but it also ensures you’re covered if you should find yourself out of work.
Unemployment figures in Switzerland are amongst the lowest in the world, with just 3.2% of the population classed as unemployed and a further 3.8% as job-seeking in 2016. However, it never hurts to know that there’s some support available if you end up as part of this percentage.
Paperwork and Permits: The Effect of Unemployment
Foreign nationals in Switzerland could be concerned about the status and validity of their residency permit if they lose their job. If you are a national of an EU or EFTA member state and your Swiss residency permit expires while you are unemployed, you may still be entitled to renew your permit. However, you must be able to prove that you have sufficient funds to keep you going for the foreseeable future. The authorities will also want to see proof that you have sufficient health and accident insurance.
Normally when foreign nationals from EU or EFTA member states renew their residency permit, it is valid for another five years. However, if you have been unemployed for over twelve consecutive months, authorities can limit this extension period to one year.
So-called “third-country nationals” (i.e. expats from outside the EU or EFTA) who are unemployed in Switzerland may find it more difficult to renew their residency permit. However, as long as you have a valid short stay permit, you will be allowed to stay in Switzerland for up to six months, which gives you some time to search for another job. Bear in mind that in order to stay in Switzerland without a job, you must have permission from the immigration authorities.
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The System Has Got Your Back
Unemployment insurance (ALV) was introduced in certain cantons in 1951, and in 1977, it was made compulsory for the whole of Switzerland. Every employee in Switzerland must contribute towards unemployment insurance. ALV insurance is overseen and regulated by the State Secretariat for Economic Affairs (SECO), which then delegates to individual cantonal public unemployment funds (RAV), as well as recognized private unemployment funds.
Contributions toward unemployment insurance can vary depending on your income, but it works out as roughly 2.2% of your gross salary for the year, as long as you earn less than 148,200 CHF. Swiss residents on a higher salary than this will contribute roughly 3.2% of their gross salary. However, you aren’t responsible for this whole amount, as contributions are spilt 50/50 between you (the employee) and your employer. To make it even easier, your employer will usually automatically deduct your ALV contributions from your salary, so you don’t need to remember to pay them yourself.
For self-employed Swiss residents, it is up to them to decide whether or not they want to pay into an unemployment fund. There are some organizations that offer private unemployment insurance; however, this can work out to be quite expensive, so it is worth weighing up all of your options before deciding.
What to Do If You Lose Your Job
So you know the ins and outs of paying into the system, but what happens if you require compensation? There are number of situations that can arise and entitle you to claim unemployment compensation (ALE):
- if you are fully or partially unemployed
- if your working hours are significantly reduced (minimum of two days)
- in the case of bad weather preventing you from working (e.g. in the construction industry)
- if the company that you work for is dissolved
If one of the situations above applies to you, you are entitled to receive ALE. However, you must also meet the following requirements:
- You are legally allowed to live and work in Switzerland.
- You have been employed for at least twelve months during the previous two years (or twelve months during the previous four years, if you have a child under ten). During this period, you have paid ALV contributions.
- You register, in person, at your local unemployment office (RAV) in your respective canton.
- You are actively searching for a new job.
- You have earned at least 500 CHF a month before registering as unemployed.
Taking the First Step: Registering as Unemployed
The first step that you need to take, should you lose your job, is to register at your local unemployment center (RAV). On the official RAV website, you will be able to search for your local RAV center by canton.
It is worth noting that after registering as unemployed at the RAV office, you must immediately start looking for a job, or else your claim for compensation could be seen as void. You normally have a trial period of seven days, but after this, start searching right away so as not to lose your benefits! The same applies to those on a fixed-term contract — you must start looking for work three months before your contract is due to end. For more information on finding a job in Switzerland, please see our article on jobs and business.
If you decide to search for a job abroad, you must let the RAV know and keep them updated on your progress — your claim can be “exported” for up to three months.
Remember to also keep a record of the applications you have sent and any responses you receive.
Receiving Compensation: The Final Hurdle
It is up to your respective RAV office to pay out your unemployment benefits. You can choose which office in your respective canton you would like to visit to collect your compensation. In every canton and most municipalities, you will be able to easily find a list of the RAV offices that you can choose from.
You must apply for your unemployment benefits within three months of losing your job, or else you could lose your right to claim your benefits. If your application is approved, you will normally receive a daily allowance which covers five days a week — meaning you will get paid for around 21.7 days every month.
How Much Should You Expect?
The unemployment benefits that you receive normally amount to around 70% of your average salary over the last six to twelve months, and are capped at 10,500 CHF a month. However, this only applies if you are involuntarily unemployed: if you have left your previous job without any reasonable explanation, your benefits could be suspended or dramatically reduced. Unemployed expats with children, people with a disability level of more than 40%, and low-income earners are entitled to receive 80% of their former salary.
A handy tip for expats: if you have been working for a Swiss firm abroad and have been paying towards an unemployment fund, these contributions will also be taken into account in order to decide if you are entitled to ALE. Depending on the situation, EU/EFTA citizens working in EU/EFTA countries can also have their employment in these countries taken into account — but it’s best to check with your local authority to be sure.
The unemployment insurance scheme entitles you to between 200 and 520 daily allowances within a two-year period, depending on your age, how long you were employed for, your maintenance obligations, and whether or not you have a disability.
Anyone receiving ALE compensation is, in fact, allowed to take up temporary employment. Naturally, given that you are then employed, your compensation will be calculated accordingly. If you have the opportunity to take on temporary work, it is advised to do so as it can bring significant financial advantages to the unemployed person in question.
Keeping the Officials Informed
While you are receiving ALE, you must always keep your unemployment office informed about your employment status — for example, if you’re taking part in an educational course or have found some temporary work. If you don’t, the RAV are perfectly entitled to either stop or cut your unemployment benefits.
You normally begin to receive payments five days after officially registering as unemployed; however, depending on your former yearly income, this period can be anything between 0 and 20 days.
You must also let your RAV office know within one week about any periods in which you were ill, had an accident, or were on parental leave. If you receive any other compensation (e.g. from your accident insurance plan), this can change the amount of unemployment benefit that you are entitled to receive.
What If You Move?
You will only receive unemployment benefits while you are living in Switzerland. If you choose to leave while you are still entitled to ALE, payments will be automatically cancelled. If you live abroad but work in Switzerland — for example, if you are a cross-border commuter — it is advised to contact the respective authorities directly for help and advice on what to do next.