What are the legal implications of the Swiss Federal Council’s COVID-19 measures on employees and independent workers?
1. The recommendations of the Federal Council : « Stay home »
On 13 March 2020, the Federal Council closed down schools and invited employers to comply with the recommendations of the Federal Office of Public Health (FOPH), i.e. to authorize and request working from home, to the extent possible.
On 16 March 2020, the Federal Council decided to enforce stronger measures and ordered the closure of restaurants, bars and entertainment and leisure facilities up until 19 April 2020, with the exception of food shops and health care facilities. It called for the utmost caution: to "stay home" as much as possible with public and private gatherings banned.
On Friday, 20 March 2020, the Federal Council decided to release 32 billion Francs for business support. We will discuss the concrete measures taken by the Federal Council to this end below (see section 7 below).
In the context of the current health crisis, we set out an overview of the rights and means available to companies, employees and the self-employed in terms of remuneration.
2. An employee of an enterprise whose activity is maintained
The employee is entitled to his or her salary, regardless of whether he or she continues to work in his or her usual work environment or works from home on the instructions of his or her employer.
An employee's refusal to go to his workplace when his employer has complied with the FOPH's hygiene measures may be considered as abandonment of post.
In case of quarantine, the following distinctions must be made:
- The quarantine has been decided by the employer: the employee is entitled to his/her salary without restriction;
- The quarantine has been decided by a doctor: the employee’s entitlement to wages is determined in accordance with the labour law rules applicable in the event of illness (wage loss benefits for a certain duration, and possibly coronavirus wage loss benefits – see section 4 below).
As far as so-called "vulnerable" people (aged 65 or over or with underlying health problems) are concerned, they are entitled to their full salary if:
- teleworking is not possible and
- adequate measures of hygiene and social distancing are not guaranteed
In the case of a simple "personal confirmation", the employer has the right to require a medical certificate.
3. An employee of a company whose operations were suspended by the Ordinance of the Federal Council 2 COVID-19 or whose company has partially closed due to a loss of work attributable to COVID-19
The employee is then unable to perform the work in accordance with Article 119 of the Swiss Code of Obligations (CO). Insofar as the CO places the operational risk at the employer's expense, including in the event of closure ordered by the authorities, the employee will be entitled to receive his or her salary.
In order to maintain jobs, the employer may file a claim for reduced working hours (RHT - réduction d’horaire de travail or reduction of hours of work compensation) with the competent unemployment fund to partially cover the employee's salary.
The grant of such benefits is subject in particular to a loss of activity, which is unavoidable and linked to the decision of the authorities.
The employer advances the RHT benefits - 80% of the loss of earnings (up to a limit of CHF 12,350 per month) - to the employees while continuing to pay the social security charges calculated on 100% of the employee's salary. The employer must then apply for the reimbursement of these benefits. The employer is nonetheless free to pay the 20% difference to the employee.
In the case of companies that reduce their working hours due to the health crisis, the payment of RHT benefits requires the agreement of the employees concerned. In the absence of agreement, the State Secretariat for Economic Affairs (SECO) considers that partial unemployment cannot be validly imposed on the employee and that he is entitled to his salary. However, the employee runs the risk of dismissal.
In the case of employees whose salary exceeds the cap (maximum insured salary) laid down in the Ordinance (CHF 12'350 per month), the SECO and the Geneva employment office are of the opinion that the employer does not have to pay the difference.
On 20 March 2020, the Federal Council decided on measures to support companies by extending the entitlement to RHT benefits and facilitating access to them.
It was therefore decided that:
- The abolition of the waiting period of 2-3 days for the receipt of RHT allowances. This means that the unemployment fund will reimburse the employer in full for the benefits advanced by the employer to the employees.
- The extension of the right to benefits for employees with a limited period of employment and to persons in the service of a temporary work organisation, to persons undergoing an apprenticeship and to on-call workers.
- The extension of the right to compensation for company directors who are employees of the company. They may claim a gross lump-sum compensation capped at CHF 3,320 per month for a full-time position. For managers of companies who are self-employed - see section 5.
- The abandonment of the condition that employees have to work overtime before they can benefit from short-time working.
- The rapid simplification of the processing of claims and the payment of benefits in the event of short-time working.
It is worth noting that requesting such benefits may have negative consequences on foreign employees who hold a residence permit and/or are in the process of obtaining the Swiss citizenship, as one of the conditions is that the applicant does not benefit from Swiss social benefits.
4. Wage Loss Benefits:
In order to limit the economic consequences linked to COVID-19 and in view of the closure of schools, the Federal Council, by ordinance of 20 March 2020 applicable retroactively to 17 March 2020 (Ordinance on loss of earnings COVID 19), introduced a right to an allowance for loss of earnings in favour of parents of children up to the age of 12 who have to interrupt their gainful activity because the care of their children by third parties is no longer guaranteed and who are compulsorily insured with the AHV (residence or gainful activity in Switzerland).
Upon application of the parent(s), the daily allowances will be paid monthly by the relevant AHV Compensation Fund which was responsible for collecting AHV contributions and will correspond to 80% of the average gross income from gainful employment earned before the entitlement to the allowance arose. However, the ordinance limits the allowance to a maximum amount of CHF 196 per day.
In such a case, the employer no longer has to pay the wages of employees who have to look after their children.
With regard to school holidays, if the childcare solution for the school holidays (such as grandparents or crèche) is not available for reasons of coronavirus , the right to the allowance remains guaranteed.
We also point out that parents are not entitled to this allowance if they can continue their activity in the form of teleworking.
5. Self-employed persons
Self-employed persons are not eligible for RHT benefits because they are not employees. This point has been criticized by many, and there are current discussions which might change this situation.
They can, however, apply to the unemployment fund for loss of earnings allowance due to the closure of their businesses decided by order 2 COVID 19 (e.g. restaurant, shop) and that they do not receive any other compensation.
Self-employed persons can also claim compensation if they take on childcare duties for children up to the age of 12 or if they are in quarantine.
6. Employers’ right to request its employees to take their vacations?
As a reminder, the purpose of holidays is to rest (physically and mentally). Employers are in principle able to determine the date of the vacation, normally by giving at least 3 months’ notice before the holiday date and taking into account the wishes of the employee, but (according to some scholars) the possibility of imposing vacations (at more than short term in the event of exceptional and unforeseeable situations or absolute need exists.
It is general consensus that today’s crisis corresponds to an exceptional and unforeseeable situation. However, it is very doubtful that requesting employees to take their vacations now in the current situation would allow them to rest physically and mentally.
For the avoidance of doubt, it must be raised that it is also not admissible to unilaterally impose leave without pay.
7. Assistance to the companies in the form of liquidities
Among the measures taken by the Federal Council on 20 March 2020 to mitigate the economic consequences of COVID-19, the Federal Council decided the following.
Businesses affected by the crisis can benefit, through a simplified and speedy process, from bank loans up to 10% of the company's turnover, fully guaranteed by the Swiss Confederation, or a related organization, up to an amount of CHF 500’000. Higher loans - but not more than 20 million - are available (with the 10% of turnover caveat) but these are only guaranteed up to 85% by the Swiss Confederation, the remaining 15% consisting in a possible risk for the bank, hence a longer process.
These companies may request that the payment of social security contributions be deferred and that the amount be adjusted in the event of a significant reduction in the company's wage bill.
According to the Caisse Interprofessionnelle AVS de la Fédération des Entreprises Romandes (FER -CIAM), summons for payments of contribution claims are suspended with immediate effect and probably until the end of June 2020. Furthermore, no interest on arrears will be charged from Monday 23 March until further notice.
The Fédération des Entreprises Romandes (FER) points out, however, that the question of deferred payment of social security contributions by companies that have applied for HRT benefits has not been settled and therefore, as a precautionary measure, it recommends that they continue to pay social security contributions.
From 20 March 2020 to 31 December 2020, no interest on arrears will be due from 20 March 2020 to 31 December 2020 in the event of late payment of taxes (cantonal or direct federal), incentive taxes and customs duties.
If you need advice or support regarding employment law during this time or assistance in taking steps to enable you to receive RHT benefits or a loss of earnings allowance, please contact Olivier Cavadini.