Updated on 19.03.2021

Covid-19: Understanding Reduced Working Hours (RWH-RHT) and Compensation for Short-time Work (CSW-APG)

The sanitary crisis that we are experiencing has led to a drastic drop in the volume of activity for numerous companies, and even their complete closure, forcing them to put their employees on partial or full unemployment. Faced with this exceptional situation arising from the Covid-19 pandemic, companies may request indemnities. As regards RWH (RHT) and CSW (APG), we would like to help you understand them better.

[Warning to readers] As the times we are living in are totally unprecedented, it is possible that certain information given here will be modified in accordance with measures taken by the authorities to answer the economic crisis. They will therefore be updated on a regular basis.

Reduced Working Hours (RWH) and Covid-19

What is RWH?

The Reduction of Working Hours (RWH) is a temporary reduction or a complete interruption of the company’s activity due either to a decision on the part of the authorities or for economic reasons. The goal is to halt redundancies due to decreased activity.
The RWH engenders the right to compensation over a certain time span which is covered by unemployment insurance (AC). The maximum duration of compensation is currently set at 18 months (limited in time to 31.12.2021).
Therefore, 80% of the payroll costs are taken into consideration for employees whose normal working hours are reduced.

What conditions must the employer fulfil?

In principle, two conditions must be met in order to claim compensation for lost time:
  1. The compensation in case of RHT supports the loss of work due to measures of the authorities or other circumstances beyond the control of the employer. This principle applies provided that the employer cannot avoid the loss of work by appropriate and economically bearable measures or make a third party liable for the damage.
  2. The compensation in the case of RHT allows for unavoidable losses of work due to economic reasons. These include both cyclical and structural causes that lead to a decline in demand or turnover.
In both cases, the following conditions must be met in particular for an employee to be entitled to compensation in the event of an RWH:
  • The employment relationship must not have been terminated
  • The loss of work is likely to be temporary and the compensation for reduced working hours can be expected to maintain the jobs
  • The work schedule is controllable
  • The loss of work constitutes at least 10% of the total hours normally worked by the workers during the period for which the count is made
  • The loss of work is not attributable to circumstances that fall within the normal risk of operation

Who is entitled to daily indemnities (IJ) for reduced working hours (RWH-RHT)?

The “classic” beneficiaries, mentioned in Art. 31 LACI, are the employees:
  • Whose normal working hours have been reduced or suspended
  • Who have the obligation to contribute to the UI (AC) or have not yet reached the minimum age for contributing to the AVS
  • Whose employment has not been terminated
Cross-border employees are also covered by this measure.
Within the framework of the exceptional measures taken by the Confederation due to Covid-19, new categories of employees are eligible to receive indemnities.
On January 20, 2021, the Federal Council again extended the right to compensation in the event of RWH to persons in fixed-term employment and to apprentices. This extension applies from January 1, 2021 to June 30, 2021.

As of January 18, 2021, persons considered vulnerable are once again entitled to RWH benefits due to measures ordered by the authorities, provided that the company meets the overall requirements for RWH benefits. This right is currently limited to March 31, 2021.

On October 28, 2020, the Federal Council amended the ordinance COVID-19 unemployment insurance. With this amendment, the right to compensation for reduced working hours is granted to on-call workers under certain conditions. The amendment comes into effect retroactively on September 1, 2020 and remains valid until June 30, 2021.

The evolution of the beneficiaries can be found in the table below (in French).

Which categories are excluded from the RWH (RHT) procedure?

The RWH is not valid for:
  • Employees whose employment contracts have been terminated
  • Employees absent with a medical certificate (who are covered by loss of earnings insurance)
  • Employees who have reached retirement age (64/65 years old)
  • Employees who do not accept the reduction in working hours
  • Employees on maternity leave
  • Employees on holiday
  • Employees without a childcare solution: Cf. following § “Allowance for loss of earnings and Covid-19”

Can staff members eligible for RWH refuse to accept the daily RWH indemnities?

Each of the eligible employees has the right to refuse the indemnities when RWH occurs; the employer must then continue to pay the employee their full salary. However, this entails an increased risk of future loss of employment for this employee.

Is the company obligated to make up the salary to 100%?

There is no obligation for a company to make up the RWH indemnities to 100% (meaning an additional 20%), however it has the right to do so. This has no influence on the unemployment insurance’s decision.

Must the employer provide proof of the employee’s agreement?

Those employees touched by the RWH measure must be informed and give their agreement with the introduction of reduced working hours. An RWH attestation or an e-mail confirming the employee’s agreement may be good practice.

What about social security payments?

Although the daily indemnities for RWH cover 80% of the salary, all the social security contributions remain due on 100% of the salary.

Which hours must be reported?

Within the framework of Covid-19, it is mandatory to report the hours actually worked.

Why is accounting for the hours actually worked compulsory?

A control of the hours worked is required to be able to prove the reduction of hours per employee to the SECO [State Secretariat for Economic Affairs] to justify the daily indemnities for RWH.

Does the period of RWH entail a right to vacation days?

The compensatory allowance scheme for the reduction of working hours does not give rise to a suspension of the employment contract. The right to vacation days therefore continues during the period that the company receives indemnities for RWH.
N.B.: If an employee takes vacation days during the period in which their company receives indemnities for RWH, it will not receive indemnities for these vacation days. During this vacation time, the employee receives their full salary, as though the compensatory allowance scheme for RHT was not in place.

How should RWT (RHT) be declared and a request for indemnities submitted?

In order to provide simple and rapid support for employers who are encountering difficulties due to the novel coronavirus, the SECO has simplified the administrative steps linked to the notification of reduced working hours in relation to the coronavirus. A guide and the necessary forms are available by clicking on the following link (in French).
On February 19, 2021, the Federal Council decided to extend the simplified procedure for compensation for reduced working hours and the abolition of the waiting period until June 30, 2021. The corresponding amendments to the COVID-19 Unemployment Insurance Ordinance will come into force on April 1, 2021.
The notice period is temporarily suspended. A notice must still be submitted by the 1st day of the RHT. The duration of new permits is set at a maximum of six months. Retroactive removal of the notice period for the period from September 1, 2020 to March 20, 2021 is not automatic and requires a written request to the relevant authorities by April 30, 2021.

Some points to verify

  • Correctly establish to causal connection between Covid-19 and the impact on the company in the notification
  • Make no mistakes in the calculation bases
  • It is compulsory to maintain an accounting of all the hours worked by each employee
  • Send the request for reimbursement within a period of 3 months maximum, without which no indemnities may be claimed

Allowance for loss of income and Covid-19

Who is eligible for the loss of income for sickness allowance?

Beneficiaries eligible for loss of income allowance are:
  • Parents who have to interrupt their work because the care of their children by third parties is no longer assured.
  • Persons who are quarantined and must therefore interrupt their gainful employment.
  • Employees, self-employed persons and persons in a position similar to that of an employer who are considered vulnerable persons.
  • Self-employed persons, persons in a position similar to that of an employer and their spouses or registered partners who work in the company who must close their company by order of the cantonal or federal authorities.
  • Self-employed persons, persons in a position similar to that of an employer and their spouses or registered partners who work in the company who are affected by a ban on one or more events issued by the cantonal or federal authorities.
  • Self-employed persons, persons in a position similar to that of an employer and their spouses or registered partners who work in the company who must significantly restrict their gainful activity due to a measure imposed by the cantonal or federal authorities.
Please note: employees who receive compensation for reduced working hours are not eligible for this allowance. In addition, a person may only receive one allowance per day for one of the reasons for entitlement to the allowance.

Does an employee who must take care of their child also qualify for a loss of earnings allowance?

An employee who must assume the care of their child below the age of 12 years may, in principle, be eligible for loss of income indemnities if they fulfil the 2 following conditions:
  1. Be compulsorily insured with the AVS (i.e. have your residence or exercise your lucrative activity in Switzerland)
  2. Be gainfully employed or self-employed.
The need for care must be caused by measures to combat the coronavirus, e.g. the closure of schools, kindergartens, nurseries, or when care is rendered impossible because the person who was taking care of the child is placed in quarantine by a doctor or an authority.

If the child is quarantined, the employee is entitled to an allowance if he/she is obliged to interrupt his/her gainful activity in order to look after the child. However, if the child can be looked after (by a partner or another person), the allowance is not necessary.
Indemnities shall also continue to be received during school holidays.
The employee is not entitled to an allowance:
  • If he/she chooses to remove the child from an outside child care facility (e.g., daycare) even though the facility is still open.
  • If the person who normally cares for the child is a member of the vulnerable group (e.g. grandparents), as vulnerable persons are no longer subject to special measures.
  • If the work can be done from home (teleworking) without loss of earnings. However, it is possible to provide proof of loss of earnings (e.g. written certificate from the employer) and to be entitled to the allowance.

What are the procedures for people in quarantine?

Employees who are quarantined must contact their employer and declare themselves sick.The quarantine must be justified by a medical certificate or an official order. However, in view of the increasing number of cases, if the cantonal doctor is no longer able to issue such a document, you can simply provide a self-declaration stating why it is not possible to submit a certificate.

As of February 8, 2021, the quarantine allowance for the employee or his/her child is limited to a maximum of 7 daily allowances. In case of quarantine of the employee, the loss of earnings allowances are subsidiary to the RHT.

It should be noted that the quarantine can be terminated early if the employee presents the cantonal authority with a negative result of a COVID test (PCR or rapid test), which can take place at the earliest on the 7th day of the quarantine, and the competent cantonal authority gives its consent to the early termination of the quarantine.
Those who are sick or given permission to stay at home by their employer due to their vulnerability are not eligible for an allowance as, in this case, the employer must continue to pay their salary.

How are loss of income allowances calculated?

The indemnities are defined on the basis of the system of allowances for loss of income and paid in the form of daily indemnities. They correspond to 80% of the salary and are capped at 196 francs per day.
Childcare benefits are subject to a waiting period of 3 days.

To which entity should the request for CSW (APG) be made?

The allowance is not paid automatically. Those eligible must make the request themselves to the competent AVS compensation fund, who will then pay the allowance directly to the individual.

The obligations of employers/employees and Covid-19

What measures must be taken by the employees?

Employees must inform their employer if they have been close to someone who has Covid-19 or if they experience symptoms of the virus (a flu-like state, cough, fever). In any of these cases the employees must stay at home (self-isolation as recommended by the OFSP).

What measures must be taken by the employer?

The employer must respect and pass on to their employees and customers the recommendations of the authorities (Federal Office of Public Health (OFSP), Federal Council, the State Council of the Canton involved) as regards hygiene, social distancing, the closure of establishments, etc.

Do those employees who stay at home because they are experiencing symptoms of the virus have the right to a salary?

Yes, according to the rules applicable in case of sickness. In the case of Covid-19, the authorities encourage employers to be flexible and require a medical certificate only after 5 to 10 days of absence. The Cantons of Vaud and Geneva require that a medical certificate should not be requested prior to the 10th day of absence.

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In this time of pandemic with its important social, economic and financial impacts, we are at your side to help you and advise you on human resources. Our Caredesk, Payroll and Absences experts are at your disposal to answer any questions you may have.
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