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Workforce Flexibility and Government Incentives in times of Covid-19 - Switzerland

Short-term State Aid

Covid-19 Questionnaire

Are there any regulations in place providing an employer with possibility for flexible workforce planning such as part-time work/temporary leave which are triggered in a situation similar to a pandemic outbreak as Covid-19?

Yes

If YES on question 1, please describe which type of regulation. Please confirm if and to what extent such leave can be supported by state aid and/or other extra-ordinary governmental support.

Yes

if YES on question 1, please describe which contacts that may need to be initiated with trade unions and/or works councils. Must a special process be followed?

  • More than 40 billion Swiss Francs for financial support in the sense of immediate economic help, short-time work and other compensations.
  • Short-time work compensation
  • Short-time work is an instrument to compensate for temporary work loss that aims at keeping jobs. The compensation usually amounts to 80% of the relevant earnings (in principle calculated on the basis of the latest monthly income).
  • Due to the extraordinary situation, the application process for short-time work has been simplified.
  • Most restrictions to the eligibility of short-time work compensation have been withdrawn.
  • Short-time work compensation can now also be paid to employees with fixed-term contracts and persons working for a temporary work organization.
  • Short-time work compensation will also be available for persons in an apprenticeship.
  • Short-time work compensation can now also be paid to employees who are similar to employers. For example, shareholders of a GmbH who are also employees; persons who work in the spouse's business. These persons will be able to claim a lump sum of up to CHF 3'320 p.m. for a full-time position.
  • The waiting period will be abolished. A claim can thus be asserted from the 1st day.
  • Employees will no longer have to reduce their overtime in order to receive an unrestricted compensation of 80% of the relevant earnings.
  • In principle, the employer must advance the compensation at the usual payday to its employees (before receiving the compensation by the competent cantonal unemployment insurance fund). This obligation does no longer apply. Furthermore, the employer can request an interest-free postponement of the payment of some social security contributions (AHV/IV/EO/ALV) at the competent cantonal AHV compensation fund.
  • Compensation for the loss of earnings
  • The Federal Council has also implemented further measures in the area of loss of earnings compensation, to which both employees and self-employed individuals are entitled.
  • The system will be running from the beginning to mid April 2020.
  • The measure will apply retroactively from 17 March 2020.
  • Entitlement begins on the 4th day on which all eligibility criteria are met, i.e. on 19 March 2020 at the earliest, as all schools in Switzerland have officially been closed since 16 March 2020.
  • The number of daily allowances for self-employed persons in quarantine or with care duties is limited to 10 and 30 respectively.
  • These measures are limited to six months.
  • This compensation is subsidiary in nature. Anyone who can draw benefits from another social or private insurance scheme or short-time work or who continues to receive the salary is not entitled to it.
  • Further financial support measures
  • Special support measures have been announced for companies and/or self-employed individuals that work in the field of culture, tourism and sport. Further measures in different fields are currently discussed and might be announced shortly.

Are there any governmental programs if a company needs to close totally or partially for a certain time period?

20 billion Emergency aid for Bussinesses through loans

  • The Federal Council set up a guarantee program worth CHF 20 billion.
  • This is intended to provide companies with a quick and uncomplicated way of obtaining credit of up to 10% of turnover or a maximum of CHF 20 million.
  • Amounts of up to CHF 0.5 million will be paid out immediately by the banks and 100% guaranteed by the federal government.
  • Amounts of between CHF 0.5 million and CHF 20 million will also be paid out immediately by the banks. These amounts will be guaranteed by the federal government at 85% and by the banks at 15%. This will encourage the banks to carry out a short bank review.
  • For amounts in excess of CHF 20 million, a case-by-case decision must be made.
  • Loans can be requested from the bank with which a customer relationship already exists.
  • The loans are to be interest-bearing only at a low interest rate.

Deferral of payment of social security payments

  • The companies concerned may be granted a temporary, interest-free deferral of payment of social security (AHV/IV/EO/ALV).
  • Companies also have the option of having the amount of the regular contributions to the AHV/IV/EO/ALV to be adjusted if the sum of their wages has fallen significantly.
  • The same applies to self-employed workers whose turnover has collapsed.
  • The cantonal AHV compensation fund is responsible.

Liquidity buffer in the tax area and for federal suppliers

  • Businesses will be able to extend payment periods without having to pay interest on arrears.
  • Therefore, the interest rate for VAT, customs duties, special consumption taxes and incentive taxes will be reduced to 0.0 percent in the period from 21 March 2020 to 31 December 2020.
  • The same rules apply to direct federal taxes from 1 March 2020 until 31 December 2020.
  • Administrative units are instructed to pay out invoices as quickly as possible without making use of the payment deadlines.

Legal standstill according to SchKG

  • From 19 March 2020 until 4 April 2020, debts may not be enforced in the whole of Switzerland.

If state aid and/or other extra-ordinary governmental support is available, please describe the necessary prerequisites to qualify for such state aid.

  • Short-time work compensation:

If working hours must be reduced or operations must be shut down completely, employees are generally entitled to compensation for short-time work if (a) they are liable for unemployment insurance contributions, (b) the work loss is based on economic reasons, inevitable and amounts to at least 10% of working hours normally performed by the employees, (c) the employment relationship has not been terminated yet, and (d) the work loss is likely to be of temporary nature and it can be expected that short-time work will maintain jobs.

Short-time work is subject to the consent of the concerned employees.

  • Compensation for the loss of earnings:

Compensation for the loss of earnings can be applied for by employees and self-employed individuals if the loss of earnings is based on one of the following reasons:

  • Compensation can be applied for if an employee or a self-employed individual must take care of their children up to the age of 12 as a result of school closings and the absence of external childcare and therefore suffers from a loss of earnings. The compensation is not paid during school holidays. Concerning self-employed individuals, the compensation is limited to 30 days.
  • Compensation can also be applied for if an employee or a self-employed individual must stay in quarantine and therefore suffers from a loss of earnings. To prove this, a medical certificate is required, and the compensation is limited to 10 days for both, employees and self-employed individuals.
  • In order to limit the spread of the coronavirus, the Federal Council has, among other things, closed certain publicly accessible facilities such as shops and restaurants as well as banned public and private events. If a self-employed individual suffers from a loss of earnings as a result of one of these measures, he/she is entitled to compensation for the loss of earnings.

The compensation is subsidiary to other compensations (such as short-time work compensation) and to benefits from social and private insurances.

If state aid and/or other extra-ordinary governmental support is available, please describe the application procedure for such state aid (e.g. how and when is the application filed with the government etcetera; what shall such application include).

  • Short-time work compensation:

If an employer intends to claim short-time work compensation for its employees, it must in principle notify the cantonal unemployment insurance fund ten days before the start of short-time work using the official pre-application form (that has lately been simplified). The deadline that must have been considered when pre-applying has been withdrawn by the Federal Council. Within three months after the end of each accounting period the employer asserts the entire claim for compensation of its employees using the official request form (that has lately been simplified). When requesting the compensation within the mentioned deadline, the employer has to prove its information by means of a working time record for each affected employee and an evidence of the respective monthly income. An accounting period is usually one month.

Responsible is the canton in which the employer has its registered office.

  • Compensation for the loss of earnings:

Compensation for the loss of earnings must be applied for by the employee to the competent cantonal AHV compensation fund using the official form (which can be downloaded from the website www.ahv-iv.ch). If the employee benefits from continued remuneration, this must be specified when applying. In this case not the employee receives the compensation (because of its subsidiary) but the employer.

Please note that the COVID-19 scenario is constantly changing and that this information is current as of 02 April 2020. This publication should not be regarded as offering a complete explanation of the legal matters referred to and is subject to changes in the law and other applicable rules.