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Short-time work compensation and continued payment of salary: What employers need to know

Melanie Imper Senior Associate Treuhand/Corporate Support Services Switzerland, PwC Switzerland 25 Mar 2020

To dam the rapid spread of COVID-19, the Federal Council has redefined various immediate support measures like short-time work compensation, working from home and holiday arrangements. Employers need to clarify how they will ensure continued payment of salary and calculate salaries correctly.

Short-time work compensation

With short-time work compensation, the Federal Council aims to avoid redundancies in the case of a temporary lack of workload. This instrument was used during previous crises and helped many companies to survive and to avoid making mass redundancies or closures. However, employees must agree to it. Short-term work can’t be applied retroactively.

Expansion of the entitlement
Employers can find information on the conditions governing eligibility for short-time work compensation amongst other information on the SECO website. Details of possible restrictions are also listed here. Employees with a fixed-term or temporary employment contract previously were not entitled to short-time work compensation. The expansion was being reviewed by 20 March 2020. This requires an amendment to legislation. Therefore, companies that are considering short-time work need to monitor these changes closely; they may be crucial, depending on the industry.

Simplified procedure
The registration deadline has been shortened and the process designed to be more pragmatic. The usual registration deadline is ten days, but the deadline for sudden unforeseeable circumstances is three days. The latter now applies to the COVID-19 crisis.

Waiting period shortened
The Federal Council has also shortened the waiting period up to the end of September 2020, with immediate effect. In the event of lack of workload, employers now only have to pay one day themselves (waiting period) before they are entitled to support.

Processing in payroll accounting
Each company should check processing in payroll accounting individually, as it can differ depending on the circumstances. Furthermore, it deviates considerably from settlement to the authorities. Employees should not underestimate the effort involved in this. Changes to the recording of working hours and the reasonable processing of reports can be helpful here.

Continued payment of salary

Imposed home office or compulsory holiday for risk groups
Various publications deal with situations regarding employer obligations for continued payment of salary. One of these obligations is new: According to the Federal Council, people who are particularly at risk must work from home. This group includes people aged 65 and over, and people with illnesses like high blood pressure, diabetes, cardiovascular disorders, chronic respiratory illnesses, diseases and therapies that weaken the immune system and cancer. If it’s not possible for these people to work from home, they must be granted leave. But they will still be entitled to their salary.

Type of incapacity to work
The reason for incapacity to work must be accurately stated: Either it relates to absence due to illness (Art. 324a Swiss Code of Obligations) or the employer is unable to offer work (Art. 324 Swiss Code of Obligations). There are currently different views as to whether a parent’s incapacity to work due to closed schools and daycare facilities falls under Art. 324a of the Swiss Code of Obligations, for example. Whether or not a salary reduction is allowed, where the employee was proven to be at fault, depends on the type of absence. Only once the employer has clarified all the parameters he can guarantee that processing in payroll accounting is done correctly.

 

Contact us

Melanie Imper

Melanie Imper

Senior Associate Treuhand/Corporate Support Services Switzerland, PwC Switzerland

Tel: +41 58 792 28 32