Back payment of short-time working compensation

The COVID-19 pandemic hit the Swiss economy hard at the beginning of 2020. To prevent unemployment and preserve jobs, the federal government reacted quickly and introduced various instruments to help the companies affected. One of these is short-time working compensation (KAE), which covers the wage costs of companies if employees are unable to work due to the COVID-19 pandemic or the measures adopted in the wake of it. As time was of the essence, the eligible loss of earnings was calculated using an accelerated and simplified summary procedure and the KAE was paid as a lump sum for the entire company.

It has now emerged that errors were made by the authorities when applying this accelerated procedure.

On November 17, 2021, the Federal Supreme Court ruled that a vacation and public holiday component must also be taken into account when calculating KAE in the summary procedure for employees on a monthly salary. Based on this ruling, the Federal Council decided on March 11, 2022 that companies can apply for corresponding additional payments for 2020 and 2021. The necessary credit was approved by Parliament in the 2022 summer session.

 

As a result, all companies that settled KAE in 2020 and 2021 using the summary procedure can have their entitlement to KAE reviewed upon request. According to initial settlements, KAE normally increases by around 10% to 20% of the original compensation, depending on internal factors (employees' vacation entitlement, number of employees on hourly and monthly pay, etc.) and the underlying period.

The affected companies have been informed by letter in stages since the beginning of July and the corresponding applications can now be submitted online. The deadline for submitting applications is October 31, 2022, and a separate application including detailed accounts must be submitted for each month that is to be reviewed. It is also important to note the impact of any subsequent payment on other COVID-19 aid funds. In addition to the KAE, the federal government has made various other aid funds available to cushion the impact of the COVID-19 pandemic on the Swiss economy, in particular hardship allowances.

The COVID-19 financial aid is not intended to enable the companies concerned to make a profit, but to cover uncovered costs or financial losses. If companies make a profit due to the additional payment in the area of KAE as a result of the accumulation of COVID-19 financial aid, this overcompensation may lead to a reclaim of other COVID-19 aid funds by the competent authorities.

 

The additional payment in the area of KAE represents a further opportunity for affected companies to mitigate the consequences of the COVID-19 pandemic. However, it is also associated with additional effort and possibly also with risks, namely the additional administrative effort involved in preparing detailed statements and a possible impact on other COVID-19 aid funds received, which could result in a repayment obligation. Accordingly, affected companies should weigh up these opportunities and risks when deciding whether or not to submit an application.