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11 December 2019
If employees become ill through no fault of their own and are therefore unable to work, they are still entitled to a wage. Employers' obligation to continue to pay wages is governed by Article 324a of the Code of Obligations. Employers may release themselves from this obligation if they offer employees health insurance for a daily allowance. The Federal Supreme Court has formulated the requirements for employee health insurance. Protection for covered employees begins earlier and lasts considerably longer in the case of long absences due to illness than employers' obligation to continue to pay wages.
According to Article 324a of the Code of Obligations, employers' obligation to continue to pay wages does not arise until the start of the fourth month of employment, unless the employment relationship has existed for more than three months. This is the case for fixed-term employment relationships. Permanent employment relationships fulfil this requirement if they cannot be terminated until after the end of the third month of employment. The obligation to continue to pay wages is also limited in time. In the first year of employment, it is three weeks, after which it is longer dependent on the length of employment. Court practice has developed scales for this purpose.
According to all scales, employers' payment obligation increases to five to six months in the 20th year of employment. During this period, sick employees are entitled to wages as if they were working. Employers can release themselves from this payment obligation if certain formal and material conditions are fulfilled. The required agreement must be made in writing or included in a normal or collective labour agreement. In addition, a regulation deviating from Article 324a of the Code of Obligations must be at least equivalent for the employee. Equivalence is given in the case of (collective) daily sickness benefit insurance taken out by the employer for an employee if, in the event of the employee's incapacity to work, the insurance provides for daily benefits of 80% of the salary for 720 days within 900 consecutive days after a waiting period of a maximum of three days. In addition, employers must pay at least half of the insurance premium. Further, employees must have a direct right of claim against the insurer.
During a permissible waiting period of up to three days, an employee receives neither wages nor a daily allowance and thus risks losing their full wage for as long as their period of incapacity lasts. However, if an employee is unable to work for a long period, they can benefit from a daily allowance that is significantly longer than their entitlement to continued payment of wages. If the waiting period lasts longer than three days, employers must continue to pay wages as long as they are obliged to do so in accordance with Article 324a of the Code of Obligations or the court scales (at a maximum, until the daily sickness benefit insurance obligation becomes effective). For example, collective labour agreements in the hospitality industry stipulate that employers must pay 88% of the gross wage if a waiting period of no more than 60 days per year applies. If there is no formal agreement in the employment contract regarding the conclusion of daily allowance insurance for employees, they are entitled to continued payment of wages in the event of illness. In this case, a daily allowance to cover the employee's insurance will be deducted from the wage payment.
If daily sickness allowance insurance does not pay out a daily allowance in the event of a declared incapacity to work, employers are not obliged to make an advance payment to employees. An obligation to make an advance payment does not arise from the employer's duty of care, but may be agreed in an employment contract. Collective bargaining agreements in the hospitality industry stipulate that employers must advance the insurance benefits at the end of the month if the insured event has not yet been concluded. If employees do not use their direct right to claim the daily allowance, insurers will pay the daily allowance to the employer, which will forward it to the employee. Thus, employers act as the paying agent for insurers. If and to the extent that an employer does not pass on the daily allowance received, the insurer has not yet fulfilled its daily allowance obligation towards the employee.
As daily allowances, unlike wages, are not subject to compulsory social insurance, no deductions are made – namely, for old age, invalidity or unemployment insurance. However, contributions to mandatory pension funds are still due. The applicable regulations usually provide for a premium exemption only if the incapacity to work has lasted three months. While an employer's obligation to continue to pay wages under Article 324a the Code of Obligations ends with the termination of an employment relationship, an employee's entitlement to a daily allowance generally continues after their employment contract ends as long as their incapacity to work continues and the maximum benefit period has not been exhausted.
For further information on this topic please contact Thomas Rihm at Rihm Rechtsanwälte by telephone (+41 44 377 77 20) or email (firstname.lastname@example.org). The Rihm Rechtsanwälte website can be accessed at www.rihm-law.ch.
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