Legal Compass Switzerland: Employment Law

Working time monitoring

1. Background

In its judgment 8C_306/2023 from 7 March 2024 (published as BGE 150 V 249), the Federal Supreme Court examined whether, under the Federal Act on Compulsory Unemployment Insurance and Insolvency Compensation (AVIG, SR 837.0) and its corresponding ordinance (AVIV, SR 837.02), the verifiability of the loss of working hours was ensured in the absence of legally compliant time recording, and whether subsequently submitted time-recording documents could be considered authentic and admissible.

The case pertained to a company engaged in the sale of new and used vehicles whilst also operating a car workshop for service and repair work. During the COVID-19 pandemic, from March 2020 to February 2021, the company received short-time work compensation totaling CHF 407,020.05 for its employees. Following an employer inspection on 24 March 2021, the State Secretariat for Economic Affairs (SECO) ordered the repayment of unlawfully received benefits amounting to CHF 256,162.15.

The Federal Supreme Court upheld the lower court’s reasoning, finding that due to the lack of legally sufficient timekeeping, the substantive requirements for entitlement to short-time work compensation were not met. This ruling was subsequently reflected in several further decisions of the Federal Administrative Court, which essentially address the same topic (BVGer B-1097/2024; BVGer B-3793/2024; BVGer B-3789/2024; BVGer B-1932/2025).

2. Legal framework

2.1 Short-time working compensation – Legal requirements

The requirements that must be met to qualify for short-time working compensation are set out in Article 31 of the Federal Act on Compulsory Unemployment Insurance and Insolvency Compensation (AVIG). Accordingly, employees whose normal working hours are reduced or whose work is completely suspended due to the economic situation are generally entitled to short-time working compensation if they are subject to unemployment insurance contributions or have not yet reached the minimum age for contribution liability under the Old-Age and Survivors’ Insurance (AHV).

Furthermore, additional conditions require the loss of working hours be creditable in accordance with Article 32 para. 1 AVIG, the employment relationship must not have been terminated, and the loss of work must be expected to be temporary, with the expectation that short-time work will help preserve jobs.

Conversely, no entitlement to short-time work compensation exists, among others, for employees whose loss of working hours cannot be determined or whose working time cannot be sufficiently monitored (Article 31 para. 3 AVIG). Article 46b AVIV specifies that adequate verifiability of lost working hours requires a company-level working time control system (para. 1) and that employers must retain the corresponding records for five years (para. 2). This ensures that the authorities responsible for implementing unemployment coverage can verify the effective loss of working hours.

A loss of working hours is considered verifiable when daily working time is recorded in detail for each employee. This means that start and end times of the working hours and intermediate breaks and the duration of each working day must be documented on an ongoing basis. According to the case law of the Federal Supreme Court, only real-time, continuous daily recording of working hours is deemed authentic and thus reliable for evidentiary purposes. The authorities consider that employees cannot retrospectively provide detailed information about their actual working times out of their memory.

However, electronic or mechanical recording is not mandatory, if the outlined level of detail is achieved by other forms of documentary evidence and if the authorities are able to gain a clear picture of the loss of working hours within a reasonable timeframe.

Insufficient documentation includes, for example, monthly reports, work schedules, attendance lists, fixed core working hours, retrospective or unclear reports, mere absence notifications, trust-based working time without additional internal control, or estimates.

The obligation to maintain a company working time control system and to keep the records for five years means that an employer must be able to present the documentation immediately during an employer inspection. If timekeeping records are submitted only after such an inspection, they must, according to case law, be “clearly authentic” to be accepted for further examination. In other words, only real-time working time records qualify; records prepared retrospectively are deemed insufficient.

2.2 Exemption from or simplification of working time recording obligations

Provisions on working time and rest periods are set out in the Federal Act on Work in Industry, Trade and Commerce (Labour Act, ArG, SR 822.11). According to Article 46 ArG and Article 73 para. 1 of Ordinance 1 to the Labour Act (ArGV 1, SR 822.111), employers are required to ensure detailed recording of working hours and to make available to the enforcement and supervisory authorities all records or other documents containing the information necessary for the implementation of the Labour Act and its ordinances. Said records must, among other things, show the hours worked (daily and weekly), including compensatory and overtime work, and the schedule of such hours (Art. 73 para. 1 (c) ArGV 1).

Employees who hold senior management positions and are therefore not subject to the working time provisions of the Labour Act may be exempted from the obligation to record working time. Further exemptions may apply depending on the scope of application of the Act, both at company and individual level.

Since the easing of working time recording requirements applicable as of 1 January 2016, it has been possible, under certain conditions, to waive working time recording entirely (Art. 73a ArGV 1) or to apply a simplified form of working time recording (Art. 73b ArGV 1). A waiver is permitted if it is admitted in a collective labour agreement (CLA), if employees enjoy a high degree of autonomy because they can set at least 50% of their working hours, and if they have a gross annual income (including bonuses) exceeding CHF 148,200. This threshold is adjusted pro rata for part-time employees and indexed to the maximum insurable earnings under the Accident Insurance Act (Art. 73a para. 2 ArGV 1). In addition, an individual written agreement must be concluded confirming that the employee waives working time recording (Art. 73a ArGV 1).

Simplified working time recording may be introduced for employees who can determine a substantial portion of their working time themselves (at least 25%). This requires either an agreement with employee representatives or individual agreements with the concerned employees, particularly in companies with fewer than 50 employees.

Despite this labour law adjustment concerning working time recording, the social insurance requirements for short-time working compensation have remained unchanged. Sufficient verifiability of the loss of working hours still requires company-level working time control, and employers must retain these records for five years (Art. 46b AVIV).

Consequently, waiving working time recording results in the loss of entitlement to short-time working compensation (Federal Administrative Court, BVGer B-5990/2020, para. 4.8). Whether simplified working time recording (Art. 73b ArGV 1) is sufficient for claiming short-time working compensation has not yet been clarified by the courts.

According to SECO’s guidance on short-time working compensation, it is sufficient if the company’s working time records provide daily information on hours worked (including overtime), economically induced lost hours, and all other absences (e.g. vacation, illness, accident, or military service). From this, it can be inferred that the precise timing of work (i.e. start and end times) and the duration of breaks do not necessarily need to be recorded. Nevertheless, as a precautionary measure, it is advisable to ensure that all employees affected by short-time work record their working hours in detail on a daily basis during the short-time work period.

2.3 Consequences of Inadequate Working Time Recording

As previously mentioned, unlawfully received unemployment insurance benefits may be reclaimed (Art. 95 para. 1 AVIG in conjunction with Art. 25 para. 1 and 2 ATSG). If it is determined that the requirements for entitlement to short-time working compensation are not met, the insured party must repay the compensation received. Accordingly, insufficient company-level working time control may lead to repayment claims for short-time working compensation.

In addition, deficient working time recording can have consequences under the Labour Act. Although a violation of the obligation to record and document working time is not, in itself, a criminal offence, the standard system of administrative enforcement may apply. This means, in practice, that the employer in breach is given a deadline to remedy the deficiency. If the deficiency is not corrected, the authorities may issue a formal order, which can be enforced by a penalty for non-compliance under Article 292 of the Swiss Criminal Code (StGB).

Finally, where a collective labour agreement (CLA) applies, a breach of the obligation to record working time may also result in contractual penalties by a joint (parity) commission.