What happens when difficulties arise and you are running a small business or working as a self-employed professional? Under what conditions are entrepreneurs covered by unemployment insurance? Here are some explanations and key points to consider.
Self-employed individuals operating as sole proprietors are not subject to compulsory unemployment insurance. However, many entrepreneurs heading a GmbH (Sàrl) or an AG (SA) choose to pay themselves a salary, in the belief that this entitles them to unemployment benefits. This approach may seem logical: by contributing like any employee, they hope to be protected in the event of bankruptcy or loss of business activity.
However, the legal reality is more nuanced. Unemployment insurance (UI) is based on a relationship of subordination between employer and employee – a condition that no longer holds when one person occupies both roles. Suppose an insured person loses their salaried position but retains a significant influence in the company (for example, as a shareholder or managing director). In that case, they are not entitled to unemployment benefits as long as they have not permanently stepped down. The law assumes they could still derive income from the company – for instance, through dividends.
Significant influence
"Unemployment insurance requires a clear and demonstrable break from any ability to influence decisions within the company," explains Thierry Rossier, founder of Delegis, a Fribourg-based firm specializing in advice and training in social insurance and retirement planning. "This can be achieved through liquidation, bankruptcy, sale, or any other form of exit. The clearest indication of such a separation is when the individual is no longer listed in the commercial register and no longer holds any decision-making authority."
Unemployment insurance authorities will assess whether the individual continues to exert actual influence over the company’s business decisions, whether through majority voting rights at the general assembly, financial dependencies, or informal power structures. Concealing a decision-making role within a company can result in the recovery of any benefits that were unduly received.
Self-employed persons and unemployment insurance
Individuals operating a business as sole proprietors do not pay into the unemployment insurance scheme and are therefore not entitled to unemployment benefits. However, if a self-employed person started their business less than three years ago and can prove a minimum of 12 months of contributions as a salaried employee prior to becoming self-employed, they may still be eligible for benefits. "The standard two-year contribution period is extended by the number of months the insured worked as a self-employed person, up to a maximum of four years," explains Thierry Rossier. "If there is any uncertainty about the viability of the business, an important decision must be made before the end of the third year. After that, entitlement to benefits is excluded."
"Unemployment insurance authorities carefully assess the time and financial resources invested," notes Pierre-Yves Carnal, a social insurance specialist active in the cantons of Bern and Jura. "If the self-employed activity is too demanding, the individual’s availability for job placement may be called into question." Only those who are fully available to the labor market are deemed fit for placement. If the business activity continues – for instance, due to ongoing contracts with clients, an active website, or current obligations – this availability is reviewed critically by the authorities.
For this reason, it may be advisable, where possible, to maintain part-time salaried employment while launching a self-employed venture. "It’s also worth noting," adds Thierry Rossier, "that income from self-employment can be recognized as interim earnings. This allows for slower depletion of benefits and can potentially result in a higher overall income."
The expert points out that many entrepreneurs immediately opt to set up a GmbH (Sàrl), assuming this will offer better protection. "But depending on the planned activity, it may be advantageous to start as a sole proprietor. It’s less expensive, and under the conditions mentioned above, unemployment benefits may still be available. Not to mention the potential advantages in terms of social security contributions and taxation when beginning in this form, then transitioning to a GmbH as the business grows."
On the theme
Toward a legal reform?
Entrepreneurs and their spouses who pay contributions to the unemployment insurance scheme should also be insured against unemployment. This is the aim of parliamentary initiative 20.406, submitted by Zurich National Councilor Andri Silberschmidt. The initiative argues that the current situation contradicts the fundamental principle of insurance, which links the payment of contributions to entitlement to benefits. The proposal is currently under review by the competent committee of the Council of States. The Federal Council has recommended that Parliament not take up the initiative, considering that the existing regulation represents an acceptable compromise between the position of the individuals concerned and the risk of abuse.
In discussion
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Last modification 06.08.2025
