Videoconference Expo Event: Coronavirus and Short-Time Work Compensation

Short-time work is an effective tool to compensate for temporary employment slumps in cases such as the unexpected occurrence of the coronavirus. The aim of short-time work is to preserve jobs.

The short-time allowance KAE provides appropriate compensation for a chargeable loss of working hours. The KAE offers the employer an alternative to impending layoffs. The employer thus saves the costs of staff turnover (training costs, loss of operational know-how) and retains short-term availability over the workforce. The advantages for employees are the avoidance of unemployment, the preservation of comprehensive social protection within an employment relationship and the avoidance of gaps in the amount of occupational pension benefits.

SECO considers the unexpected appearance of the new coronavirus and its effects not to be part of the normal operating risk. Thus, companies can apply for KAE with reference to the coronavirus. But: the general reference to the new coronavirus is not sufficient to establish a claim for KAE. Rather, employers must continue to credibly demonstrate why the work absences to be expected in their company are due to the occurrence of the coronavirus.

The loss of working hours must therefore have an adequate causal connection with the occurrence of the virus. For example, one can think of the following constellations:

• Businesses are closed by order of the authorities
• Production slump because components from regions affected by the coronavirus, such as China or from affected plants, are no longer available (import). China or from affected plants are no longer available (import).
• Production slump because products can no longer be delivered to regions affected by the coronavirus, such as China (export)
• Goods transports slump
• Customers stay away for fear of infection (mainly affects restaurants, leisure and entertainment facilities, travel agencies, passenger transport companies and so on)

The employer must submit advance notifications of short-time work to the competent cantonal office (KAST). The KAST of the canton in which the company or company department is located is responsible for processing the advance notification. In order to be able to react more quickly, the advance notification period has been reduced from 10 days to 3 days.

The following questions and answers are intended to help Expo Event Swiss Live Com Association members and other interested parties properly assess the issues related to short-time compensation regarding coronavirus.

These are summary answers to the most common questions. The explanations are deliberately kept simple and pragmatic and are to be understood as a guide. They are no substitute for an in-depth legal examination in individual cases. Questions and answers from live streaming are summarized here:

What happens to the accrued overtime? Will they be frozen for the short-time working period? Will overtime accumulated in the last six months be deducted from the KAE?

If, at the time of the introduction of approved short-time work for the company or company department, a framework period for the receipt of benefits is not yet running, the additional hours worked by the individual employees in the six preceding months shall be deducted from the lost working hours.

During the framework period for the receipt of benefits, all additional hours worked by the individual employee up to the time of a new work loss will be deducted from the work losses, but no longer than from the last 12 months.

To apply for KAE, must overtime and vacation from the previous year be completely eliminated? 

Overtime (overtime) does not have to be reduced before the employee receives KAE. However, they are included in the calculation of the chargeable loss of working hours. Vacations also do not have to be taken.

We won't have the overtime we would have made at the moment to move in and bridge over during the next season break. Should we just continue to register short-time work, or how should we handle this? 

Catch-up and make-up times shall be included in the target hours calculation for the payroll period. They shall be compensated on an ongoing basis to the extent that they are missed. In payroll periods in which make-up time is compensated, the target number of hours shall be reduced accordingly. Advance notice may well be worthwhile.

Can employees also take vacation at the same time as they are prohibited from providing services, i.e. while they are receiving KAE (at the employee's request)? If vacation is taken, would the short-time allowance (KAE) be reduced accordingly? Does the employee retain the full vacation entitlement (e.g. 25 days per year) even if he/she is absent for 3 months due to the official measures? Do you recommend that, as a matter of principle, no vacation days be taken while the employee is receiving KAE?

The vacation entitlement is taken into account within the framework of the creditable hourly earnings. In this respect, there is no point in reducing vacation during the KAE.

What impact does short-time work have on employees' regular vacation entitlement? Can there be a reduction in vacation? 

No, a vacation reduction is not provided for by law. Illustrative calculation examples can be found in AVIG Practice KAE B1-16 as well as in the KAE brochure of the SECO.

We have a company with fixed-term employment contracts for 3 years. What are the chances of being able to register for short-time compensation here? 

As a rule, the loss of working hours of persons who are employed for a fixed period of time is not chargeable. The reason is that they are protected from dismissal due to the fixed duration of the contract and therefore do not have to agree to the ordered short-time work. If an employment contract permits termination before the end of an agreed fixed term, there is entitlement to KAE. However, insofar as the reduction in working hours is due to an official measure in the event of a pandemic, you can claim KAE for persons in a fixed-term employment relationship in accordance with the hardship clause.

What should we do with part-time, on-call employees: enroll already or wait?

For persons on call, you can claim KAE based on average working hours.

What applies to learners? 

The absence from work of persons who are in an apprenticeship relationship cannot be credited. The reason for this exclusion is, on the one hand, the time limit and, on the other hand, the predominant training character of the apprenticeship relationship. Apprenticeship relationships within the meaning of the Vocational Training Act and employment relationships of trainees that predominantly have the characteristics of an apprenticeship relationship are to be equated with these apprenticeship relationships.

What applies to temporary employees?

Temporary employees are excluded from KAE.

What about finding side work if this condition now lasts longer than 1 month? 

Employees affected by a full- or half-day work stoppage may be assigned a suitable, reasonable interim job. Employees whose work is suspended for more than 1 month must also seek such employment themselves.

Employees who accept interim employment require the consent of the employer. If interim employment is unjustifiably refused, the cantonal office shall reject the claim to remuneration of the KAE for the employees concerned.

Employees must notify the employer of the income earned during short-time work through interim employment or self-employment. The employer notifies the ALK.

Contributions to AHV, IV, EO and ALV: Are employer contributions also reimbursed by the fund? 

Not direct. The KAE, after deduction of the waiting period, amounts to 80% of the creditable earnings lost on the hours lost. Reimbursement to the employer is not directly provided for, but is included in the creditable hourly earnings.

Assumption: The crisis lasts several weeks/months and we see ourselves forced to terminate employees in the medium term. Is there any financial support (ALV/KAE) during the notice period or would we have to pay 100% salary without employment/performance of the employee during the notice period? 

The purpose of the KAE is to prevent terminations. If the employment relationship is terminated, the entitlement to KAE is lost from the beginning of the contractual notice period. At least it is not reclaimed if its assertion was not abusive.

Are there also financial support options for the owners of small businesses? In the case of owners/partners, can at least part of the wages for their operational activities be registered for short-time work? 

Those who run a business themselves cannot apply for short-time work, not even for family members, at most for permanent employees.

The Federal Council has granted ten billion francs in emergency aid for SMEs. However, small businesses and sole proprietorships must still be patient. The Federal Council wants to provide information by March 20, 2020 on how to proceed with those affected. In principle, one billion francs will be reserved for such cases of hardship.

Can we claim compensation for loss of earnings from the authorities on the basis of Art. 63 EpG Finally, our service provision was prohibited.

Art. 63 refers to the cases in Art. 33-38 and Art. 41 para. 3 EpG and does not cover loss of earnings in general. Loss of earnings insurance covers loss of earnings caused by closure of operations or a ban on activities. The prerequisite is usually an official order. However, damage caused by influenza viruses such as the coronavirus is often not covered.

Up to CHF 8 billion can be claimed in the unemployment insurance fund for short-time work compensation. The grace period for short-time work will be reduced to one day by September 30, 2020.

SECO is examining an extension of the entitlement to short-time work compensation to employees with fixed-term (non-terminable) employment relationships and employees in temporary employment by March 20, 20202.

For particularly hard-hit companies, the Federal Council is considering financial support (e.g. for liquidity bridging or financial aid) in the form of a hardship provision of up to CHF 1 billion. SMEs with financial bottlenecks have immediate access to up to CHF 580 million in guaranteed bank loans.

An additional CHF 10 million is to go to the guarantee organizations for extraordinary administrative costs. Based on the Federal Law on Financial Assistance to Guarantee Organizations for SMEs, four recognized guarantee organizations can grant guarantees of up to one million francs to companies of any size The bank loans obtained by means of guarantees must be repaid. The Federal Council is also easing the conditions for a guarantee. Until the end of 2020, it wants to cover the one-off application review costs and the companies' risk premiums for the first guarantee year for new guarantees. Up to CHF 4.5 million can be requested for defaults in connection with (trade fair) activities of the official export promoter S-GE.

A-fonds-perdu contributions in the amount of 50 million Swiss francs are to be made available for voluntary organizations in the sports sector.

For professional team sports, the Federal Council wants to grant interest-free, repayable loans, as access to bank loans is difficult in the sports sector. Up to 50 million Swiss francs have also been earmarked for this measure.

The FDHA is urgently preparing a temporary bill for additional economic measures that can be used in addition to other instruments to cushion cases of hardship in the cultural sector. In this way, the Federal Council wants to prevent the existence of recurring cultural events from being threatened and, in particular, to support self-employed and freelance cultural workers in emergency situations. In the course of drafting the law, it is also to be examined how the cantons, as those responsible for the cultural sector, can be included in the financing.