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When is my company entitled to compensation for the coronavirus pandemic?

Reduced-hours compensation (KAE) is a component of unemployment insurance (ALV) and is designed to help employees cope with a temporary reduction in their working hours or cessation of their work.
Reduced-hours compensation (KAE) is a component of unemployment insurance (ALV) and is designed to help employees cope with a temporary reduction in their working hours or cessation of their work.

Reduced-hours compensation can be applied for if, as a result of official measures or for other reasons, it becomes necessary to introduce short-time working or cease operations for reasons outside the employer’s control.

Numerous companies are suffering economic losses due to the current coronavirus crisis. According to the guidelines issued by the Swiss government, the impact of the coronavirus pandemic justifies short-time working – and entitles those affected to reduced-hours compensation (KAE).

Applications for compensation must be submitted to the relevant cantonal authority, i. e. the local Office of Economic and Labour Affairs. The latter will determine whether there is a connection between the spread of the virus and the application for short-time working.

Short-time working – even if the company ceases operations?

Short-time working refers to a temporary reduction or total cessation of work in a company or department for economic reasons. In the event of short-time working, the existing employment relationship under labour law remains in force.

In order to prevent redundancies due to unavoidable short-term downtimes, unemployment insurance (ALV) covers part of the employer’s wage costs. As a rule, it covers 80% of the employee’s gross salary up to the annual maximum amount of CHF 148,200. Unlike unemployment benefit, the reduced-hours compensation is paid to the employer.

Employers can only submit an application for reduced-hours compensation for employees who have completed their compulsory schooling and are below the AHV retirement age. In addition, the employees must hold a permanent position of unlimited duration.

However, in light of the current exceptional circumstances, the Federal Council has instructed SECO to evaluate an extension of the entitlement to reduced-hours compensation for employees with fixed-term (non-terminable) employment contracts and employees on temporary contracts by 20 March 2020. However, such an extension will require an amendment of the law.

Formalities

In order to be eligible for reduced-hours compensation, the competent cantonal authority must be notified in advance. The following questions must be answered:

  • Field of activity of the company
  • Monthly turnover / fee income for the last 2 years
  • Reason for introducing short-time working (causal link between the loss of working hours in your company and the occurrence of the coronavirus)
  • Have order dates been postponed, if so, why? Type and scope of the postponed orders

Normally this pre-notification must be submitted 10 days before the official application. Given the current situation, however, this notice period has been reduced to one day by the Federal Council. The employee’s approval and the current extract from the commercial register are also no longer required.

Information centres

Information Service of the Office for Economy and Labour of the Canton of Zurich

SECO continuously reviews the situation and publishes new information here

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