Simplified procedure for short-time work – and its pitfalls

Raymond Simmen Leader Payroll & Employment Solutions Switzerland, PwC Switzerland 28 Apr 2020

There is currently much discussion about short-time work in the HR world. Questions are being asked, answers have been searched for and partially provided. On one hand, companies continuously need to inform themselves about the expanding regulations. On the other hand, it is becoming increasingly difficult to complete the relevant forms – especially to reclaim amounts from the unemployment insurance fund. 

Short-time work is a tool that existed before COVID-19. Fortunately, it was not so omnipresent in recent years. Completion of the forms was not easy in the past, and calculation of the loss of earnings was laborious. 

Simplified form for “COVID-19” short-time work

A simplified procedure has been introduced to make things easier. In the corresponding form “Antrag und Abrechnung von Kurzarbeitsentschädigung”(German), the employer only has to declare the following totals: number of entitled persons, number of affected persons, AHV wage total of all entitled persons, total of planned hours of all entitled persons, total of lost hours of all affected persons. 

The simplified form indicates which persons are not entitled to compensation for short-time work. This was amended after the notification of 8 April (in particular, on-call employees are now also eligible if they have been working for the employer for at least six months). 

The definition of the AHV wage total is also to be found on the form: in addition to the total wages subject to AHV of all eligible employees, allowances subject to AHV must be included, as well as the relevant payable portion of the 13th monthly salary, or any bonuses or holiday or public-holiday supplements for employees paid by the hour, but not exceeding CHF 12’350 per person. The following are not to be included: forms of compensation such as overtime, allowances for work-related inconveniences, such as building-site and dirty-work allowances, and expense allowances. Persons with crucial decision-making powers and their spouses may be declared by the employer for a maximum of CHF 4’150. 

Differences from the previous “classic” short-time work form

The detailed form “Abrechnung von Kurzarbeit” used before COVID-19 is no longer accepted by some cantons if short-time work is caused by COVID-19. This form sets out different procedures, resulting in a major financial difference. Both the brochure “Kurzarbeitsentschädigung – Information für Arbeitgeber und Arbeitgeberinnen” (German) issued by SECO (Annexes I and II) and the document “AVIG-Praxis KAE” (margin no. E10) (German) also provide for a holiday and public-holiday supplement to be added to the declared AHV wages for employees on a monthly salary. This supplement was not rejected for COVID-19 short-time work. In our opinion, the simplified form has not been thoroughly explained and, if implemented literally, would lead to unequal treatment of employees on hourly versus monthly wages. Moreover, this supplement is entirely justified: if holidays are taken or public holidays occur, there is no entitlement to short-time work compensation even though the employer must pay the employee’s wages. Therefore, the employer is additionally compensated with the supplement in the non-holiday period so that it can pay the employee during the holiday period. 

SECO has published a table in its brochure on short-time work, indicating the supplement that is payable according to the number of paid public holidays (if falling on a working day) and the number of weeks of holiday leave taken. As confirmed by SECO, there are further differences (to the benefit or disadvantage of employers) resulting from a summary calculation according to the COVID-19 procedure compared to the detailed “classic” procedure (especially in the case of different numbers of lost hours on a percentage basis at different wage levels), that need to be accepted. 

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Raymond Simmen

Raymond Simmen

Leader Payroll & Employment Solutions Switzerland, PwC Switzerland

Tel: +41 58 792 42 33