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COVID-19: simplified short-time work compensation

  • Adrian Tüscher, Partner |

Many companies are currently struggling with declining orders, some even have to close down. Simplified access to short-time work compensation is intended to help. What does this look like? And what are the practical questions that arise during this process?

Short-time work compensation (SWC) is a key instrument for bridging loss of work due to the COVID-19 crisis.

Since SWC cannot be applied for retroactively, the employer is well advised to apply for it as soon as possible. At the same time, an accurate application is important, otherwise there is a risk that compensation will not be granted or advance payments will have to be repaid. Despite many crisis-related simplifications in the application process, the devil is in the detail.

The summary below take account of the legal situation up to 31 March 2020. Simplifications resolved in response to the COVID-19 crisis are indicated below as "NEW".

What is new – at a glance:

  • The deadline for advance notification for SWC has been lifted
  • SWC is now granted for 6 instead of 3 months
  • The waiting period is no longer applicable – the employer does not have to contribute to the loss of work
  • Temporary workers, employees with limited employment contracts, apprentices, persons in employer-like positions (members of management, business owners, etc.) are entitled to SWC
  • The employer can now request advance payment of the SWC
  • Current forms and documents specifically related to the COVID-19 crisis have been made available (advance notification for short-time work, form 716.300; consent for short-time working, form 716.315; application and settlement of short-time work compensation (extraordinary form, Excel file); online calculator for short-time work compensation).
  • Interim employment is no longer counted against SWC (i.e. the additional income from interim employment has no effect on SWC).
  • Employees on call (even if their workload fluctuates by more than 20%) are entitled to SWC if they have been employed by the same company for at least 6 months.
  • The maximum period of 4 months for SWC in the case of more than 85% work reduction has been abolished.

SWC - answers to the most frequently asked questions in practice

What are the requirements for an application for SWC?

The loss of working hours must amount to at least 10% compared to the usual total working hours of the company or operating department concerned and must be due to the current COVID-19 crisis.

Can we apply for short-time working compensation for individual departments in our company?

Short-time compensation can also be applied only for individual operating departments. An operating department is typically an organizational unit within the company that is under independent management or provides services that could also be provided by independent companies and offered on the market.

For example, a construction site or branch office could be such a department. It is advisable to assess on an individual basis if your unit meets the definition.

Who is entitled to SWC?

Employees who pay contributions to unemployment insurance or who have completed compulsory schooling but have not yet reached retirement age (i.e. also employees who are paid by the hour).

NEW: Employees in fixed-term employment, apprentices, temporary workers, workers on call and employer-like employees, such as the shareholders of a limited liability company or sole proprietors, as well as their spouses who work for them, are also entitled to SWC. Persons in an employer-like position as well as spouses are entitled to a lump sum of CHF 3,320.00 for a full-time position.

Who is not entitled to short-time work compensation?

Employees in terminated employment relationships, employees who do not agree with short-time work or whose loss of working hours cannot be determined (e.g. because there is no time recording system or because they have trust-based working hours) are still not entitled to SWC.

We want to apply for SWC - what should we do?

The first mandatory step for the employer is advance notification with the relevant cantonal office using an official form. The form has been adapted and simplified specifically for the COVID-19 crisis (pre-registration for short-time work, form 716.300). The causal link between the COVID-19 crisis and the decline in working hours must be briefly explained.

If there are several branches or establishments, advance notification is always submitted to the cantonal authority of the canton where the head office is located.

NEW: The deadline for advance notification has been lifted; however, it is still not possible to apply for SWC retroactively.

Can the employer order short-time work unilaterally?

No, the employees must agree to short-time work or SWC.

NEW: Employees no longer have to give their consent on the form "Consent for short-time working" (German: "Zustimmung zur Kurzarbeit") at the time of submitting the advance notification. It is now sufficient to have the employer's confirmation on the advance notification form that the employees agree to short-time work. However, the individual employee's declarations of consent must be submitted to the unemployment insurance fund with the settlement, at the latest. If employees do not agree, the employer must in principle continue to offer unrestricted work and, in the worst case, risk ordinary termination for economic reasons.

What salary do I need to pay as an employer and who pays the SWC?

The employer must pay the salary at the usual time. The hours lost due to short-time work must be paid at 80% of the salary and the hours worked at 100%. The employer is thus generally obliged to make an advance payment. The unemployment insurance fund compensates the employer for 80% of the lost hours afterwards. The employer must still deduct all contractual and statutory social security contributions on the basis of the full salary. The employer will also be reimbursed for its contribution to AHV/IV/EO and ALV, but not the employees.

NEW: The employer can demand payment of SWC without having to pay the salaries in advance. This is intended to enable punctual payment even in the event of liquidity bottlenecks. In addition, the employer's participation in the loss of working hours is no longer required, i.e. there is no longer a waiting period for the employer.

Do flextime balances, overtime and accrued vacation have to be reduced?

Previously extra hours worked (i.e. overtime, "accrued hours") had to be reduced in order to be eligible for SWC, but not accrued vacation entitlements.

NEW: It is no longer necessary to first reduce accrued hours. The same applies to positive balances due to a current flextime system.

What applies if employees earn more than the maximum insured salary of CHF 148,200.00 per year?

The SWC amounts to 80% of the creditable loss of earnings of max. CHF 148,200, i.e. CHF 12,350 per month. If SWC is claimed for employees who earn more than CHF 12,350 gross per months, the employer must pay 100% of the part of the salary in excess of CHF 12'350 (i.e. not insured salary) and not just 80% of the salary in excess of CHF 12'350.

Example: An employee earns CHF 15,000 gross per month (incl. 13th month's salary) and works on a 100% workload. If 50% short-time work is introduced for this employee, the SWC consists of 80% of 50% of the insured salary of CHF 12'350 per month (i.e. 80% of CHF 6'175). The SWC thus amounts to CHF 4'940. 100% of the uninsured part of the salary attributable to the 50% short-time work must be paid by the employer. In our example this is CHF 1,325 (CHF 7,500 – CHF 6,175). The employee is therefore entitled to a total gross amount of CHF 13,765 (CHF 7,500 + CHF 4,940 + CHF 1,325).

What about vacation and other absences during short-time work?

Employees may take vacation during short-time work, but the employer must pay 100% of the salary for these days. Also for other absences, such as those due to illness, accident or maternity, the SWC does not apply. Rather, during such days of absence, the employer (or the insurance company) must pay 100% of the salary.

Are employees who are assigned/seconded to Switzerland eligible for SWC?

Usually, these employees would not qualify for SWC since they are typically not meeting the criteria of having paid unemployment insurance contribution. There may be exceptions, however, for employees who are seconded from a country that has not entered into a social security treaty with Switzerland and thus who are obliged to pay social security contributions in Switzerland.

Read the updated version here: Short-time work – what’s next?

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