Short-time working & coronavirus

Legal issues for employers and employees

Short-time working and compensation for loss of earnings

The situation surrounding the outbreak of the coronavirus continues to affect Switzerland and the rest of the world. In addition to political and social ramifications, the focus is increasingly on the legal implications. Employees have questions in relation to their salary in the event of sickness or care leave, or temporary closure of the workplace due to a decision by the authorities. Employers need to clarify whether they are entitled to, and how to apply for, short-time working compensation. The answers to these and other questions can be found below.

Information as of 18 March 2020.

Questions on “Short-time working”

Short-time working is defined as the temporary reduction or total cessation of work in a company as a result of a decision taken by the employer and agreed with the affected employees. The employment contract of those affected remains in force. Short-time working usually arises for economic reasons.

It also occurs if the loss of working hours is due to a measure ordered by an authority or other circumstances for which the employer is not responsible.

Employees whose normal working hours have been reduced in part or down to 0% are entitled to short-time working compensation in accordance with Art. 31 para. 1 of the Unemployment Insurance Act (UIA) if:

  1. They pay compulsory unemployment insurance contributions (UI) or have not yet reached the minimum age for paying compulsory OASI contributions;
  2. They lose working hours for a qualifying reason (i.e. due to economic reasons or a measure ordered by an authority);
  3. They are in an employment relationship that has not been terminated; and
  4. The loss of working hours is likely to be temporary and it can be expected that short-time working will allow them to keep their jobs.

The other prerequisites for the granting of STWC are:

  1. The loss of working hours amounts to at least 10 per cent of hours worked per billing period (so-called minimum loss);
  2. A system of work time control is in place (stamp card, work time reporting, etc.);
  3. The loss of working hours is not caused by events that are considered a normal operational risk. SECO has made explicit that a coronavirus occurrence is not a normal operational risk.

In the case of the coronavirus, one looks at whether the loss of working hours is due to an official measure (such as a city lockdown or the suspension of certain public transport connections) or to economic reasons (such as a decline in demand due to fears of infection).

Short-time working compensation applies to a loss of working hours caused by an official measure or other circumstances for which the employer is not responsible. The affected employers must be unable to prevent the loss of working hours by means of appropriate, economically viable measures, as well as unable to hold a third party liable for the loss.

A loss of working hours for economic reasons also entails a right to compensation if it is unavoidable. Economic reasons include both cyclical and structural factors that result in a decline in demand and sales.

The loss of working hours does not qualify for compensation if the affected employee refuses short-time working. In such a case, the employee must continue to receive normal remuneration. But a refusal does give rise to a risk of termination.

STWC amounts to 80% of the qualifying loss of salary. The waiting period normally borne by the employer was cancelled under the “COVID-19 Ordinance on Unemployment Insurance” of 20 March 2020. The payment of the STWC is made by the unemployment funds directly to the employer. The employer must pay employees 80% of their loss of salary on the normal pay date.

For co-working spouses or registered partners of the employer, and the persons who influence the employer’s decision-making (such as shareholders, directors and officers, or persons having a financial interest in the company), a lump sum of CHF 3,320.00 is considered relevant earnings for a full-time position.

Employers must claim their employee's compensation from the relevant unemployment fund at the latest within three months of the end of each calendar month.

STWC will be paid for a maximum of 12 calendar months within a period of two years. However, the Federal Council may extend the maximum duration by a maximum of six months.

According to the “COVID-19 Ordinance on Unemployment Insurance” of 20 March 2020, any overtime worked by employees in the six or twelve months prior to an application for short-time working is no longer to be deducted from the hours not worked before an application for short-time working. The holiday balance must also not be taken into account for the purpose of determining a qualifying loss of working hours. This means that employees need not reduce their holiday balance to become entitled to STWC.

If their work is fully halted for more than a month, employees are required to look for adequate interim employment. Acceptance of intermediate employment must receive the consent of the employer, who in most cases may not refuse his consent. According to the Ordinance on Supplementary Measures in Connection with the Coronavirus in the area of Unemployment Insurance of 8 April 2020, however, employees are no longer required to notify the employer of the income earned from intermediate employment.

The amount of the compensation is determined on the basis of the contractually agreed salary for the last pay day period prior to commencement of short-time working. The relevant pay includes, in addition to basic salary, compensation for holidays and public holidays, commissions and contractually agreed gratifications such as the 13th month salary or bonuses. If the bonus amount remains uncertain, it is not considered as relevant salary. When the bonus payment is made, there can be a new calculation and a retrospective payment may be requested.

However, the maximum amount of the relevant salary corresponds to the maximum amount of compulsory accident insurance (currently: CHF 148,200.00 per year or CHF 12,350.00 per month).

No, because in this case the loss of earnings is not (directly) attributable to official measures.

However, according to the “COVID-19 Ordinance on Loss of Earnings” of 20 March 2020, parents who have to stop working to look after their children or persons who must self-isolate may apply for a daily allowance from the compensation office. The prerequisites are as follows:

  1. Parents who have to look after their children aged no more than 12 are eligible;
  2. They must be employed or self-employed when they stop working;
  3. and they must have OASI.

In principle, parents are not entitled to an allowance during the school holidays, unless their child was being cared for by an extremely vulnerable person or in a setup provided by the school. The daily allowance paid by the compensation office is secondary to other social insurance benefits and continuous salary payments from the employer. This means that it is paid only if no such are received.

Eligibility for daily allowance arises once all the prerequisite are met, in the case of carers on the 4th day after meeting the prerequisites. A maximum of 10 daily allowances are paid if an employee self-isolates. 

The daily allowance amounts to 80% of the average income earned up to a ceiling of CHF 196.00 per day (two additional daily allowances are paid for each five-day allowance period, so weekends are covered). It is paid at the end of each month and must be claimed by the eligible person from the competent compensation office, that is, the office that collects the OASI contributions. If the employer continues to pay salary despite loss of earnings, it may claim the loss of earnings compensation for itself.

Under the “COVID-19 Ordinance on the Obligation to Report Jobs” of 25 March 2020, the pre-registration period for short-time working was lifted. It is possible to pre-register by telephone, but written confirmation to the cantonal authority is necessary. If the short-time working lasts longer than six months, the pre-registration must be renewed.

Cantonal Office of Lucerne:

WAS wira KAST und Recht

Bürgenstrasse 12

PO Box

6002 Lucerne

Telephone: 041 228 61 00

Email: kurzarbeit@was-luzern.ch

 

 

No, but self-employed persons are entitled to loss of earnings compensation if they suffer such a loss as a result of the measures taken by the Federal Council to combat the spread of the coronavirus (e.g. business closure, event ban, lost customers). A number of conditions must be met for such a claim. If you have any further questions, please do not hesitate to contact our law firm or the cantonal authorities.

The compensation is paid in the form of daily allowances. The daily allowance amounts to 80% of the average income earned up to a ceiling of CHF 196.00 per day (two additional daily allowances are paid for each five-day allowance period, so weekends are covered). It is paid at the end of each month and must be claimed by the eligible person from the competent compensation office, that is, the office that collects the OASI contributions.

Loss of earnings compensation is secondary to other social insurance benefits. This means that it only applies if no other compensation is received.

For employees who are paid on an hourly basis, the same eligibility requirements apply as for employees who are on monthly pay. According to the Ordinance on Supplementary Measures in Connection with the Coronavirus in the area of Unemployment Insurance of 8 April 2020, employees with on-call work contracts are also entitled to short-time working compensation, if they have been on their employer's payroll for more than six months.

In accordance with the “COVID-19 Ordinance on Unemployment Insurance” of 20 March 2020, short-time working registrations may also be made for temporary employees and apprentices.

Persons who are self-employed primarily in the cultural sector and are resident in Switzerland, on request, receive compensation for loss of earnings for the financial loss arising from the cancellation or postponement of events and projects or company closures following government measures combating the coronavirus. Such compensation is capped at 80% of the financial loss.

Applications for compensation for loss of earnings must be submitted to the competent authorities designated by the cantons.

Affected persons can also apply for emergency aid to cover the immediate cost of living if they are unable to meet their own living costs due to the state's coronavirus restrictions. The emergency payout amounts to a maximum of CHF 196.00 per day.

Applications for emergency payouts must be submitted to the association Suisseculture Sociale.

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