05 December 2022

Short-time working due to electricity shortage – is that possible?

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The currently discussed official measures due to a possible energy shortage and the rising energy prices put the topic of short-time working at the centre of the conversation. Our article gives you a brief overview of whether short-time working compensation could also be an option for you.

  • Michèle Stutz

    Legal Partner

In Switzerland, various measures are currently being discussed for the event of an electricity shortage. At its meeting on the 23rd of November 2022, the Federal Council took note of various management measures for this scenario. In an abbreviated consultation procedure lasting until the 12th of December 2022, the interested parties are now to comment on the individual regulatory proposals. As ultima ratio, i.e. as the last possible measure, power grid shutdown is envisaged. Such official measures due to a possible energy shortage and the massively rising energy prices also have major – if not existential – effects on the employers and the employees affected.

Due to the extraordinarily high energy prices, some employers have to reduce production or other activities. This has a direct impact on the employees and the topic of short-time working moves into the centre of the discussion. The aim here is to compensate for a temporary decline in employment and to preserve jobs.

Short-time working due to the current energy market situation?

If the general conditions for entitlement are met, employees whose normal working hours are reduced or whose work has ceased completely are entitled to short-time working compensation from the unemployment insurance (Art. 31 para. 1 AVIG). This can also be the case if the company's capacity utilisation must be reduced due to massively rising energy prices or if official measures are decided due to a possible electricity shortage. The aim is to avoid possible dismissals due to official measures or economic reasons.

Whether a company is entitled to short-time working compensation must be examined on a case-by-case basis. The company concerned miust provide detailed information in the pre-announcement, which will then be examined by the cantonal office. The following explanations are intended to give you a brief overview of whether short-time working compensation could also be an option for you.

What circumstances justify short-time working compensation?

The fact alone that energy prices have risen is not sufficient for entitlement to short-time working compensation. Even work stoppages that occur against the background of the energy price increase must first be examined in the individual case. In particular, it is checked whether it could have been avoided or if it has to be assessed as a normal operating risk.

The following points, among others, are decisive for the assessment of the exceptionality of a work stoppage and the unavoidability: (1) the energy price increases, (2) the energy consumption of the company, (3) the possibility of passing on the additional costs incurred due to the increased energy costs to the customer, and (4) the contractual situation of companies that purchase electricity or energy on the free market. The last three points should not be considered in isolation but must be analyzed in the overall context of the company.

Companies that are active in energy-intensive sectors and especially in the free electricity market are generally much more affected by the increased energy prices than other companies. However, depending on the previously established contractual relationships, energy costs can also vary for companies in the free market. Voluntary production reductions or those made for reasons of profitability do not in principle trigger any entitlement for short-time working compensation. However, if passing on the additional costs to the customer leads to a reduction in the order volume, a voluntary reduction cannot be assumed.

In conclusion, it must be noted that in the advance notification for short-time working compensation, it must be shown in detail to what extent the increased energy prices lead to a loss of work that could not be avoided or require a reduction in production. If the Federal Council orders official measures (e.g. a quota) due to the possible energy shortage, a possible claim for short-time working compensation must also be examined on this basis.

Our labour law experts will be happy to assist you with questions on this and other labour law topics.
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