Exit polls suggest that voters have given the thumbs up to government proposals to cut unemployment benefit rights.
Polls by the country's leading research institute suggest that 55 per cent are in favour. German-speaking cantons supported the initiative; French-speakers were against.
The changes, which are intended to slash up to SFr415 million ($281 million) from the federal budget, come at a time of rising unemployment in the country.
They have been strongly condemned by unions who say now is not the right time to tamper with the system.
"The supporters of the proposals do not live in the real world," Christoph Lips of the Swiss Federation of Trade Unions told swissinfo.
"The government wants to revise the law just as unemployment is increasing month after month in Switzerland."
In October the jobless rate hit three per cent - almost double the rate in October 2001 (1.9 per cent) and up from 2.8 per cent in September.
Lips maintains the proposed changes would hit those who most rely on the current system.
"The middle-aged would be most affected by any changes," he said. "They are exactly the people who statistically need longer to find a job.
"And they are the ones with the most responsibilities - with over half of them having children."
The Swiss economics minister, Pascal Couchepin, has accused unions of putting the whole system at risk by forcing Sunday's vote on the proposals.
"If the law is rejected we might have to think about increasing the contributions of workers and employers," he told swissinfo.
The proposals would reduce the period during which benefit can be claimed - but not the monthly entitlement.
Couchepin warned that if they are rejected, the government might have to look at other cost-saving measures.
"We have a financial problem at the moment and it is not unthinkable that parliament would reduce [the level of] benefits," he said.
Unions, however, do not believe a change in the law would result in savings.
Lips argues that the proposals would place an extra financial burden on the cantons and local authorities.
"There might be savings in the federal budget," he said. "But cantons would have to reckon with an increase in social welfare payments once people are no longer entitled to claim unemployment benefit."
Switzerland currently has one of the most generous unemployment benefit schemes in Europe, although direct comparisons with its neighbours are difficult as both minimum periods of insurance contributions and periods of entitlement vary.
When a person in Switzerland loses their job, they are entitled to as much as 80 per cent of their final salary for a maximum of two years - as long as they have paid unemployment insurance for a minimum of six months.
Under the proposals, the minimum insurance period would rise to 12 months, and benefits could only be claimed for a maximum of 18 months - or 30 months for the over-55s.
Claimants would still be entitled to receive up to 80 per cent of their final salary.
Couchepin thinks a change in the law would make Switzerland less attractive to foreigners hoping to profit from the country's generous benefit scheme - so called "benefit tourists".
"At present a foreign worker can claim benefit after six months employment in Switzerland - and that benefit lasts for 500 days," he said.
"Under the new proposals they would be required to work for 12 months before being eligible."
But Lips rejects the very concept of "benefit tourism" and thinks it is a scare tactic to encourage people to support a change in the law.
"There is no evidence that it exists to any great extent within the European Union," he said.
"And there is no proof that people will target Switzerland as the free movement of people between the EU and this country increases - it is an absurd idea."
swissinfo, Jonathan Summerton
In October the jobless total stood at 110,197 - up 8,308 on the previous month.
An unemployed person can be entitled to as much as 80 per cent of the last salary for a maximum of two years.
The government estimates that a "yes" vote would cut up to SFr415 million from the federal budget.