Short-time work compensation and the Corona pandemic
Basics
According to the State Secretariat for Economic Affairs (SECO), the number of advance notifications of short-time work received by the cantons has risen sharply in recent days. It can be assumed that the situation is likely to worsen in the near future. This article aims to provide a brief overview of short-time work as a result of the spread of the coronavirus (COVID-19).
The purpose of short-time work compensation is to mitigate the economic consequences of temporary work absences for both companies and employees. Short-time work is enshrined in law in Art. 31 - 41 of the Unemployment Insurance Act (AVIG) and the associated implementing ordinance AVIV(Art. 46 ff.).
In the case of short-time work, the employer orders a temporary reduction in the contractual working hours of an employee, while the contractual relationship under labour law remains in place. The written consent of the employee concerned is required. If the employee refuses consent, the employer must continue to pay the full salary according to the employment contract. Therefore, from the employer's point of view, it is essential to seek dialogue with the affected employees as early as possible and to explain the operational situation in an understandable way. Especially in cases where the employee refuses to agree, our experience has shown that the involvement of an external third party (such as a lawyer/mediator) can be extremely helpful, as they can objectively explain the legal situation and the consequences for the parties involved.
Can a company claim short-time work compensation because of the coronavirus (COVID-19)?
In connection with the coronavirus (COVID-19), two possible scenarios must be distinguished: On the one hand, there are work absences due to declines in demand or turnover, such as infection fears, whereby these are economic reasons. The second scenario concerns work stoppages in connection with official measures (e.g. event bans or sealing off of cities). Economic reasons must be unavoidable and official measures must not be avoidable by the employers concerned through appropriate and economically viable measures. There must be an adequate causal connection between the work losses and the occurrence of the coronavirus. If the damage suffered can be passed on to a third party and this third party can be held liable, there is no entitlement to short-time work compensation.
Another cumulative condition for receiving short-time work compensation is that at least 10% of the employee's usual working hours must be affected by the loss of work per accounting period(Art. 32 para. 1 lit. b AVIG). An accounting period lasts 4 weeks or one month(Art. 53 AVIV). Furthermore, the employment relationship must not have been terminated, the loss of work must be expected to be only temporary and it must be expected that jobs can be saved through short-time work.
"A tried-and-tested instrument, but many conditions have to be met."
The pre-announcement of short-time work must be submitted to the competent cantonal office and, provided that all requirements are met, short-time work compensation will be paid for the loss of work - after deduction of waiting days. This amounts to 80% of the loss of earnings or 80% of the lost salary. It should be noted that certain employees (e.g. apprentices) may not be affected by short-time work and must therefore be paid their full salary. Only the hours actually lost are compensated and not the lost earnings.
Outlook
The Federal Council is currently examining ways to compensate for hardship cases with financial support of up to CHF 1 billion for companies that do not meet the requirements for receiving short-time work compensation. The Federal Department of Finance (FDF) has been instructed to examine the modalities and apply for the necessary funds by 1 April.
On 13 March 2020, the Federal Council decided to reduce the waiting period to one day with immediate effect until 30 September 2020. Furthermore, the Federal Council instructed SECO to examine an extension of the entitlement to short-time work compensation to employees with fixed-term employment relationships and those with temporary work by 20 March 2020.
Balthasar Wicki and Arife Asipi will be happy to answer any questions you may have on the subject of short-time work.