On March 20, 2020, the Swiss Federal Council approved a package of measures to support the companies in their role as employer and the self-employed persons in order to mitigate the economic impact of the government measures taken to protect the public against the spread of the COVID-19 (coronavirus). These new measures are designed to further simplify access to hardship indemnities for companies, provide for a possible deferral of payment of some social security contributions, guarantee minmum cash flows to the companies and expand the scope of the daily allowances in case of loss of earnings. The aim is to save jobs, guarantee wages and provide targeted support to affected individuals, companies and business sectors.

The measures taken by the Swiss Federal Council on March 20, 2020 are intended to support the companies and the self-employed persons in mitigating the economic consequences of the required measures in relation to the current COVID-19 (coronavirus) situation. Some of them are designed to further simplify access to hardship indemnities (see Section 1. below). Others intend to provide for a possible deferral of the payment of some social security contributions without interest (see Section 2. below) or offer support to the small and mediumsized companies (the "SMEs") in order to ensure their cash flows (see Section 3. below). In addition, some measures introduce a daily allowance in favor of employees and selfemployed persons who suffer a loss of earnings due to government measures implemented in relation to the COVID-19 (coronavirus) if they are not already receiving compensation or insurance benefits through another type of insurance and, as the case may be, if their salary is no longer paid by their employer (see Section 4. below).

This newsflash briefly summarizes the key elements of these 4 types of measures.

1. Simplified access to hardship indemnities

The reduction of working hours may help the companies that are facing a temporary decrease of their workload to save on wage costs, avoid terminations and thus prevent partial or complete unemployment of staff whose working hours are temporarily reduced.

The impact of the current exceptional economic situation on the activities of many companies is so immediate and severe that the Swiss Federal Council decided to extend the entitlement to hardship indemnities and to simplify the application process. As a result, with retroactive effect on March 17, 2020 and for 6 months, the following rules are in particular applicable:

  • Employees on a fixed-term contract (which is not subject to early termination), employees who are leased by another company (temporary workers), apprentices are eligible to hardship indemnities, subject to the other conditions of hardship being met;
  • Employees who determine or can significantly influence the decisions taken by the company (as a partner, member of a governing body of the company or holder of a financial participation) and their spouse or registered partner, as well as the spouse or partner of their employer, are eligible to hardship indemnities, subject to the other conditions of hardship being met;
  • The maximum monthly salary taken into account by the unemployment insurance for the employees on a fixed-term contract, temporary workers and apprentices is CHF 12'350 (CHF 148'200 per year) for a full time job as for other employees eligible to hardship indemnities; for employees who determine or can significantly influence the decisions taken by the company (as a partner, member of a governing body of the company or holder of a financial participation) and their spouse or registered partner, or the spouse of the employer, the maximum monthly salary taken into account by the unemployment insurance is CHF 3'320 (CHF 39'840 per year) for a full time job;
  • The waiting period (1 day since the measures of the Swiss Federal Council of March 13, 2020) is completely lifted;
  • Where it is not possible for the companies to advance the hardship indemnities (80% of the loss of earnings to be taken into consideration) to the affected employees on the regular payday, such hardship indemnities may be paid in advance by the unemployment insurance;
  • The application for reduction of the working hours is to be processed by the unemployment insurance as soon as possible.

We refer to our Newsletter "COVID-19 (coronavirus): hardship indemnities from the unemployment insurance in case of temporary decrease of the workload of companies"1 for further information on other key elements of the hardship indemnities and application process.

2. Possible deferral of the payment of social security contributions

The companies impacted by the current exceptional economic situation may request to temporarily defer the payment of the AVSAHV/AI-IV/APG-EO/AC-ALV2 social security contributions (the "1st pillar contributions"). If this deferral is approved, no default interest is due.

The companies may also request the adjustment of the usual amount of the advance payments in respect of the 1st pillar contributions in the event of a significant decrease in the total payroll.

These measures also apply to self-employed persons whose turnover has decreased.

The deferral of payments and reduction of advance payment requests is evaluated by the AVS-AHV compensation funds.

3. Support to ensure the companies' cash flow

Due to the extraordinary current economic situation, many SMEs have less cash to cover their running costs despite the hardship indemnities. The Swiss Federal Council therefore would like to set-up a guarantee program that allows the affected SMEs to obtain transitional bank loans.

The main objective of this guarantee program it to allow the SMEs to get loans of up to 10% of their annual turnover or up to CHF 20 million quickly and simply, as follows:

  • Loans up to CHF 500'000 should be paid out immediately by the banks and should be fully covered by a federal guarantee;
  • Loans over CHF 500'000 should be briefly reviewed by the banks and should be covered at 85% by a federal guarantee.

The Swiss Federal Council will ask for an urgent credit of CHF 20 billion to cover this measure. This request should be submitted to the Finance Delegation of the Swiss Parliament for approval in the next few days. If the credit is approved, the Federal Council will issue an ordinance, which should in particular provide for more information on how to apply for a loan.

4. Daily allowances for loss of earnings

Employees or self-employed persons who suffer a loss of earnings due to the measures against the spread of the COVID-19 (coronavirus) may receive daily allowances from the APG-EO (usually applicable in particular to maternity leave or leave for military duties) provided that:

  • They are subject to AVS-AHV; and
  • They are not already receiving compensation or insurance benefits through another type of insurance and, for employees, their salary is no longer paid by their employer.

Compensation under these new measures is provided in the following cases:

  • Interruption of work to take care of one's children up to the age of 12 due to the closure of day-care and schools (except during school holidays); or
  • Quarantine of the concerned person ordered by a doctor.

In addition, self-employed persons may also be entitled to compensation of their loss of earnings due to a State decision ordering them to close their independently managed business to the public.

The daily allowances correspond to 80% of the salary/average income (maximum CHF 196 per day). They are paid after a waiting period of 4 days in case of interruption of work to take care of one's children. There is no waiting period in case of quarantine or an independently managed business is ordered to close its doors to the public.

The number of daily allowances is limited to 10 days in case of quarantine. For the selfemployed, the number of daily allowances is limited to 30 days in case of interruption of work to take care of their children.

Applications for daily allowances for loss of earnings is evaluated by the AVS-AHV compensation funds.

Footnotes

1. This Newsletter is available on our website ( https://www.lenzstaehelin.com/publications/newslett ers/newsletters/more/4774/).

2. Old-age/Invalidity/Loss of earning in case of service or maternity/Unemployment insurance.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.